Mapping Legal Basis Accounts to GAAP Reporting Model

CHAPTER 3 MAPPING LEGAL BASIS ACCOUNTS TO GAAP REPORTING MODEL

OVERVIEW Once all legal basis year-end closing entries have been recorded in the financial records of the campus and year-end procedures have been performed, the GAAP derivation process can begin. The first step of the GAAP derivation process is the classification or “mapping” of all campus CSU funds and accounts, as reflected in the legal basis financial records, to specific net position groups and financial statement line items for two of the three required financial statements. The GAAP derivation process was further enhanced by adding a step to read the program code override on the AAT key first before using the program code posted to the campus CSU business unit (BU). The conversion of data from the FIRMS object code used in the legal-basis financial records to the GASB 35 natural class code used for external financial reporting occurs automatically in the financial system. The natural class equivalents for each FIRMS object code are described in the Table of Object Codes located at the Systemwide Financial Standards & Reporting (SFSR) website. This table also shows the state General Ledger Account Number (GLAN) equivalents. The SFSR website also holds the Excel version of the GAAP Edits Table. This table resides in its electronic form in the Central Financial System (CFS) and in FIRMS and is used by these systems to validate the combinations of CSU fund, the GAAP natural classification code, the program code and net position group. The Excel version is organized by net position category and shows the valid combinations for each state fund and CSU fund. It should be noted that the GAAP Edits Table operates slightly differently in CFS and in FIRMS. In CFS, certain combinations are allowed solely to facilitate the posting of GAAP adjusting entries. The combinations established for this purpose are identified within the Excel version of the table. Such combinations are invalid in FIRMS as the balances reported in that system must represent the final values shown in the campus reporting packages (values ultimately flowing to the consolidated financial statements) and will generate FIRMS errors if used. Instructions for preparing the Statement of Cash Flows, the third required statement, are presented in Chapter 6.

The following chart shows the flow of information from transactions recorded in the campus accounting records to the SCO reports and the GAAP financial statements.

3.00-1 GAAP Manual | Mapping Legal Basis Accounts to GAAP Reporting Model | June 30, 2015 .

GAAP DERIVATION TEMPLATES For GAAP derivation purposes, the campus will prepare legal to GAAP derivation templates/trial balances for each of the following net position groups and for agency funds by CSU fund: Net Investment in Capital Assets Restricted, Unexpendable – Endowments Restricted, Expendable – Scholarships and Fellowships Restricted, Expendable – Research Restricted, Expendable – Loans Restricted, Expendable – Capital Projects Restricted, Expendable – Debt Service Restricted, Expendable – Other Unrestricted Agency Funds – Depository Accounts Agency Funds – Grants Refundable

The GAAP derivation templates are used to map legal basis net activity account balances during the year to the GAP BU by net position category, by CSU fund, and to record GAAP adjustments and reclassifications (see Chapters 4 and 5). After all the necessary adjusting entries are posted, the GAP BU ledger trial balance will reflect the adjusted GAAP year-end account balances by net position category, by CSU fund. The adjusted GAAP balances on the GAP BU trial balance by net position category, by CSU fund (the totals column), will be reported on the GAAP financial statement lines.

For CSU audit purposes, the legal to GAAP derivation is included as delivered reports in PeopleSoft 9.2. A list of the delivered reports is provided in Chapter 9.

ACCOUNT MAPPING OF LEGAL BASIS ACCOUNTS Use the Excel version of the GAAP Edits Table for classification of CSU funds from the campus SAM07 report to the proper net position derivation template. The Table of Object Codes should be used for mapping of balance sheet accounts on the SAM07 report to the Statement of Net Position line items. Use this table for mapping of State general ledger (GL) accounts and FIRMS object code account balances to GAAP financial statement line items (e.g. cash and cash equivalents, investments, accounts receivable, etc.) on the SNP. The Table of Object Codes should also be used for mapping of revenues, expenses and transfer accounts on the SAM07 report to the Statement of Revenues, Expenses, and Changes in Net Position line items. The GAAP Edits Table shows the FIRMS program codes that map to specific GAAP revenue and transfer line items on the financial statements. A query report can be developed locally by the campus to map state general ledger revenue, expense and transfer accounts by FIRMS object codes or FIRMS program codes to GAAP financial statement line items. Because of their custodial nature, agency funds should never have net position on the postclosing trial balance or revenue and expense activity on the pre-closing trial balance. Therefore, the state general ledger fund balance and the revenue and expense accounts for agency funds, except for funds 0948403, 0948406, and 0948407 (Perkins and Nursing loans), should be mapped to depository accounts during the derivation process. Funds 0948-403, 0948-406 and 0948-407 should be mapped to grants refundable.

ANALYSIS OF CERTAIN CSU FUNDS AND ACCOUNTS Most CSU funds at the campus level can be mapped to the proper net position group directly by reference to the GAAP Edits Table. However, certain CSU funds, as indicated by a (1) next to the fund description on the table, must be analyzed at the campus level to determine the proper net position classification based on the type of activity flowing through the accounts. It may be necessary to classify activity in a CSU fund into more than one net position group. Campuses can change the default net position classification of a CSU fund to a more appropriate category, if necessary, using the GAAP Override feature in PeopleSoft.

Although state general ledger accounts have been mapped on the Table of Object Codes to a specific asset or liability line item, certain account balances must be analyzed at the campus level to determine if the account balance contains a current or noncurrent portion. “Current” can reasonably be expected to either use or generate cash as part of normal business operations within 12 months of the financial statement date. Accounts should be analyzed and a portion of the balance reclassified to current or noncurrent, if applicable.

For derivation purposes, financial line items for Due to Other Funds, Due from Other Funds, and Transfers among funds can be added to the derivation template. However, Due to Other Funds and Due from Other Funds accounts for intra-agency transactions should always agree in total at the campus level and balances should be eliminated on a GAAP basis. Due to Other Funds and Due from Other Funds accounts for inter-agency transactions do not net to zero at the campus level. The campus should 1) analyze the accounts for purposes of reclassification to accounts receivable or accounts payable in the campus reporting package and 2) reconcile with the corresponding balances at the Chancellor’s Office so that they can be properly eliminated in the CSU consolidated financial statements. Transfers among CSU funds should also net to zero in total. Since transfers within the campus should net to zero at the campus level, the only balances that should remain in the transfer line item after mapping are inter-agency transfers. These inter-agency transfers should be eliminated or reclassified in the campus reporting package, as described in Chapter 4 and Chapter 5,

and reconciled with the corresponding balances at the Office of the Chancellor so that they can be properly eliminated in the CSU consolidated financial statements. The adjusted GAAP balance for these derivation template line items must net to zero.

CONCLUSION It is imperative that each campus follow the mapping protocol in order to achieve accuracy and consistency in financial reporting on a system-wide basis. If accounting personnel at the campus level are unsure how to classify a specific CSU fund or legal basis account, inquiries should be directed to the Office of the Chancellor for clarification and guidance. Mapping of CSU funds to the proper net position group and mapping of legal basis net account activity balances to the GAP BU ledger should be performed before recording any GAAP adjustments and reclassifications.

REVISION CONTROL

Document Title: CHAPTER 3 – MAPPING LEGAL BASIS ACCOUNTS TO GAAP REPORTING MODEL

REVISION AND APPROVAL HISTORY

Section(s) Revision Summary of Revisions Revised Date Matrix 1 Deleted reference “SRB” from CSU 461 as the fund is not a SRB fund. May 2014 Deleted references to matrices 2.2 and 3.2 as these tables have been General replaced by the GAAP Edits Table, which is separately described in the April 2014 chapter. Page 3.0-1 Added information regarding GAAP Edits Table. April 2014 Deleted section GAAP Combination Edits Table since the information is Page 3.0-6 April 2014 now on pg. 3.0-1. Matrix 2.2 Deleted – replaced by GAAP Edits Table residing in CFS and FIRMS. April 2014 and 3.2 Matrices 1, Deleted – information formerly on these matrices has been incorporated March 2015 2 and 3 in the Table of Object Codes and the GAAP Edits Table. Throughout Deleted references to Matrices 1, 2 and 3 and substituted references to March 2015 text Table of Object Codes and the GAAP Edits Table. FIRMS GAAP Deleted section and moved information to separate chapter, 7.02. March 2015 Submission section