TASSCUBOAccounting Principles Committee

Summer MeetingJuly 25, 2011

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AGENDA1. Welcome and Introductions 2. H.R. 2146 – ARRA Type Reporting to all Federal Awards3. Advisory Draft – Voluntary Uncommitted Cost Sharing4. SAM Restricted Research Reporting Guidelines – Anthony Turrietta5. 3 Percent Withholding Requirement6. SEFA Checklist7. GASB Update8. NACUBO APC Update9. Other Issues

   

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H.R. 2146 – ARRA Type Reporting for All Federal Awards

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H.R. 2146Intent is to greatly improve the tracking of

federal spendingWould require recipients of Federal funds, as

either Prime or Sub-recipient, to report various characteristics of the received grants

Bill requires creation of a single collection platform for this information

Very similar to ARRA required reporting

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H.R. 2146At a minimum, the following will be required not less

than every quarter:Identification of recipientIdentification of executive agencyIdentification of federal award and sourceAmount of federal funds received, expended, or obligatedDetailed list of projects/activities for which funds were

expendedStatus as prime or sub-award, and any sub-awards issuedAdditional information reasonably related to the receipt

and use of Federal funds as the Board shall, by rule, require

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H.R.2146Already approved by House Committee on

Oversight and Government ReformBill is very popular among lawmakers-they

cite accountability, reduction of fraud, transparency

Bill is unpopular among universities, who cite increased bureaucracy and cost

Copy of bill can be found at: http://oversight.house.gov/images/stories/Markups/Amendments/ISSA_043_xml.pdf or

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HR 2146

Advisory Draft – Voluntary Uncommitted Cost Sharing

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Advisory Draft-VUCSNACUBO is working on how VUCS should be

treated for functional expense purposes

Guidance based on hypothetical question – can institutionally funded research effort (instruction, research, public service) be reported as VUCS if the activities are separately budgted?

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Advisory Draft-VUCSVUCS are effort or other costs incurred that

are over and above the amount committed and budgeted for in a sponsored agreement

In essence, the institution is incurring costs related to a research project as cost sharing

OMB issued clarification in 2001 related to treatment of VUCS in F&A calculation

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Advisory Draft-VUCS“VUCS should be treated differently from

committed effort and should not be included in the organized research base for computing the F&A rate or reflected in any allocation of F&A costs”

OMB Guidance did not dictate VUCS treatment for classification of functional expenses in Financial Statements

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Advisory Draft-VUCSGuidance is still in draft form: “Functional

expense reporting should not be driven solely by budget allocations, but rather by the actual amounts spent on a particular function”

To the extent that VUCS can be associated with a specific institutional research objective, it should be included in the functional expense category of research

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VUCS

SAM Restricted Research Reporting Guidelines

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SAM – Review Standards and Accounting Methods for

Reporting Restricted Research Expenditures (SAM) was issued by the THECB in 2005

Sets standards and accounting for reporting restricted research

Defines the concept of “restricted research”Definition excludes Indirect Cost Recovery

funded expenditures from consideration in “restricted research”, although IDC can be reported in the research survey for total research

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SAM – Advisory CommitteeAdvisory Committee on Revision to SAM met

on February 10th

Editorial changes were proposed to SAM to add clarity

To add further clarity, SAM for Reporting Restricted Research Expenditures for the Research Development Fund was issued after May 24, 2011

Guidance in this is very similar to original SAM

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SAM RDF

SAM – Advisory CommitteeThreshold for SAM for RDF is $250,000Revisions were made again on July 11, 2011,

and will be available for public comment on or about July 29, 2011

Gives clear definition of restricted research as it relates to RDF: “Only selected state appropriated grant programs having a competitive award process may be considered restricted research (See Appendix A). State appropriations directly to institutions through formula or special item funding do not qualify as restricted research.”

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SAM – Advisory CommitteeNew draft that will be posted in late July:

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SAM for RDF redline July 11 2011

3% Withholding Requirement – IRC

3402(t)

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IRC 3402(t)Applicable to Governmental EntitiesExclusion for entities – less than $100

million in payments for goods and servicesOriginally effective January 1, 2011Now set for January 1, 2013Affects all payments for goods & servicesApplies to individuals, trusts, estates,

partnerships, associations, companies, or corporations

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IRC 3402(t)Does not apply to other non-profit and

governmental entitiesReal property transactions are exempted,

construction costs are notAll transactions over $10,000Credit Card TransactionsSome exemptions for pass through entitiesWithheld amounts are to be reported on

Form 945Report to recipients on 1099-M

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IRC 3402(t)More complete copy of regulation and

exceptions:

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3402 (t) presentation

SEFA Checklist

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SEFA Checklist - BackgroundPY Audit finding, 10-555-26, Agencies and

Higher Education Institutions Should Strengthen Their Reviews of Their Schedules of Expenditures of Federal Awards, was related to 17 institutions of Higher Ed

Deficiencies related to SEFAIn order to prevent this, a checklist was createdPoints taken from State Comptroller website –

Reporting Requirements for Annual Financial Report of State Agencies and Universities

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SEFA ChecklistCreated checklist does not include all areas

on CPA website - only those applicable to Universities

Can be modified to institution needshttps://fmx.cpa.state.tx.us/fmx/pubs/

afrrptreq/sefa/index.php

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Microsoft Office Excel Worksheet

GASB Update

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Statement 59Financial Instruments OmnibusEffective FYE June 30, 2011Clarifies Statements 31 and 40, and amends

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Statement 60Accounting and Financial Reporting for Service

Concession ArrangementsEffective for FYE June 30, 2013SCAs are a type of public-private or public-public

partnership, including service arrangements and management arrangements

SCAs are also a type of leaseCertain criteria have to be met to meet scope of

statementStatement deals with revenue and liability

recognition

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Statement 61Financial Reporting Entity: OmnibusEffective FYE August 31, 2013Updates inclusion data from Statement 14 for

component units

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Statement 62Codification of Pre-November 30, 1989 FASB

and AICPA GuidanceEffective for FYE August 31, 2013Supersedes Statements 20 and 29Earlier application is encouraged

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Other Issues

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Other IssuesCPA adopted TASSCUBO guidance on tuition

discount reportingWill increase consistency and comparability

of this financial reporting element

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NACUBO APC UpdateJ. Carlos Hernandez

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APC Mission and MembersAccounting guidance and advocacy

APC members are your colleagues

Council appointments typically do not exceed 5 years

APC’s principal charge is to inform and advise NACUBO

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Bi-annual meeting with GASBAPC provided information concerning:

Alternative SRECNAEndowments held by public institutionsTreatment of PELL grants

GASB provided information on: Pension project Deferred inflows and outflows of resources

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Reporting Changes/ConcernsGASBNACUBO Comment Letters:Service concession arrangements (60)The financial reporting entity (61)Deferred inflows and outflows of resources

(63)Termination of Hedge Accounting (64)Pension accounting

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Other ProjectsFair value measurementFiduciary responsibilitiesElectronic reportingLeaseReporting inconsistenciesRevenue surveyDefining an operating measureAgency transactions

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Questions

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