This document outlines the accounting and financial reporting standards established by the American Institute of Certified Accountants (AICPA) for public colleges and universities, aligning with GASB Statement No. 34. It details the requirements for financial statements, including mandatory elements like management's discussion and analysis, statements of financial position, and activities, as well as the treatment of revenues and expenses based on donor restrictions. Additionally, it emphasizes the use of the direct method for preparing cash flow statements as mandated by GASB standards.

1. (a) The American Institute of Certified Accountants. (AICPA)
(b) This Statement establishes accounting and financial reporting standards for public colleges
and universities within the financial reporting guidelines of GASB Statement No. 34, Basic
Financial Statements-and Management’s Discussion and Analysis-for State and Local
Governments. The standards are designed to provide financial information that responds to the
needs of three groups of primary users of general purpose external financial reports: the
citizenry, legislative and oversight bodies, and investors and creditors. Generally, this
amendment to Statement 34 permits public colleges and universities, in separately issued
financial statements, to use the guidance for special-purpose governments engaged only in
business-type activities, engaged only in governmental activities, or engaged in both
governmental and business-type activities in their separately issued reports. Under this guidance,
in its separately issued reports, a public institution is required to include management’s
discussion and analysis (MD&A); basic financial statements, as appropriate for the category of
special-purpose government reporting selected; notes to the financial statements; and required
supplementary information other than MD&A.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state
and local governmental entities, including general purpose governments, public benefit
corporations and authorities, and public employee retirement systems, utilities, hospitals and
other healthcare providers, and colleges and universities. Paragraph 2 discusses the applicability
of this Statement.
(c) A statement of financial position, including accompanying notes to financial statements,
provides relevant information about liquidity, financial flexibility, and the interrelationship of an
organization's assets and liabilities. That information generally is provided by aggregating assets
and liabilities that possess similar characteristics into reasonably homogeneous groups. For
example, entities generally report individual items of assets in homogeneous groups, such as
cash and cash equivalents; accounts and notes receivable from patients, students, members, and
other recipients of services; inventories of materials and supplies; deposits and prepayments for
rent, insurance, and other services; marketable securities and other investment assets held for
long-term purposes; and land, buildings, equipment, and other long-lived assets used to provide
goods and services. Cash or other assets received with a donor-imposed restriction that limits
their use to long-term purposes should not be classified with cash or other assets that are
unrestricted and available for current use.
(d) A statement of activities shall report revenues as increases in unrestricted net assets unless
the use of the assets received is limited by donor-imposed restrictions. For example, fees from
rendering services and income from investments generally are unrestricted; however, income

2. from donor-restricted permanent or term endowments may be donor restricted and increase either
temporarily restricted net assets or permanently restricted net assets. A statement of activities
shall report expenses as decreases in unrestricted net assets.
Pursuant to FASB Statement No. 116, Accounting for Contributions Received and Contributions
Made, in the absence of a donor's explicit stipulation or circumstances surrounding the receipt of
the contribution that make clear the donor's implicit restriction on use, contributions are reported
as unrestricted revenues or gains (unrestricted support), which increase unrestricted net assets.
Donor-restricted contributions are reported as restricted revenues or gains (restricted support),
which increase temporarily restricted net assets or permanently restricted net assets depending on
the type of restriction. However, donor-restricted contributions whose restrictions are met in the
same reporting period may be reported as unrestricted support provided that an organization
reports consistently from period to period and discloses its accounting policy.
GASB Statement No. 34 requires the presentation of a statement of cash flows based on the
provisions of GASB Statement No. 9. It further requires the use of the direct method of
presenting cash flows. GASB Statement No. 35, paragraph 57 further confirmed the requirement
for public colleges and universities to use the direct method for the statement of cash flows. The
statement of cash flows is comprised of six sections under GASB Statement No.9:
§ Operating activities
§ Noncapital financing activities
§ Capital and related financing activities
§ Investing activities§ Reconciliation of operating income (loss) to net cash provided by (used
in) operating activities
§ Supplemental schedule of noncash transactions
Solution
(a) The American Institute of Certified Accountants. (AICPA)
(b) This Statement establishes accounting and financial reporting standards for public colleges
and universities within the financial reporting guidelines of GASB Statement No. 34, Basic
Financial Statements-and Management’s Discussion and Analysis-for State and Local
Governments. The standards are designed to provide financial information that responds to the
needs of three groups of primary users of general purpose external financial reports: the
citizenry, legislative and oversight bodies, and investors and creditors. Generally, this
amendment to Statement 34 permits public colleges and universities, in separately issued
financial statements, to use the guidance for special-purpose governments engaged only in
business-type activities, engaged only in governmental activities, or engaged in both

3. governmental and business-type activities in their separately issued reports. Under this guidance,
in its separately issued reports, a public institution is required to include management’s
discussion and analysis (MD&A); basic financial statements, as appropriate for the category of
special-purpose government reporting selected; notes to the financial statements; and required
supplementary information other than MD&A.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state
and local governmental entities, including general purpose governments, public benefit
corporations and authorities, and public employee retirement systems, utilities, hospitals and
other healthcare providers, and colleges and universities. Paragraph 2 discusses the applicability
of this Statement.
(c) A statement of financial position, including accompanying notes to financial statements,
provides relevant information about liquidity, financial flexibility, and the interrelationship of an
organization's assets and liabilities. That information generally is provided by aggregating assets
and liabilities that possess similar characteristics into reasonably homogeneous groups. For
example, entities generally report individual items of assets in homogeneous groups, such as
cash and cash equivalents; accounts and notes receivable from patients, students, members, and
other recipients of services; inventories of materials and supplies; deposits and prepayments for
rent, insurance, and other services; marketable securities and other investment assets held for
long-term purposes; and land, buildings, equipment, and other long-lived assets used to provide
goods and services. Cash or other assets received with a donor-imposed restriction that limits
their use to long-term purposes should not be classified with cash or other assets that are
unrestricted and available for current use.
(d) A statement of activities shall report revenues as increases in unrestricted net assets unless
the use of the assets received is limited by donor-imposed restrictions. For example, fees from
rendering services and income from investments generally are unrestricted; however, income
from donor-restricted permanent or term endowments may be donor restricted and increase either
temporarily restricted net assets or permanently restricted net assets. A statement of activities
shall report expenses as decreases in unrestricted net assets.
Pursuant to FASB Statement No. 116, Accounting for Contributions Received and Contributions
Made, in the absence of a donor's explicit stipulation or circumstances surrounding the receipt of
the contribution that make clear the donor's implicit restriction on use, contributions are reported
as unrestricted revenues or gains (unrestricted support), which increase unrestricted net assets.
Donor-restricted contributions are reported as restricted revenues or gains (restricted support),
which increase temporarily restricted net assets or permanently restricted net assets depending on
the type of restriction. However, donor-restricted contributions whose restrictions are met in the
same reporting period may be reported as unrestricted support provided that an organization

4. reports consistently from period to period and discloses its accounting policy.
GASB Statement No. 34 requires the presentation of a statement of cash flows based on the
provisions of GASB Statement No. 9. It further requires the use of the direct method of
presenting cash flows. GASB Statement No. 35, paragraph 57 further confirmed the requirement
for public colleges and universities to use the direct method for the statement of cash flows. The
statement of cash flows is comprised of six sections under GASB Statement No.9:
§ Operating activities
§ Noncapital financing activities
§ Capital and related financing activities
§ Investing activities§ Reconciliation of operating income (loss) to net cash provided by (used
in) operating activities
§ Supplemental schedule of noncash transactions