Presenters:

•Michelle Korte CSU, Chicomkorte@csuchico.edu

•Patti SalomonCSU, Chico

psalomon@csuchico.edu

• GASB Statement 34, ¶ 105• Governments should present a statement of

cash flows for proprietary funds based on the provisions of GASB Statement 9, as amended by this Statement. The direct method of presenting cash flows from operating activities (including a reconciliation of operating cash flows to operating income) should be used.

Statement of Cash Flows (SOCF)

• GASB Statement 35, ¶ 57• Reiterates that Public Colleges and

Universities will also be required to use the direct method for the Statement of Cash Flows.

Statement of Cash Flows

• Cash flows from operating activities• Cash flows from noncapital financing activities• Cash flows from capital and related financing

activities• Cash flows from investing activities• Reconciliation of net operating revenues

(expenses) to net cash provided (used) by operating activities

• Supplemental schedule of noncash transactions

SOCF Layout

• GASB Statement 9, ¶ 16• Operating activities generally result from

providing services and producing and delivering goods, and include all transactions and other events that are not defined as capital and related financing, noncapital financing, or investing activities. Cash flows from operating activities generally are the cash effects of transactions and other events that enter into the determination of operating income.

CASH FLOWS from Operating Activities

University

Cash flows from operating activities:Tuition and fees $ 33,471,718Federal grants and contracts 15,791,185State and local grants and contracts 2,654,375Nongovernmental grants and contracts 0Payments to suppliers (24,699,045)Payments to employees (115,285,295)Payments to students (20,407,549)Sales and services of auxiliary enterprises 6,571,230Sales and services of educational activities 480,055Other receipts 254,921

Net cash (used in) provided by operating activities (101,168,405)

Statement of Cash Flows (Operating Activities Section)

• GASB Statement 9, ¶ 20

• Noncapital financing activities include borrowing money for purposes other than to acquire, construct, or improve capital assets and repaying those amounts borrowed, including interest. This category includes proceeds from all borrowings (such as revenue anticipation notes) not clearly attributable to acquisition, construction, or improvement of capital assets, regardless of the form of the borrowing. Also included are certain other interfund and intergovernmental receipts and payments.

CASH FLOWS from Noncapital financing Activities

University

Cash flows from noncapital financing activities:State appropriations 108,538,455Gifts and grants received for other than capital purposes 1,911,818Federal loan program receipts 37,024,562Federal loan program disbursements (36,881,401)Monies received on behalf of others 4,654,240Monies disbursed on behalf of others (4,471,187)Other (1,223,616)

Net cash provided by noncapital financing activities 109,552,871

Statement of Cash Flows (NONCAPITAL FINANCING Activities Section)

• GASB Statement 9, ¶ 23• Capital and related financing activities include (a)

acquiring and disposing of capital assets used in providing services or producing goods, (b) borrowing money for acquiring, constructing, or improving capital assets and repaying the amounts borrowed, including interest, and (c) paying for capital assets obtained from vendors on credit.

CASH FLOWS from CAPITAL AND RELATED FINANCING Activities

University

Cash flows from capital and related financing activities:Proceeds from capital debt 0State appropriations 10,251,998Capital grants and gifts 0Proceeds from sale of capital assets 174Acquisition of capital assets (13,861,769)Principal paid on capital debt and leases (1,624,313)Interest paid on capital debt and leases (680,878)

Net cash used in capital and related financing activities (5,914,788)

Statement of Cash Flows (CAPITAL and related FINANCING Activities Section)

• GASB Statement 9, ¶ 26• Investing activities include making and collecting

loans (except program loans, as discussed in paragraph 19) and acquiring and disposing of debt or equity instruments.

CASH FLOWS from INVESTING Activities

University

Cash flows from investing activities:Proceeds from sales and maturities of investments 16,549,510Investment income 78,283Purchase of investments (19,255,380)

Net cash used in investing activities (2,627,587)

Statement of Cash Flows (INVESTING Activities Section)

Reconciliation of Net Operating Revenues (Expenses) to Net Cash Provided (Used) by Operating Activities

• Begin with Operating Income (Loss)

• Add back noncash expenses included in the determination of operating income (loss)

• Plus or minus changes in assets and liabilities pertaining to operating activities (GASB 9, ¶ 33)

University

Reconciliation of net operating (loss) income to net cash (used in) provided by operating activities:

Operating (loss) income $ (111,013,205)Adjustments to reconcile net operating (loss) income to net cash

(used in) provided by operating activities:Depreciation and amortization expense 8,672,570Change in assets and liabilities:

Accounts receivable, net 935,357Prepaid expenses and other assets (293,470)Accounts payable 1,258,370Accrued salaries and benefits 557,831Accrued compensated absences (37,853)Deferred revenue (399,262)Self insurance claims liability (895,000)Depository accounts 0Other liabilities 46,257

Net cash (used in) provided by operating activities $ (101,168,405)

Statement of Cash Flows (RECONCILIATION TO OPERAting activities Section)

Supplemental Schedule of Noncash Transactions

GASB Statement 9 ¶ 37 states that a disclosure is required for all investing, capital and financing activities during the year that “affect recognized assets or liabilities but do not result in cash receipts or cash payments in the period”.

Examples of noncash transactions include:

• Assets acquired by capital leasing • Gifts in kind • Capital contributions (including transfers of assets between

the University and auxiliary organizations) • Construction work in progress passed down from the

Chancellor’s Office • Construction in progress costs accrued

Supplemental schedule of noncash transactions:Contributed capital asset $ 50,000Acquisition of capital asset through capital lease 200,000

Statement of Cash Flows (Supplemental schedule of noncash transactions section)

Cash Flow Statements For Your Auxiliary Organizations

With the CSU’s implementation of GASB Statement 39 effective July 1, 2003, the Auxiliary Organization’s statement of cash flows is no longer required to be included in the campus’ financial statements.

Survival Tips for Preparing the Statement of Cash Flows

1. Analyze net asset line items by statement of cash flow categories during preparation of audit workpapers and lead schedules.

2. Complete all other sections of the CSU GAAP reporting package.

3. Prepare Statement of Net Asset (SNA) Variance worksheet.

4. Compile the Additional Cash Flow Data worksheet.

Survival Tips for Preparing the Statement of Cash Flows, continued

5. Using the “Cash Flow Stmt Worksheet” template, transfer/link amounts from SRECNA, SNA Variance and Additional Cash Flow Data Worksheet.

6. Prepare Operating Activities section first. Then prepare reconciliation section. It is important to keep these two sections in balance.

7. Most common pitfall is transposing the sign (+/-) on amounts.

Assets Liabilit ies

I ncrease

(-)

Decrease to cash

+

I ncrease to cash

Decrease

+

I ncrease to cash

(-)

Decrease to cash

Survival Tips for Preparing the Statement of Cash Flows, continued

Chico’s Secret Survival Tips

• Lots of chocolate• Daily devotions to the Cash Flow Tiki Goddess• Lots of chocolate• ProvIDE the Cash Flow Statement preparer a

protected cash flow conducive environment: LOTS OF DESK space without ANY interruptions for as long as he/she needs! Note– DO NOT ASK IF THE STATEMENT IS IN BALANCE!

• Lots of chocolate

Presenters:

•Michelle Korte CSU, Chicomkorte@csuchico.edu

•Patti SalomonCSU, Chico

psalomon@csuchico.edu