GASB Clarifies Perkins Loan Accounting Guidance

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October 22, 2003

Controversy and confusion have arisen over accounting for Federal Perkins Loan funds by public institutions. NACUBO previously provided guidance indicating that the Federal Capital Contribution (FCC) for the Perkins Loan program represents a liability. Since that guidance was issued, NACUBO has learned that the Governmental Accounting Standards Board (GASB) has broadened the interpretation of the literature. GASB has concluded that two alternative treatments are consistent with GASB standards: Institutions may record the FCC either as a liability, in the form of a refundable advance, or as grants revenue resulting in an increase in restricted net assets.

GASB is adding a project to its technical agenda that may result in new guidance. NACUBO will continue to follow this issue and provide updates. For now, however, NACUBO recommends that institutions continue reporting as they have been since the implementation of GASB 34/35.