GASB Proposed Revisions Memo

September 25, 2001

RE: Governmental Accounting Standards Board (GASB)

Dear Colleague:

We are writing to bring to your attention a proposed revision to the accounting standards for governmental entities, including public colleges and universities, that would affect the reporting of financial data of affiliated foundations, associations, and other nonprofit organizations in the institution’s annual financial statement. For some colleges and universities, there may be broad policy and political implications to this proposed change, so we urge you to review the proposal and consider its impact on your institution.

The Governmental Accounting Standards Board (GASB) is a private entity, under the auspices of the Financial Accounting Foundation, that establishes standards of financial accounting and reporting for governmental entities. GASB issued an exposure draft on affiliated organizations on July 31 that will affect those public colleges and universities that rely on separate foundations to handle such activities as fund raising, athletic support, and research on behalf of the institution. The exposure draft is intended to provide additional guidance on determining whether an affiliated organization is a

component unit of a financial reporting entity. Financial information for component units must be discretely displayed in a separate column in an institution’s financial statements.

The exposure draft is available online at www.gasb.org/exp/rev_ed_ao.pdf. Comments will be accepted until October 31. In addition, public hearings are scheduled for October 29 in Phoenix and November 2 in New York.

The National Association of College and University Business Officers (NACUBO) is working with its Accounting Principles Council and chief financial officers of public colleges and universities to prepare a response to GASB. A survey has been posted to NACUBO’s Web site at www.nacubo.org to collect information about affiliated organizations and solicit input from members. The survey deadline is September 28.

NACUBO plans to post draft comments on the Web by the end of September. The enclosed one-page summary of the exposure draft also provides insight into the position that NACUBO is likely to take.

RE: Governmental Accounting Standards Board

September 25, 2001

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We encourage you to review the exposure draft, discuss its implications for your institution with appropriate staff, and provide feedback to NACUBO. Please refer questions to Pauline Roberts at NACUBO at 202-861-2542 or Pauline.Roberts@nacubo.org. Sincerely,