Private Cash Flow Statements

Transcription

1 Private Cash Flow Statements NACUBO Intermediate Accounting Learning Objectives Identify the GAAP guidance for the preparation of the cash flow statement List the components of the statement Describe the items included in each component of the statement Assemble the information necessary to prepare the cash flow statement 1

2 GAAP Basis FASB No. 95 required for public entities FASB No. 117 modified FASB No. 95 to require direct or indirect method cash flow statement for notfor-profits FASB issuing new guidance to require direct method for not-forprofit entities Cash Flow Information Identifies the ability to meet obligations when they are due Used to determine if the institution needs external financing Can be used to project future cash flows 2

3 Information Should Help Users determine the reasons for differences between operating income and associated cash receipts and disbursements assess the effects of the financial position of both cash and noncash investing, financing and capital transactions during the fiscal year Private C & U Concerns Three categories per FASB # 95 Operating activities Financing activities Investing activities Operating activities must be presented using direct method Required reconciliation presents the indirect operating activities Gross data no netting of ins and outs Significant differences from GASB Model 3

4 Definition of Cash Cash on hand and in banks Near cash investments with maturities of 90 days or less Can exclude deposits with debt service trustee Can exclude cash on hand in investment portfolio Include definition in Significant Accounting Policies note disclosures Required Presentation Format Cash flows from various activities Operating Financing Investing Net increase (decrease) in cash + Cash and equivalents Beg of Year = Cash and equivalents End of Year 4

5 Statement of Cash Flows Baylor University Using the current indirect method BAYLOR UNIVERSITY Statements of Cash Flows For the Years Ended May 31, 2013 and 2012 (in thousands of dollars) Year Ended May 31, 2013 Year Ended May 31, 2012 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ Mi41 $ OM Adjustments to reconcile change in net assets to net cash provided by (used for) operating activities: Depreciation 31,046 30,937 Return on long-term investments (125,209) 25,486 Distributions from long-term investments 58,672 56,382 Amortization of bond premium (953) (950) Losses on disposal of property & equipment 4,563 1,649 Fixed assets gifts-in-kind (164) (286) Contributions for endowment & plant improvements (108,730) (83,555) Provision for bad debts 2,087 1,432 Changes in assets & liabilities: Short-term investments (46,242) 6,331 Student accounts receivable (1,817) (776) Contributions receivable (64,062) (41,958) Grants & other receivables (5,759) (2,131) Prepaid expenses & other (1,776) (940) Accounts payable 17,206 15,237 Personnel related current liabilities 1,670 1,256 Deposits & deferred revenue 13,015 6,013 Accrued postretirement benefits 6, Other liabilities (4,194) 7,818 Net cash provided by (used for) operating activities (19,050) 20,843 CASH FLOWS FROM INVESTING ACTIVITIES Student loans made (855) (1,520) Proceeds from collections of student loans 845 1,506 Proceeds from sales of long-term investments 39,826 20,970 Purchases of long-term investments (73,086) (53,247) Unexpended bond proceeds increase (21,497) (104,592) Purchases of property, plant & equipment (175,399) (69,807) Net cash used for investing activities (230,166) (206,690) CASH FLOWS FROM FINANCING ACTIVITIES Contributions for endowment & plant improvements: Endowment 24,922 30,121 Plant 83,808 53,434 Proceeds from long-term debt 200, ,027 Repayment of long-term debt (5,961) (21,376) Increase in federal student loan funds refundable Net cash provided by financing activities 303, ,206 Net increase in cash & cash equivalents 54,219 8,359 Cash & cash equivalents at beginning of year 49,205 40,846 Cash & cash equivalents at end of year $ 103,424 $ 49,205 5

6 Cash Flows from Operations Displays Net Asset change then adjusts for noncash transactions and change in working capital accounts New direct method Cash inflows by major source (tuition, research activities, investment, auxiliaries, etc. Cash outflows by natural object (salaries, payments to vendors, etc.) Cash Flows from Operations The Direct Method New FASB will require direct method comparable to GASB format Provides more complete information to statement reader Enables projections based on assumptions Generally rather difficult to compile because institutional systems don t contain required attributes in readily extractable format Current 10% or less of all privates use direct method (tend to be large, research institutions audited by national audit firms) 6

7 Cash Flows from Operations Reconciliation (Indirect Method) Presently not being considered for presentation in Cash Flow Statements for Private institutions Cash Flows from Operations Reconciliation (Indirect Method) Required by GASB No. 34 for Public institutions Most privates currently use the indirect method although the direct method is an option Indirect method obscures operating cash inflows and outflows Cannot be used to project future cash flows 7

8 Cash Flows from Noncapital Financing Activities Private institutions do not have this category Items included in other categories Operations Transfers to and from Agency transactions Direct student loans Financing New endowment gifts Annuity gift transactions Debt proceeds and payments Cash Flow from Financing Inflows include new debt proceeds, contributions restricted to capital acquisitions (current GAAP), new endowment and other gift Outflows include capital bond, mortgage and note principal payments, capitalized lease payment, capital debt interest payments, capital acquisitions and capital item sale proceeds 8

9 Cash Flows from Investing Includes transaction related to traditional financial investments Investment portfolio transactions must be displayed gross purchases should not be offset against sales/maturities Interest income will become part of this activity rather than operating Cash Flows from Investing For purposes of this statement, short-term investments that are not cash equivalents are considered investments 9

10 Retrieve Private Worksheet Exhibits in Handouts ABC University Preparing the Cash Flow Statement Start with BOY and EOY comparative balance sheet Exhibit 1 Gather additional information as needed Exhibits 2, 3 and 4 Gross investment purchases and sales Gross loan activity Increase in restricted contributions Separate unrealized and realized investment gains into restricted and unrestricted Gross plant additions and deletions Distribution of cash disbursements by natural class 10

11 ABC University Statement of Financial Position June 30, 20X4 (amounts in thousands) Prior year current year year to year change Ref Assets Cash and equivalents 34,435 28,175 (6,260) A Restricted cash 6,659 7,791 1,132 B Accounts receivable 35,094 42,238 7,144 C Predge receivable 24,034 21,286 (2,748) D Inventories 3,381 3,155 (226) E Prepaid expenses 3,788 3, F Student loans 15,651 14,449 (1,202) G Notes receivable 56,536 27,315 (29,221) H Investments 596, ,900 46,226 I Capital assets, net 482, ,793 81,458 J Total assets 1,258,587 1,354,918 96,331 Liabilities Accounts payable 19,712 16,540 (3,172) K Short term notes payable 15,000 (15,000) L Accrued payroll 9,440 9, M Compensated absences 10,634 11, N Liability re security lending 7,234 8, O Other liabilities 40,638 36,401 (4,237) P Prepaid revenue and student deposits 15,990 17,647 1,657 Q Long term debt 355, ,966 25,567 R OPEB obligations 78,523 71,781 (6,742) S Federal student loans 11,724 11,487 (237) T Total liabilities 564, ,029 (265) Net assets Unrestricted 492, ,150 91,059 U Temporarily restricted 62,700 64,183 1,483 V Permanently restricted 139, ,556 4,054 W Total net assets 694, ,889 96,596 X ABC University Statement of Activities For the Fiscal Year July 1, 20X3 to June 30, 20X4 (amounts in thousands) Ref. Revenues Student tuition and fees (net 199,552 1 Private grants 45,903 2 Private gifts Endowment gifts 3,205 4 Government grants 77,307 5 Investment income 68,143 6 Residential life 90,004 7 Total revenues 484,620 Expenses Salaries and benefits 167,087 8 Benefits 60,500 9 Interest expense 15, Depreciation 24, Residential life 10, Services and maintenance 46, Supplies 12, Utilities 16, contractual servies 46, Total expenses 401,031 Other Gain on swap 6, Recognized OPEB gain 8, Loss on bond retirement (2,221) 19 Total other 13,007 Change in net assets 96,596 X 11

12 ABC University Analysis of Capital Assets and Long term Debt for the fiscal year ended June 30, 20X4 (amounts in thousands) Capital assets Beginning Additions Reductions Ending Buildings 473, ,474 Equipment 125, ,536 Land and improvements 76,997 85,673 Ligrary holdings 60,959 63,810 Construction in progress 38,538 72,934 combined total 774, ,717 3, ,427 Depreciation 292,646 24,259 3, ,634 Capital assets net 482,335 81, ,793 Long term debt Beginning Additions Reductions Ending Notes and term loans 73,954 2,099 71,855 Revenue bonds: Defeased debt 27,430 27,430 Revenue Bonds 252,670 57,510 9, ,515 Bond premium 1,345 7, ,596 long term debt 355,399 65,507 39, ,966 Analysis Long term debt additions and deductions. Debt additions: used for defeased bond 27,430 new debt 30, FN 2 Premium 7, FN 3 total addition 65,507 Reductions: defeased debt obligation 25,209 defeased loss 2,221 premium amort 746 payments bonds & notes 11,764 total reduction 39, ,194 FN 4 ABC University Analysis of Various Receivable, Payable and Other Accounts for the fiscal year ended June 30, 20X4 (amounts in thousands) Accounts receivable Prior year Current year Difference Ref. Student fees and tuition 3,798 5,033 (1,235) a 1 Grants and contracts 27,170 33,356 (6,186) a 2 other 4,126 3, a 3 total 35,094 42,238 (7,144) Notes receivable Facilities 56,536 27,315 29,221 a 4 Student loans 15,651 14,449 1,202 a 5 total notes receivable 72,187 41,764 30,423 Accounts payable contract services 8,199 6,341 1,858 a 6 supplies 1,919 1, a 7 contractual 2,616 2, a 8 utilities 6,978 6, a 9 Total 19,712 16,540 3,172 prepaid revenue tuition and fees 10,260 11,325 (1,065) a 10 residential life 4,530 5,122 (592) a 11 other prepaid 1,200 1,200 a 12 Total 15,990 17,647 (1,657)Q on fin pos Investments Ref Matured during FY 672,317 a 13 Purchased during FY 661,740 a14 Gift inv released 3,719 a 15 Grant restricted for investment 832 a 16 Gift restricted for investment 394 a 17 Analysis of investment revenue Investment income 12,504 realized gain (noncash) 55,639 a 18 Reported in statement of activity 68,

13 Preparing the Cash Flow Statement Categorize each of the above amounts into the appropriate Cash Flow categories Complete the Statement of Cash Flows Exhibit 5 Note this exhibit adds to the left Components Operating activities Ref Ref Ref Ref Ref Studend tuition and fees 199, ,552 1 (1,235) A1 1,065 a10 private grants 45,071 45,903 2 (832) A16 Private gifts 6, ,748 D 277 A3 3,719 a15 (394) a17 government grants 71,121 77,307 5 (6,186) A2 investment income 6,083 68,143 6 (55,639) a18 (6,421) 17 residential life 90,596 90, a11 salaries (167,474) (167,087) 8 (387) M benefits (59,099) (60,500) 9 (664) N (6,742) S 8, interest expense (15,223) (15,223) 10 residential life (10,992) (10,992) 12 services and maintenance (44,556) (46,935) 13 4,237 P (1,858) A6 Supplies (12,770) (12,703) E (28) F (265) A7 Utilities (17,165) (16,527) 15 (638) A9 Contractual services (47,216) (46,805) 16 (411) A8 Cashflow from operating activities 44,614 Investing activities Investment sales proceeds 672, ,317 A13 Investment purchases (661,740) (661,740) A14 Acquisition of Properity, plant and equip (105,717) (105,717) FN1 Private grant restricted for investment 300 (832) A16 1,132 B Cashflow from investing activities (94,840) Financing Government advance for federal loans decrease (237) (237) T Endowment Restricted gifts 3,599 3, a17 Notes receivable 29,221 29,221 H Student notes receivable 1,202 1,202 G Notes receivable payments (15,000) (15,000) L Bond proceeds 57,510 57,510 FN2 Bond payments (39,194) (39,194) FN4 New Bond premium 7,997 7,997 FN3 Cashflow from financing activities 45,098 Change in cash balances (5,128) (6,260) A 1,132 B Beginning Cash Balance 41,094 34,435 X3C&E 6,659 X3RC Ending Cash Balance 35,966 28,175 X4C&E 7,791 X4RC 13

14 Exercise for your use Using the information in the Exhibits Trace the preparation of the Cash Flow from Operations section to the statement Trace the preparation of the Cash Flow from Financing section to the statement Trace the preparation of the Cash Flow from Investing section to the statement Review statement details Learning Assessment What are the categories in the Statement of Cash Flow? What information is reported as operating activity? Nonoperating activities include what cash receipts and disbursements? Where are student Perkins Loan activities reported in the Statement of Cash Flow? What GAAP guidance directs the preparation of the Statement of Cash Flow? 14

15 Questions? Thank you! 15