Download Private Cash Flow Statements

9/30/2014
Private Cash Flow
Statements
2014-2015
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
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9/30/2014
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
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9/30/2014
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
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9/30/2014
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
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9/30/2014
Statement of Cash Flows
Baylor University
Using the current indirect method
BAYLOR UNIVERSITY
Statements of Cas h Flows
For the Years Ended May 31, 2013 and 2012
(in thousands of dollars)
Year Ended
May 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Change in net as sets
Adjus tments to reconcile change in net ass ets to net cash
provided by (us ed for) operating activities :
Depreciation
Return on long-term inves tments
Distributions from long-term investments
Amortization of bond premium
Losses on disposal of property & equipment
Fixed as sets gifts -in-kind
Contributions for endowment & plant improvements
Provision for bad debts
Changes in ass ets & liabilities:
Short-term inves tments
Student accounts receivable
Contributions receivable
Grants & other receivables
Prepaid expens es & other
Accounts payable
Pers onnel related current liabilities
Depos its & deferred revenue
Accrued postretirement benefits
Other liabilities
Net cas h provided by (us ed for) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Student loans made
Proceeds from collections of student loans
Proceeds from s ales of long-term inves tments
Purchases of long-term investments
Unexpended bond proceeds increase
Purchases of property, plant & equipment
Net cas h us ed for investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions for endowment & plant improvements :
Endowment
Plant
Proceeds from long-term debt
Repayment of long-term debt
Increase in federal student loan funds refundable
Net cas h provided by financing activities
Net increas e in cas h & cas h equivalents
$
Mi41
Cas h & cas h equivalents at beginning of year
Cas h & cas h equivalents at end of year
Year Ended
May 31, 2012
$
OM
31,046
(125,209)
58,672
(953)
4,563
(164)
(108,730)
2,087
30,937
25,486
56,382
(950)
1,649
(286)
(83,555)
1,432
(46,242)
(1,817)
(64,062)
(5,759)
(1,776)
17,206
1,670
13,015
6,756
(4,194)
(19,050)
6,331
(776)
(41,958)
(2,131)
(940)
15,237
1,256
6,013
688
7,818
20,843
(855)
845
39,826
(73,086)
(21,497)
(175,399)
(230,166)
(1,520)
1,506
20,970
(53,247)
(104,592)
(69,807)
(206,690)
24,922
83,808
200,652
(5,961)
14
303,435
54,219
30,121
53,434
132,027
(21,376)
-194,206
8,359
49,205
$
103,424
$
40,846
49,205
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9/30/2014
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)
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9/30/2014
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
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9/30/2014
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
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9/30/2014
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
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9/30/2014
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
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9/30/2014
ABC University
Statement of Financial Position
June 30, 20X4
(amounts in thousands) Prior year
Assets
Cash and equivalents
Restricted cash
Accounts receivable
Predge receivable
Inventories
Prepaid expenses
Student loans
Notes receivable
Investments
Capital assets, net
Total assets
current year
year to year change
Ref
34,435
6,659
35,094
24,034
3,381
3,788
15,651
56,536
596,674
482,335
1,258,587
28,175
7,791
42,238
21,286
3,155
3,816
14,449
27,315
642,900
563,793
1,354,918
(6,260)
1,132
7,144
(2,748)
(226)
28
(1,202)
(29,221)
46,226
81,458
96,331
A
B
C
D
E
F
G
H
I
J
Liabilities
Accounts payable
Short‐term notes payable
Accrued payroll
Compensated absences
Liability re security lending
Other liabilities
Prepaid revenue and student deposits
Long‐term debt
OPEB obligations
Federal student loans
Total liabilities
19,712
15,000
9,440
10,634
7,234
40,638
15,990
355,399
78,523
11,724
564,294
16,540
9,827
11,298
8,082
36,401
17,647
380,966
71,781
11,487
564,029
(3,172)
(15,000)
387
664
848
(4,237)
1,657
25,567
(6,742)
(237)
(265)
K
L
M
N
O
P
Q
R
S
T
Net assets
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
492,091
62,700
139,502
694,293
583,150
64,183
143,556
790,889
91,059
1,483
4,054
96,596
U
V
W
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
Private grants
Private gifts
Endowment gifts
Government grants
Investment income
Residential life
Total revenues
199,552
45,903
506
3,205
77,307
68,143
90,004
484,620
1
2
3
4
5
6
7
Expenses
Salaries and benefits
Benefits
Interest expense
Depreciation
Residential life
Services and maintenance
Supplies
Utilities contractual servies Total expenses
167,087
60,500
15,223
24,259
10,992
46,935
12,703
16,527
46,805
401,031
8
9
10
11
12
13
14
15
16
Other Gain on swap
Recognized OPEB gain
Loss on bond retirement
Total other
6,421
8,807
(2,221)
13,007
17
18
19
Change in net assets
96,596
X
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9/30/2014
ABC University Analysis of Capital Assets and Long‐term Debt
for the fiscal year ended June 30, 20X4
(amounts in thousands)
Capital assets
Buildings
Equipment
Land and improvements
Ligrary holdings
Construction in progress
combined total
Beginning
473,007
125,480
76,997
60,959
38,538
774,981
Additions
Reductions
105,717
3,271
Ending
523,474
131,536
85,673
63,810
72,934
877,427
Depreciation
292,646
24,259
3,271
313,634
Capital assets net
482,335
81,458
‐
563,793
Long‐term debt
Notes and term loans
Revenue bonds:
Defeased debt
Revenue Bonds
Bond premium
long‐term debt
Beginning
Additions
Reductions
Ending
73,954
2,099
71,855
27,430
252,670
1,345
355,399
27,430
9,665
746
39,940
‐
300,515
8,596
380,966
57,510
7,997
65,507
Analysis Long‐term debt additions and deductions.
Debt additions:
used for defeased bond
27,430
new debt
30,080
Premium
7,997
65,507
total addition
Reductions:
defeased debt obligation
25,209
defeased loss
2,221
premium amort
746
payments bonds & notes
11,764
total reduction
39,940
57510 FN 2
7997 FN 3
746 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
Student fees and tuition
Grants and contracts
other
total
Notes receivable
Facilities Student loans
total notes receivable
Accounts payable
contract services
supplies
contractual
utilities
Total
prepaid revenue
tuition and fees
residential life
other prepaid
Total
Investments
Matured during FY
Purchased during FY
Gift inv released Grant restricted for investment
Gift restricted for investment
Analysis of investment revenue
Investment income
realized gain (noncash)
Reported in statement of activity
Prior year
3,798
27,170
4,126
35,094
Current year
5,033
33,356
3,849
42,238
Difference
(1,235)
(6,186)
277
(7,144)
Ref.
a 1
a 2
a 3
56,536 27,315 29,221
15,651 14,449 1,202
72,187 41,764 30,423
a 4
a 5
8,199
1,919
2,616
6,978
19,712
6,341
1,654
2,205
6,340
16,540
1,858
265
411
638
3,172
a 6
a 7
a 8
a 9
10,260
4,530
1,200
15,990
(1,065) a 10 (592)
a 11
‐
a 12
(1,657)Q on fin pos
672,317
661,740
3,719
832
394
11,325
5,122
1,200
17,647
Ref
a 13
a14
a 15
a 16
a 17
12,504
55,639
68,143
a 18
6
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9/30/2014
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
Operating activities
Studend tuition and fees
private grants
Private gifts
government grants
investment income
residential life
199,382
45,071
6,856
71,121
6,083
90,596
199,552
45,903
506
77,307
68,143
90,004
Ref
1
2
3
5
6
7
salaries
benefits
interest expense
residential life
services and maintenance
Supplies
Utilities
Contractual services
Cashflow from operating activities
(167,474)
(59,099)
(15,223)
(10,992)
(44,556)
(12,770)
(17,165)
(47,216)
44,614
(167,087)
(60,500)
(15,223)
(10,992)
(46,935)
(12,703)
(16,527)
(46,805)
8
9
10
12
13
14
15
16
Investing activities
Investment sales proceeds
Investment purchases
Acquisition of Properity, plant and equip
Private grant restricted for investment
Cashflow from investing activities
672,317
(661,740)
(105,717)
300
(94,840)
672,317
(661,740)
(105,717)
(832)
A13
A14
FN1
A16
Financing
Government advance for federal loans decrease
Endowment Restricted gifts
Notes receivable Student notes receivable
Notes receivable payments
Bond proceeds
Bond payments
New Bond premium
Cashflow from financing activities
(237)
3,599
29,221
1,202
(15,000)
57,510
(39,194)
7,997
45,098
(237)
3,205
29,221
1,202
(15,000)
57,510
(39,194)
7,997
T
4
H
G
L
FN2
FN4
FN3
Change in cash balances
(5,128) (6,260)
A
Components Ref
Ref
(1,235) A1
(832) A16
2,748
D
277 A3
(6,186) A2
(55,639) a18
(387)
(664)
M
N
(6,742) S
4,237
226
P
E
(28) F
1,132
B
394
a17
Ref
1,065 a10
Ref
3,719 a15
(394) a17
(6,421)
17
592 a11
8,807
(1,858)
(265)
(638)
(411)
18
A6
A7
A9
A8
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
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9/30/2014
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?
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9/30/2014
Questions?
Thank you !
15