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Higher Education Basic Accounting and Reporting Structure

State of Colorado Higher Education Accounting Standards

Issued by the Office of the State Controller: Standard #1

Original issue: 12/26/1975

Last revised: 12/26/2013

Revision effective: 07/01/2012

The purpose of the State of Colorado Higher Education Accounting Standards is to provide guidance in areas:

  • Which are not addressed by the authoritative accounting and reporting literature;
  • Where the literature provides alternate methods of accounting and reporting; and/or
  • Where accounting practices for Colorado institutions of higher education will vary from that recommended in NACUBO, Financial Accounting and Reporting Manual for Higher Education (FARM).

These Standards are intended to prescribe external financial reporting practices and are not intended to provide guidance on internal accounting policies.  Institutions should refer to their internally approved financial reporting policies or State of Colorado Fiscal Rules (as applicable), and the accounting manuals prepared or approved by the State Controller’s Office for appropriate internal accounting practices.

Under Statement No. 34 of the Governmental Accounting Standards Board (GASB), Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, as amended by GASB Statement No. 35, Basic Financial Statements - and Management’s Discussion and Analysis - for Public Colleges and Universities, as amended by GASB 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, Colorado institutions of higher education prepare external financial statements following the guidance for special-purpose governments engaged only in business-type activities (BTA model).  
Under the BTA model, colleges and universities follow the financial accounting and reporting guidelines for enterprise funds (Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, Governmental Accounting Standards Board Statement No. 34, Norwalk, CT, June, 1999, paragraph 138).  With the passage of GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance in Pre-November 30, 1989 FASB and AICPA Pronouncements, institutions are no longer permitted to follow FASB pronouncements but may elect to follow  post-November 30, 1989 FASB statements that do not contradict GASB guidance as “other accounting literature”.

The underlying measurement focus and basis of accounting used to prepare external financial statements are the:

  • Economic resources measurement focus; and
  • Accrual basis of accounting.

Although, the economic resource measurement focus and accrual basis of accounting are used to prepare external financial reports, Colorado institutions must also maintain management accounting records that account for transactions in a manner that ensures compliance with statutory and regulatory guidelines.  To facilitate this, institutions may continue to maintain management accounting records at a more detailed level that are then consolidated by the institutions for posting to the State’s accounting system.  The extent of the more detailed information at the institutional level will vary depending on the institution’s activities, laws and regulations, and policies and practices approved by the institution’s management.  The rollup of the internal institutional funds for posting to the Colorado Operational Resource System (CORE), or its successor, is approved by the Office of the State Controller.  Institutions should use guidance provided by the Financial Advisory Committee and the Office of State Controller when setting up their management accounting records.
In addition, certain transactions, such as encumbrances, student financial aid expenditures, capital asset acquisitions, and transfers and loans between funds will continue to be recorded for management purposes in a manner that differs from external financial reporting guidelines.  To the extent that these transactions do not meet current external financial reporting requirements, the Standards which follow prescribe adjustments that are required to convert the institution’s management accounting to the appropriate measurement focus and basis of accounting for external financial reporting.