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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities


Frequently Asked Questions

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Capital Assets

For a capital asset that is built in phases, is it ok to record construction in progress (CIP) for a cost incurred related to a past project phase now recorded as a capital asset since the cost is related to the completed CIP project phrase? [+]

Yes. If the related phase has moved from construction in progress (CIP) to capital assets, the incurred cost is recorded as a capital asset. Contact your SPA analyst with project phase questions.

How are capital assets affected by conduit debt financing in GASB 91, Conduit Debt Obligations? [+]

In these arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third-party obligors during their activities. Payments from third-party obligors are intended to cover and coincide with debt service payments. During those arrangements, issuers retain the titles to the capital assets. Those titles may or may not pass to the obligors at the end of the arrangement. If the title:

  • Passes to the third-party obligor at the end of the arrangement, the issuer will not recognize a capital asset.
  • Does not pass to the third-party obligor and the third party has exclusive use of the entire capital asset during the arrangement, the issuer will not recognize a capital asset until the arrangement ends.
  • Does not pass to the third-party obligor and the third party has exclusive use of only portions of the capital asset during the arrangement, the issuer (at the inception of the arrangement) will recognize the entire capital asset and a deferred inflow of resources.

Discrete Component Units and Statement of Cash Flows

Is a statement of cash flows required for an agency’s discrete component units? [+]

No. A statement of cash flows is not required for discrete component units (FT15). Only an agency that has enterprise funds (FT05) and internal service funds (FT06) must submit a copy of its annual financial report’s statement of cash flows.

Default Fund

Our agency made an entry to remove a deposit that went to the default fund; however, the entry removed cash from another fund instead of the default fund. Will a due from/due to USAS entry remove the deposit that remains in the default fund? [+]

Yes. Record a due from/due to USAS entry. For more information, see Due From/ Due to Within Same Agency.

Exhibit I

If compensable leave liability is reported in Note 5, does it also need to be reported in Exhibit I? [+]

Yes. Compensable leave liability is reported in Exhibit I as shown on the Agency Template Exhibit I located in the Templates & Sample Exhibits. The amounts tie to Note 5 balances. For additional information, see Employee Compensable Leave.

Should agencies include capital asset adjustments and long-term liability adjustments within Exhibit I since they are reported in Notes 2 & 5? [+]

Yes. They must be included in your combined Exhibit I, as the exhibit notates. The amounts tie to Note 2 and Note 5 balances. Unless you are an agency with independent audits required by statute, the Comptroller’s Financial Reporting section does not require these exhibits as a part of the AFR submission package and does not reconcile them to USAS or the notes. These exhibits are provided for agency reporting needs.

Fund Balance Allocation

Is there an additional report that can be used to verify if entries were posted correctly for unrestricted and restricted fund balances other than the DR110 — Review Fund Balances at the GAAP Fund Level (BS,SNA-8580) report located on FMQuery–SIRS in the AFR Desk Review menu? [+]

Yes. The DAFR8580 at the D23 fund level (4) is post-close and shows the allocated ending fund balance.

According to GASB 54, certain fund balances must be classified as unassigned. However, on the DR110 report, some of the same funds also have restricted balances. Are there any working papers to help classify those amounts to fund balance balance-unassigned? [+]

Yes. Agencies can use the following Working Papers templates to allocate fund balances:

  • Fund Balance Governmental Activities, Allocating FT01 (Excel)
  • Fund Balance Governmental Activities, Allocating FT02, FT03 and FT04(Excel)
  • Fund Balance Governmental Activities, Allocating FT19 (Excel)

Implementation of GASB Statement No. 84, Fiduciary Activities

What should be recorded as FT22 custodial funds activity? [+]

Custodial funds are generally held outside the state treasury. Do not use a T-code that debits or credits GL account 1149 – Funds Held for Others. By definition, the purpose of custodial funds is for assets that are held on behalf of individuals or entities other than the state of Texas.

The activity reported in FT22 includes revenues and expenditures. Reporting only the adjustments to balance sheet accounts does not follow the requirements of GASB 84 and causes imbalances on the CR111S.

Record FT22 activity using the following T-codes:

Balance Sheet

  • 646/647 (Reversing)
  • 644/645

Operating Statement

  • 628/628R (Transfers Out)
  • 629/629R (Transfers In)
  • 642/642R (Expenditures)
  • 643/643R (Revenues)


  • 454/454R

GR Reconciliation

Our agency has determined that the difference between Calc I and Calc II is how 20XX judges’ supplemental salary increase. How do we correct the difference? [+]

Enter salary increase expenditures on Salary Increase Line 200700 in the GR Reconciliation web application, on the Salary Increase – Column I. For additional information, see Salary Increase – Column I.

Note 6 – Bonded Indebtedness

For a bond that was partially defeased and partially refunded in this reporting year, should the defeased/refunded par value be reported as current year principal on the Principal and Interest screen in the BRS web application? [+]

No. Once bonds are paid off, refunded, defeased or early extinguished, they are no longer reported as a liability of the agency. The only remaining requirement for any of the refunded/defeased bonds is to report the outstanding principal balance that is paid by your escrow agent subsequent to year-end. The purpose of the Principal and Interest screen in the BRS web application is to provide the information for all remaining principal (the agency’s liability) and associated interest by future fiscal year.

Schedule 2E Defeased Bonds Outstanding

What amount is used for “par value outstanding” as of August 31, 20CY? Do we use the same amount as last year –or– do we need to consider payments made against it during the current fiscal year? If so, how can we find out what those payments were, since we didn’t make them? [+]

The amount reported is the amount of par value that has still not been paid to the bondholders as of the reporting date.

When some or all of a bond issue is refunded, it is possible that the first call date of the bonds has not been reached. Payment of principal and interest continues to be made on these refunded bonds until the bonds can be called or maturity of the bond occurs. At the time of refunding, sufficient money was placed with an escrow agent to make all required interest payments until maturity (or call) of each bond not yet paid. When that event occurs, principal on the bond is made by the escrow agent.

Your bond financial advisor can assist you in confirming the amount (par value) that was still outstanding each Aug. 31 for each refunded issue not yet repaid to the bond holders. The amount is less from year-to-year if maturity was reached on some of the bonds being held by the escrow agent. This disclosure is required because your agency is still secondarily responsible for the payments to the bond holders in the event the escrow agent does not pay. This event is highly unlikely, but could happen.

Implementation of GASB Statement No. 87, Leases

What new implications will arise from GASB 87 [+]

  • Leases are no longer classified as operating or capital leases.
  • Lessees record a right to use lease liability and a right to use asset, see Leases — Recognitions and Measurements for Lessees.
  • Lessors record a lease receivable and a deferred inflow of resources, see Recognitions and Measurements for Lessors.
  • Recording a lease as a liability (instead of an obligation) may impact:
    • Laws, regulations and ordinances relating to debt limits.
    • Bond covenants.
    • Bond continuing disclosure.
    • Federal Grants:
      • Uniform Guidance (2 CFR 200) requires lease vs. purchase analysis.
      • Most awards only reimburse the lower of lease expense vs. depreciation.
  • Clauses of subject to appropriation or funding apply to budgeting, not lease accounting (GAAP). Unless it is reasonably probable that the clause will be enforced, it can be ignored.

What about existing leases? [+]

Leases must be recognized and measured using the facts and circumstances that exist at the beginning of the period of implementation. If applied to earlier periods, leases must be recognized and measured using the facts and circumstances that existed at the beginning of the earliest period restated. However, lessors must not restate the assets underlying their existing sales-type or direct-financing leases. Any residual assets for those leases must become the carrying values of the underlying assets.

  • Review the contracts as of that date.
  • Contracts in progress are measured from that date, even if the actual contract started years before.
  • If contracts do not have options to extend and end within 12 months of implementation date, they are considered short-term.

For a new lease (obtained during this reporting fiscal year but will not be active until the next reporting fiscal year) do we include the new lease amount for the next five years in the LNSS web application under future payments for this reporting year? [+]

No. Since the new lease does not begin until the next reporting fiscal year, include the future lease payments for the next five years in Note 8. Do not record an amount due on the financial statements for this new lease in the current reporting fiscal year in the LNSS web application.

Have the web applications been updated to comply with GASB 87 [+]

Implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements

Does GASB 96 (SBITA) apply to internally created software or maintenance agreements? [+]

GASB 96:

  • Applies to temporarily leased software.
  • Does not apply to internally created software.
  • Excludes contracts that solely provide maintenance, support or training for information technology (IT) services.
  • Is very specific and focused on contracts that provide the right to determine the nature and manner of use of the IT software. For example:
    • An agency leasing a backhoe and putting an employee in the backhoe to tear up the parking lot for the three years — yes, this is a SBITA.
    • An agency hires a contractor who uses their own backhoe to tear up the parking lot for three years — no, this is not a SBITA.

How is the life of the asset connected to the subscription term? [+]

GASB 96 specifically covers intent to extend outside of the contract period. This should not be included in the life of the asset. Only the legally covered, contractually bound lease period is considered the life of the asset, regardless of whether the agency pursues renewing the lease at the end of the contract. See Subscription-based IT Arrangements (SBITA) for more information.

Should a subscription liability be remeasured for a change in index or discount rate? [+]

The agency only needs to re-measure the subscription liability if there is a change to the:

  • Subscription term
  • Estimated amounts of payments
  • Interest rate the SBITA charges to the agency
  • Contingencies related to variable payments

A change in the discount or the index rate alone would not require a re-measurement. For further information, see SBITA Modifications and Terminations.

Implementation of GASB Statement No. 94, Public-Public or Public-Private Partnerships (PPP) and Availability Payment Arrangements (APA)

What is the difference between a PPP and a Service Concession Agreement (SCA)? [+]

All SCAs are PPPs, but not all PPPs are SCAs. SCAs are a subset of PPPs that meet the following special criteria:

  • An operator collects and is compensated from third party fees.
  • The agency (transferor):
    • Determines or can modify or approve services provided.
    • Decides to whom the services are provided.
    • Has a significant residual interest in the underlying PPP asset at the end of the arrangement.

Under what scenarios does GASB 94 apply? [+]

GASB 94 applies if the agency (transferor) executes a PPP arrangement that:

  • Is on an existing asset.
  • Results in either a new or improved asset. This PPP meets the definition of an SCA that is purchased or constructed by the operator.
  • Results in either a new or improved asset. However, this PPP does not meet the definition of an SCA that is purchased or constructed by the operator.

What is an Availability Payment Arrangement? [+]

Arrangements in which the agency compensates an operator for services (including designing, constructing, financing, maintaining or operating a non-financial asset) for a period of time in an exchange or exchange-like transaction.

Example: For a design-build-finance-operate a transit system:
  • The corporation collects all fares for the period and remits to the agency.
  • The agency pays fixed payments based on certain milestones.

Petty Cash

Petty Cash Account (APS 010) (FPP A.044) instructs agencies to process warrant cancellations with T-code 632. Why am I receiving a USAS error when using petty cash GL accounts with T-code 632? [+]

T-code 632 does not allow petty cash GL accounts. To process the warrant cancellation entry using T-code 632, contact your financial reporting analyst to temporarily allow the original petty cash GL account on the Trans Code Options Profile (28B) screen for T-code 632. For more information, see Petty Cash.

Pass-Through Activity

What is the proper course of action if an agency determines (during the current reporting fiscal year) that federal realized revenue and/or expense was under/overstated in the prior reported fiscal year? [+]

There are no restatements for federal revenue or SEFA.

  • For direct federal revenue — Reduce the current amount of revenue received and return that amount to the federal government. Record the offset to federal payable.
  • For pass-throughs — Reduce the pass-through amount for the current reporting fiscal year. If there is no activity for either agency for the current reporting fiscal year:
    • The receiving agency must return the revenue to the original sending agency.
    • The sending agency must return the excess to the federal agency or adjust its current reporting fiscal year draws against that Assistance Listing Number (ALN). If the prior reporting fiscal year was understated, include the amount understated in the current reporting fiscal year activity.

Are loan programs that require institutional contributions (such as matching funds) reported within the SEFA federal loans? [+]

Only report federal funds related to the loan program. Do not report the portion of loans that are distributed using institutional contributions. For more information, see Federally Funded Loan Programs.

For student loans, does an agency stop reporting new loans once federal funds have been disbursed?

For example: $200K federal funds are received and the entire amount was disbursed in Year 1; therefore, $200K was reported for new loans. In year 2, interest and payments were made; therefore, another $10K of those funds was loaned.

Are the interest and payments reported in SEFA? How do I differentiate the amount that was loaned with federal repayments and the amount that was loaned with interest? [+]

Earned federal funds not received from the federal government are included as interest income or another appropriate category. Differentiating the amounts loaned with federal repayments from that loaned with interest is something agencies determine and document internally. For more information, see Earned Federal Funds vs. Federal Funds.

Is SEFA Note 7 (Federal Deferred Revenue) optional for universities? [+]

Yes. Universities are exempt from SEFA Note 7. For more information, see Note 7: Federal Deferred Revenue.

If the ALN cannot be identified, is it ok to use a generic ALN? [+]

Generic ALNs are only allowed as a last measure. The agency must exhaust every avenue of communication with the federal agency in an effort to identify the correct ALN. For more information, see SEFA Required Data.

How do I enter nonmonetary donations in the SEFA web application? [+]

On the Notes to SEFA menu, enter nonmonetary donations in Note 1: Non-Monetary Assistance and include a description of the donation as well as the ALN and amount.