ARE TWO SETS OF GAAP REALLY NEEDED FOR COLLEGES AND UNIVERSITIES? As this and the...

ARE TWO SETS OF GAAP REALLY NEEDED FOR COLLEGES AND UNIVERSITIES?

As this and the previous chapter have discussed, public colleges and universities must follow GASB standards. For that reason, these schools have been directed to use the same reporting model that state and local governments follow, although such schools frequently view themselves as consisting solely of business-type activities so that they need only fund-based statements.

Private not-for-profit colleges and universities adhere to FASB Accounting Standards Codification requirements and prepare financial statements as illustrated in this chapter. GAAP for public schools comes from GASB; for private schools, it comes from FASB ASC.

Readers of college and university financial statements may want to compare the data presented by various institutions. The use of this information is especially important to potential donors who are attempting to evaluate each school’s efficiency and effectiveness in utilizing the funding that it receives.

Does the division between the financial reporting appropriate for public colleges and universities and that utilized by private colleges and universities serve these statement users well? Are these two types of schools so different that they require two separate sets of generally accepted accounting principles created by two official bodies? Should one set of GAAP apply to all schools? Should only one group be in charge of developing GAAP for colleges and universities?