Academic journal article Journal of Accountancy

Direct-Method Transition Would Require Prompt Attention: Public Colleges and Universities Encountered Challenges after Making the Switch with GASB Statement 34

Academic journal article Journal of Accountancy

Direct-Method Transition Would Require Prompt Attention: Public Colleges and Universities Encountered Challenges after Making the Switch with GASB Statement 34

Article excerpt

If FASB follows through with its plan to mandate a direct-method cash flow statement for not-for-profit entities, experts say financial statement preparers would be wise to address implementation quickly.

The transition from the indirect method to the direct method is familiar to financial executives at public colleges and universities, which underwent a similar change following the issuance in 1999 of GASB Statement No. 34.

"The implementation year takes a lot of effort," said Cheryl Soper, CPA (inactive), controller and director of financial operations for the University of Michigan. "I recommend any not-for-profits preparing a direct-method statement for the first time not to wait until the last minute. You need to figure out if your systems contain the required attributes in a readily extractable format."

Soper and University of Florida CFO Mike McKee, CPA, said the direct method does provide more information to financial statement users. But they said there is more work involved in preparing cash flow statements on an ongoing basis and that implementation required some work to figure out how to accumulate the appropriate information for each line on the direct-method cash flow statement. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.