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Training Tidbit: Iowa Reversing GAAP

Have you completed the Reverse GAAP Expensing options at the end of fiscal year in the School Accounting System in the past, but now are considering switching from Reverse GAAP Expensing to regular Expensing for this fiscal year end?  If so, below is important information to review while trying to make your decision.

No matter if you Reverse GAAP Expense or regular Expense in the School Accounting System, the CAR will still reflect the exact same information.  The change comes in how your monthly financial statements appear.

For Example:

  • Reverse GAAP Expensing District for Teacher salary expenditure accounts see financial statements the following way:
    • At the end of September, these accounts reflect 3 months of expenses (2 months of salaries at the old rates and 1 month of salary at the new rate).
    • At the end of December, these accounts reflect 6 months of expenses (2 months of salaries at the old rates and 4 months of salaries at the new rate).
    • At the end of June, before Reverse GAAP Expensing, these accounts reflect 12 months of expenses (2 months of salaries at the old rates and 10 month of salary at the new rate).
    • At the end of June, after Reverse GAAP Expensing and running a financial report that includes reverse GAAP entries, the report reflects 12 months of expenses (12 months at the new rate). To get this report, the system takes the actual figures for September through June, subtracts the previous year reversing GAAP (July and August) and adds in the current year reversing GAAP (July and August).
  • Regular Expensing District for Teacher salary expenditure accounts see financial statements the following way:
    • At the end of September, these accounts reflect 1 month of expenses only (1 month at the new rate because the salaries for July and August were expensed in June of the previous fiscal year and carried across on the balance sheet in the contract payable accounts).
    • At the end of December, these accounts reflect 4 months of expenses (4 months of salaries at the new rate).
    • At the end of June, before regular Expensing, these accounts reflect 10 months of expenses (10 months at the new rate).
    • At the end of June, after regular Expensing and running a regular financial report, the report will reflect 12 months of expenses (12 months at the new rate).

If a district chooses to switch this year from Reverse GAAP Expensing to regular Expensing, keep the following in mind:

When printing June financial reports before completing the EOFY Checklist in any module, the reports will include revenues and expenditures for the 12-month period from July through June.  When printing the same reports after completing the EOFY Checklist in any module, the reports will include revenues and expenditures for the 12-month period from July through June, plus the newly expensed entries created while completing the EOFY Checklist.  For example, if you regular expense your July and August payrolls this year (in June) and last year you reverse GAAP expensed the July and August payrolls, then when printing the reports after you expense the payrolls, you will have 14 months worth of expenditures on the reports.  In this same example, when you generate the CAR or any financial report that includes reverse GAAP entries, the amounts will reflect regular entries for July through June with the reversing GAAP entries from last year backed out and the expensed entries for this year added.

If your district does decide to switch this year from Reverse GAAP Expensing to regular Expensing, for this transition year you still need to generate your year-end reports indicating to include reversing GAAP entries (i.e. CAR, Account Inquiry Reports, Activity Fund Balance Reports, etc.).