As data users attempt to compare institutions that cross accounting models, it becomes difficult to put them on the same scale. Some accounting differences cannot be adjusted for, but an understanding of them may help.
From 1987 to 1996, both public and private institutions reported financial information using the same form, now known as the “Common Form” (or “Old Form”), with public institutions continuing to use the Common Form through the early 2000s. In 1997, private institutions began reporting under the Financial Accounting Standards Board (FASB). Public institutions were also affected by changes to the Governmental Accounting Standards Board (GASB), which IPEDS phased in between 2002 and 2004. Most public institutions were using GASB reporting standards in 2002, but some continued to use the Common Form through 2003; all institutions were required to report using GASB standards by 2004. Beginning in 2008, a new “Aligned Form” was phased in for both FASB- and GASB-reporting institutions that improved comparability in reporting, but maintained some differences; the Aligned Form became mandatory for all institutions in 2010. These “Aligned Forms” will be referred to as the GASB for public institutions (F1), FASB for public and private, not-for-profit institutions (F2), and FASB for private, for-profit institutions (F3). Note that while most public institutions report using GASB standards on the F1 forms, there are about 20 or so public institutions that report using FASB standards on the F2 forms. Beginning with the 2014-15 collection cycle, the FASB for for-profit institutions (F3) was revised even further to increase comparability with the other two forms (F1 and F2). The major areas affected by the changes in accounting standards over time are revenues, expenses/ expenditures, and scholarships and fellowships.
For a complete analysis of the differences in the finance forms, consult the Delta Cost Project, which attempts to assuage these differences over time.
On the revenue side, the Common Form either grouped together, or left out altogether, many sources of revenue that are now reported in a disaggregated format on the FASB and GASB forms. The Common Form collected only current unrestricted, restricted and auxiliary funds. It did not include revenues related to endowments, loans, and plant and equipment—such as contributions to endowments, interest from student loans, and capital appropriations—which are all now collected under the FASB and GASB reporting standards. Tuition, fees and auxiliary revenues were reported as a gross amount on the Common Form, but are now reported separately on FASB and GASB with tuition discounts, including scholarships and fellowships, subtracted from the revenues. However, allowances to tuition, fees and auxiliary revenues (such as tuition discounts or scholarships) can be added back to the net amounts to allow comparison with the gross amounts reported on the Common Form. The new GASB format also divides revenues into operating, nonoperating and other revenues, and in several categories (such as state grants and contracts) adding these together will result in a comparable value as reported in FASB and under the Common Form. Finally, investment income is now reported separately under FASB and GASB, and additions to permanent endowments are reported whereas they were excluded on the Common Form. These additions appear as a revenue source in the GASB form (F1), but do not appear separately in the FASB (F2 and F3), where they are included in private gifts, grants and contracts or contributions from affiliated entities, depending on the source.
There are also major differences in the way the Pell Grant is reported as revenue between GASB institutions and FASB institutions. IPEDS instructs institutions following GASB standards to report Pell Grants as federal nonoperating revenue, netted of discounts and allowances applied to tuitions/fees and auxiliary enterprises. Institutions following FASB standards that treat Pell Grants as federal grant revenue will also report it as such. However, for FASB institutions that treat Pell Grants as a passthrough agency transaction, these funds will not be reported as federal grant revenue. A passthrough transaction is essentially a payment on the student's account where the institution is purely processing the Pell Grant (or other student grant aid) and those monies are not counted by the institution until they come in as a tuition or auxiliary enterprise payment from the student. If Pell or other student grants are passthrough transactions, then they are not counted as federal grant revenues and are not considered to be a discount/allowance to tuition and fees or auxiliary enterprises. For a detailed explanation, visit the Scholarships and Grants page.
FASB for not-for-profits (F2) also collects revenues by unrestricted, temporarily restricted, and restricted categories separately, which can provide a finer level of detail than FASB for for-profits (F3).
Beginning with the 2014-15 collection cycle, all institutions report expenses using the matrix that allocates expenditures by both functional and natural classification. Functional expense classification categories include instruction, research, public service, academic support, institutional support, student services, etc. There are slight differences in the functional classification categories found on the GASB (F1), FASB for not-for-profit (F2), and FASB for for-profit (F3), such as the exclusion of independent operations in F3. Scholarships/Fellowships expenses referred to in the GASB form F1 is also called Net Grant Aid to Students in the FASB forms F2 and F3. Natural expense classification categories include salaries and wages, benefits, operation and maintenance of plant, depreciation, interest, and all other.
Historically, not all institutions are required to report functional expense information. Private institutions, following FASB accounting standards, are required by FASB ASC 958-720-45 to report expenses by function on either the face of the statement of activities or in the notes; however, the standards broadly defined program services and supporting activities and did not dictate specific functional classifications (e.g., instruction, research, etc.) to be used. Public institutions, on the other hand, following GASB accounting standards, are not required to report expense by functional classification on their financial statements. However, they do it for IPEDS because it is required, in order to improve comparability of data across public and private institutions in our collection. NACUBO, the National Association of College and University Business Officers, established the industry classifications and definitions for functional expenses for all institutions in IPEDS.
Tracking basic functional expenditures over time may prove difficult, as the survey forms have changed. Though most spending categories remained intact, operation and maintenance of physical plant and equipment and depreciation were both affected by the change in accounting formats. Refer to the Delta Cost Project History Documentation (PDF, 571 KB) for a detailed summary of this difference. In addition, interest on debt was excluded on the Common Form but is now reported in GASB and as a functional expenditure in FASB; it can also be excluded and/or backed out, however, to facilitate comparisons with the Common Form. Depreciation-related expenditures are now included in FASB and GASB with plant and equipment depreciated over expected useful life. Under the Common Form, there was essentially no depreciation recorded for building purchases or construction, and purchases of equipment, vehicles and furniture were recorded as full expenditures in the year they were purchased with no accounting for future depreciation. So while FASB and GASB both calculate the depreciation of assets on debt similarly, it is impossible to crosswalk these expenditures with the Common Form.
Part E of the Common Form displayed student scholarships and fellowships by source. This data is essentially the same on the FASB and GASB Aligned forms, with more detail added. Institutional scholarships are further broken down as funded and unfunded on the FASB forms (F2 and F3) or from restricted or unrestricted resources on the GASB form (F1). The amount of the scholarships applied to tuition and fees is reported, as well as scholarships applied to auxiliary enterprise revenues (such as room and board or bookstore charges). These amounts may be different among FASB schools due to the variance in accounting method for Pell grants. As explained earlier, FASB institutions treating Pell as passthrough agency transactions will not apply the grant amount to discounts and allowances. FASB schools treating Pell as federal grant revenue and GASB reporters, however, will include them as discounts and allowances (if used to pay for tuition and fees or other institutional charges).
Replacement value was required for fixed assets on the Common Form, but is not required on the new forms. Instead, the value of the assets as recorded in the institution's accounting records is required instead. The previously collected data were based on estimates, whereas the new data are audited, and deemed to be more reliable.
New data items were added to the FASB and GASB forms that were not collected on the Common Form include assets, liabilities, and net assets. The section on ''Changes in Net Assets'' (FASB forms) or “Change in Net Position” (GASB form) is another new part. Prior to the 2014-15 collection cycle, balance sheet data (e.g., assets, liabilities, net assets) was collected in limited categories on the FASB for for-profit (F3) forms. However, beginning with that year, F3 forms were expanded to include more detail to enhance comparability. See the list of changes for that collection cycle and other cycles here. The additional data collection items allowed new areas for trend comparisons and peer analysis.
A direct crosswalk cannot be made from the Common Form to the Aligned forms. There also is not a direct crosswalk between the Aligned forms, although comparisons are somewhat easier. The changes in scope and data collected caused some major and some minor obstacles to comparing data before and after the accounting changes for private and public institutions. The changes described above should help to bridge some of the gaps between the types of data collected and aid the reader in understanding where direct comparisons cannot be made.
For more information, contact the IPEDS Finance Survey Director.