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Preparing US GAAP financials, either for the first time or just the first time in a few years, can seem daunting to most, after all, it’s not something that comes naturally to us Brits.
Having years of experience working with UK universities and US GAAP, James Thurkettle shares the key points to consider.
Whilst there are many key technical differences between UK and US GAAP standards, the most important starting place for any university is to first conclude on whether or not the student loan thresholds set by the US Department of Education have been breached, and if so, to what extent. As a reminder, these student loan thresholds are stated below.
| Total Loan funds | Home Country GAAP (UK) | U.S. GAAP & U.S. Government Auditing Standards |
| More than $10,000,000 | Required annually, in English | Required annually, in English |
| $3,000,000 to $9,999,999 | Required annually, in English | Required annually, in English, may omit for 2 consecutive years after submission of US GAAP & GAGAS audit |
| $500,000 to $2,999,999 | Required annually, in English | Not required |
Reviewing your time and resources
Once the breach position has been clarified, it’s time to switch your focus to the operational side with a plan of action and a list of deliverables. A comprehensive plan of action needs to consider a few fundamental points:
- Time to prepare relevant information and working papers
- Timing of signed UK GAAP financial statements
- Timing of the audit of the US GAAP financial statements
- Deadlines – The filing deadline for most UK universities will be 1st Feb (6 months and a day following the financial year-end).
Of the above listed points, when it comes to reviewing the resources and time required internally, one of them sticks out like a sore thumb, being the preparation of relevant information and working papers.
In our experience, there are many areas of significant divergence between UK and US GAAP that require not only detailed supporting documents to support current year balances, but also supporting documents that sometimes go back a number of years that are required to “unpick” historical treatment for the areas that are not aligned.
A good example of this would be the revaluation of fixed assets. Many UK universities took the opportunity to revalue fixed assets on adoption of the FRS 102 standards (approximately 10 years ago now!) and have subsequently depreciated said assets on an inflated, revalued cost basis. In this scenario, not only are the original revaluation journals relevant, but unpicking the subsequent depreciation treatment often means reviewing fixed asset registers over multiple years.
Whilst planning for US GAAP reporting may seem complicated and daunting, our team at Scrutton Bland are on hand to do the heavy lifting and offer our expert guidance throughout the process. Get in touch with James by calling 0330 059 6559 or email hello@scruttonbland.co.uk
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