Section 1: Introduction to Financial Reporting Using CPB s Integrated Station Information System (ISIS) FY 2008 Reporting Year

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1 Section 1: Introduction to Financial Reporting Using CPB s Integrated Station Information System (ISIS) FY 2008 Reporting Year Introduction These Financial Reporting Guidelines (Guidelines) provide valuable information on completing the financial reports that public broadcasters must file with CPB each year. These documents provide the basis on which CPB awards grants. Specifically, the non-federal financial support (NFFS) reported by grantees in their Annual Financial Reports (AFRs) is used to: calculate grants certify total NFFS system-wide to the U.S. Treasury in order to fulfill one of the key legal requirements for CPB's annual appropriation, and provide a basis for regional and national public broadcasting organizations to calculate the dues of their member stations. There are several acronyms used throughout these Guidelines. They are: AFR Annual Financial Report AFS Audited Financial Statement CPB Corporation for Public Broadcasting CSG Community Service Grant FSR Annual Financial Summary Report NFFS Non-Federal Financial Support ISIS Integrated Station Information System AFRs and FSRs must be filed within the period specified in the Guidelines (see 00H0HSection 4). Equally important, stations must exercise great care to ensure that these reports are prepared accurately, in compliance with CPB policies and NFFS reporting criteria. We recognize that accurate, timely preparation of these reports requires a substantial commitment of time and resources, and we appreciate your efforts in this regard. The Guidelines present the statutory definition of NFFS and additional rules concerning the exclusion of certain revenues and support from grantees reported NFFS. They also describe policies and procedures governing the review and audit of grantees financial reporting by independent accountants. Beginning with the FY 2006 AFR reporting process, you used CPB s new online Integrated Station Information System (ISIS). We hope you found that ISIS provided much improved functionality as you completed the AFR or FSR Schedules and navigated your way through all the steps necessary to complete and submit your reports. Please take time to read all the ISIS Help files so that you have a keen sense of ISIS features and reporting requirements. 1

2 CPB staff will conduct a desk review of each AFR and AFS, the purpose of which is to ensure that the reports are accurate so that station grants are allocated fairly and equitably among all grantees. Contact us at 1H1H1H1HISIS@cpb.org with all inquiries. Thank you for your attentiveness and we hope ISIS will make filing your AFR or FSR a smooth experience. Highlights of Reporting Changes Using ISIS With the introduction of ISIS for the FY 2006 reporting year CPB implemented some significant changes to how you reported certain data when completing the AFR. These changes either eliminated or significantly reduced some common reporting errors of years past and eliminated most reconciling items from Schedule F. Since this is the second year using ISIS we thought it would be helpful to once again highlight these changes for you. Schedule A Direct Revenue Line 2.B was formerly used to report revenues from the Annenberg/CPB Project, which ceased operations on December 31, Beginning in FY 2006 this line is used to report revenue from CPB Digital Project Grants. Line 13, which is used to report net auction revenue, was subdivided into two data entry lines: 13.A report gross auction revenue on this line* 13.B report direct auction expenses on this line* Net auction revenue (line 13.A less line 13.B) will display as read-only on line 13. Very important: In the unlikely event that line 13.B is greater than line 13.A resulting in negative net auction revenue, ISIS will display a zero value on line 13. Line 13.A will be used to calculate total direct revenues on line 21. The lesser of lines 13.A or 13.B will be forwarded to line 26.A and included in the total for line 26, which will be subtracted from line 21 to arrive at total direct NFFS on line 27. See Line 26 highlights. *Special Note: For most grantees this will eliminate the direct expenses reconciling item for Schedule F (i.e. in the financial statements revenues and expenses each are reported gross). However, for those grantees who already report revenues net of direct expenses in the financial statements, you should report the net revenue on line 13.A (exactly as it appears in the financial statements) and report zero on line 13.B. If you do this, the financial statements must be clear about this fact. For example, assume that gross revenue is $50K and direct expenses are $10K resulting in net revenue of $40K. You may report $40K on line 13.A and zero on line 13.B if the financial statements show revenue of $40K and the line item description is (illustrated 2

3 for comparative financial statement presentation) Auction revenue, net of direct expenses of $10,000 and $XX,XXX in 2007 and 2006, respectively. Line 14, which is used to report net revenue from special fundraising activities, has been subdivided into two data entry lines: 14.A report gross special fundraising revenues on this line* 14.B report direct special fundraising expenses on this line* Net special fundraising revenue (line 14.A less line 14.B) will display as read-only on line 14. Very important: In the unlikely event that line 14.B is greater than line 14.A resulting in negative net special fundraising revenue,isis will display a zero value on line 14. Line 14.A will be used to calculate total direct revenues on line 21. The lesser of lines 14.A or 14.B will be forwarded to line 26.B and included in the total for line 26, which will be subtracted from line 21 to arrive at total direct NFFS on line 27. See Line 26 highlights. *Special Note: For most grantees this will eliminate the direct expenses reconciling item for Schedule F (i.e. in the financial statements revenues and expenses each are reported gross). However, for those grantees who already report revenues net of direct expenses in the financial statements, you should report the net revenue on line 14.A (exactly as it appears in the financial statements) and report zero on line 14.B. If you do this, the financial statements must be clear about this fact. For example, assume that gross revenue is $50K and direct expenses are $10K resulting in net revenue of $40K. You may report $40K on line 14.A and zero on line 14.B if the financial statements show revenue of $40K and the line item description is (illustrated for comparative financial statement presentation) Special events revenue, net of direct expenses of $10,000 and $XX,XXX in 2007 and 2006, respectively. Lines 16.B and 16.C, which are used to report realized and unrealized gains and losses on investments and actuarial gains/losses on charitable trusts and gift annuities WILL NO LONGER REQUIRE that you include gains and losses on endowment funds. Information on endowment funds will be discretely captured as subsets to line 17. Lines 16.A, B and C, are used to report gains from sales of property and equipment, gains and losses on investments (other than endowment funds) and charitable trusts and gift annuities. Since these revenues do not qualify as NFFS, they will be treated as automatic exclusions on lines 26.C, D and E and the total for line 26 will be subtracted from line 21 to arrive at total direct NFFS on line 27. See Line 26 highlights. Line 17, which is used to report endowment revenue was subdivided into three data entry lines and expanded to include gains and losses from investment activities: 17.A report contributions to endowment principal on this line 3

4 17.B report interest and dividends on this line 17.C report realized and unrealized net investment gains and losses on endowment funds on this line. Total revenue from endowment activities (the sum of lines 17.A, 17.B and 17.C) will display as readonly on line 17. Since the revenue reported on line 17.C does not qualify as NFFS, it automatically will be forwarded to line 26.F and included in the total for line 26, which will be subtracted from line 21 to arrive at total direct NFFS on line 27. See Line 26 highlights. Line 18.A is used to report capital contributions for facilities and equipment from sources other than the federal government and public broadcasting entities. The line item text was changed to read Facilities and equipment (except funds received from federal or public broadcasting sources). This is a text change only, the purpose of which is to clarify that revenues received from federal and public broadcasting sources for capital acquisition purposes must be reported on lines 1 and 2, respectively. Line 19 is used to report gifts and bequests from major individual donors. Report on this line large gifts and bequests (equal to or greater than $1,000) from major individual donors (estates, trusts, etc.). The $1,000 threshold is for cumulative gifts received from any one donor during the reporting year. For example, if Donor A gives two $500 gifts in the same fiscal year it meets the $1,000 threshold and should be reported on line 19. For eligible gifts and bequests, use this line rather than lines 10, 11, or 17 but use line 18 rather than this line when the gift meets the definition of line 18. Line 19a is used to report the total number of individual donors that contributed to the value reported on line 19, Gifts and bequests from major individual donors. Enter the number of unduplicated contributors providing the revenue reported on line 19. This line must be completed if revenue is reported on line 19. For example, if a single donor gives two $500 gifts in the same fiscal year the donor count for line 19a is 1. Line 26 is used to capture Other automatic subtractions from total revenue. These are revenues that do not qualify as NFFS but are included in total revenues on line 21. See the highlights for lines 13, 14, 16 (A, B and C) and 17. This functionality simplifies the treatment of revenues that do not qualify as NFFS. The table below illustrates the line 26 components as you will see them in ISIS. 26. Other automatic subtractions from total revenue 26.A. Auction expenses limited to the lesser of lines 13a or 13b 26.B. Special fundraising event expenses limited to the lesser of lines 14a or 14b 26.C. Gains from sales of property and equipment line 16a 26.D. Realized gains/losses on investments (other than endowment funds) line E. Unrealized investment and actuarial gains/losses (other than endowment funds) line 16c 26.F. Realized and unrealized net investment gains/losses on endowment funds line 17c 4

5 Schedule C - In-Kind Contributions of Services and Other Assets Lines 1, 2, 3 and 4 capture in-kind contributions that are NFFS eligible. Line 4, which is the total of lines 1 through 3, emphasizes this fact Total in-kind Contributions - services and other assets eligible as NFFS (sum of lines 1 through 3). Line 5 is used to report IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS. You will enter values on one or more sub-lines of line 5 that provide a checklist of the typical in-kind contributions that do not qualify as matchable NFFS for grant calculation purposes. See illustration below Line 6 highlights. Line 6 is the sum of lines 4 and 5 and represents Total in-kind contributions - services and other assets (line 4 plus line 5) and will forward to Schedule F for reconciliation with the financial statements. VERY IMPORTANT this line, together with its Schedule D counterpart, must agree with the in-kind contributions reported in the audited financial statements. The following table illustrates the line item reporting requirements for lines 5 and 6: 5. IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS A. Compact discs, records, tapes and cassettes B. Exchange transactions C. Federal or public broadcasting sources D. Fundraising related activities E. ITV or educational radio outside the allowable scope of approved activities F. Local productions G. Program supplements H. Programs that are nationally distributed I. Promotional items J. Regional organization allocations of program services K. State PB agency allocations other than those allowed on line 3(b) L. Services that would not need to be purchased if not donated M. Other Total In-kind contributions - services and other assets ineligible for NFFS 6. Total in-kind contributions - services and other assets (line 4 plus line 5) 5

6 Schedule D In-Kind Contributions of Property and Equipment Lines 1 through 6 capture in-kind contributions that are NFFS eligible. Line 6, which is the total of lines 1 through 5 emphasizes this fact Total in-kind Contributions property and equipment eligible as NFFS (sum of lines 1 through 5). Line 7 is used to report IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS. You will enter values on one or more sub-lines of line 7 that provide a checklist of the typical in-kind contributions that do not qualify as matchable NFFS for grant calculation purposes. See illustration below Line 8 highlights. Line 8 is the sum of lines 6 and 7 and represents Total in-kind contributions property and equipment (line 6 plus line 7) and will forward to Schedule F for reconciliation with the financial statements. VERY IMPORTANT this line, together with its Schedule C counterpart, must agree with the in-kind contributions reported in the audited financial statements. The following table illustrates the line item reporting requirements for lines 7 and 8: 7. IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS A. Exchange transactions B. Federal or public broadcasting sources C. TV only property and equipment that includes new facilities (land and structures), expansion of existing facilities and acquisition of new equipment D. Other Total In-kind contributions - property and equipment ineligible as NFFS 8. Total in-kind contributions - property and equipment (line 6 plus line 7) 6