Governmental Financial Statement Note Disclosures and Analysis of Texas Public Two-Year Colleges’ Reporting

Abstract

Generally Accepted Accounting Principles (GAAP) requires state and local governments, public colleges and universities, and other governmental entities to issue basic financial statements, management’s discussion and analysis, and required supplementary information (GASB 34, 1999a, 6). The notes to the financial statements are an integral part of the basic financial statements and consist of disclosures about the governmental entity. The notes provide qualitative and quantitative information to help financial statement users better understand the numbers on the face of the financial statements. This study investigates Texas two-year college 2014 financial statements to determine the extent of note disclosures and compliance with the Texas Higher Education Coordinating Board (THECB) requirements. The investigation also seeks to determine if a difference in compliance and disclosure exists between the financial statements audited by local, regional, or national accounting firms and finds that types of disclosure and auditor together with size, revenue, enrollment, tuition and state appropriate explain the number of required note disclosures, additional note disclosures and policy disclosures.