An Examination of Differences Between Financial Information Provided in IRS Forms 990 and Audited Financial Statements of U.S. Private Colleges and Universities (Manuscripts‪)‬

ABSTRACT Internal Revenue Service data derived from the information return filed by tax-exempt organizations is more accessible to researchers than ever before. This study examines the reliability of Form 990 data elements as compared to data derived from the audited financial statements of a sample of colleges and universities. Results indicate that balance sheet elements tend to be more reliable than income statement elements and that highly aggregated information such as total liabilities is more reliable than the detailed components such as tax-exempt bonds payable. Systematic differences between generally accepted accounting principles and Internal Revenue Service instructions are one possible source of discrepancies. An examination of the direction of the differences suggests that consolidation issues are another important source of discrepancies.