DOCUMENT RESUME ED 400 897 JC 960 667 TITLE Annual ... · DOCUMENT RESUME ED 400 897 JC 960 667...

DOCUMENT RESUME

ED 400 897 JC 960 667

TITLE Annual Financial Reporting Requirements for TexasPublic Community Colleges, Fiscal Year 1996.

INSTITUTION Texas State Higher Education Coordinating Board,Austin. Div. of Research, Planning, and Finance.

PUB DATE 96NOTE 85p.PUB TYPE Guides Non-Classroom Use (055)

Legal /Legislative /Regulatory Materials (090)

EDRS PRICE MF01/PC04 Plus Postage.DESCRIPTORS Annual Reports; Community Colleges; Compliance

(Legal); *Educational Finance; Expenditures;Financial Audits; *Financial Policy; Guidelines;*School Accounting; School District Spending; TwoYear Colleges

IDENTIFIERS Texas

ABSTRACTThis manual provides a comprehensive set of

definitions, rules, formats, and illustrations for use by publiccommunity and junior colleges in Texas to ensure consistent anduniform financial reporting. Chapter 1 provides an introduction tothe manual, highlighting changes in requirements for Fiscal Year (FY)1996. Chapter 2 presents general requirements for financial reportsrelated to report content, while chapter 3 provides definitions ofitems to be used in the balance sheet, focusing on terms associatedwith assets, liabilities, and fund balances. Chapter 4 focuses on thestatement of changes in fund balances, or reports of changes infinancial position reflecting the results of all increases,decreases, and transfers affecting individual fund groups from thebeginning to the end of the reporting period. Chapter 5 examines thestatement of current funds revenues and expenditures, including asample table for reporting revenues, while chapter 6 describesrequirements for preparing a statement of educational and generalexpenditures summarized by elements of institutional costs. Chapter 7discusses specific procedures for preparing the annual financialreport, highlighting issues related to bonds, staff benefits,equipment, and investments and including a list of required reportsand schedules. Chapter 8 describes the preparation of a schedule offederal financial assistance, while chapter 9 provides samplenarratives to accompany the financial statements. Finally, chapter 10provides sample forms, exhibits, schedules, and statements. (TGI)

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Annual Financial ReportingRequirements for

Texas Puh lie Community CollegesFiscal Year 1996

Division of Research, Planning and FinanceTexas Higher Education Coordinating Board

U.S. DEPARTMENT OF EDUCATION

Office of Educational Research and Improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

This document has been reproduced aseceived from the person or organization

onpmating .1.Minor changes have been made to improve

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t Points of view or opinionsStated in this docu-

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"PERMISSION TO REPRODUCE THIS

MATERIAL HAS BEEN GRANTED BY

J.H. Friese

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INFORMATION CENTER (ERIC)."

Texas Higher Education Coordinating Board

Leonard Rauch (Chairman) HoustonWilliam C. Atkinson BryanDolores Hutto Carruth, M.D. IrvingJoaquin G. Cigarroa, Jr., M.D. LaredoRobert I. Fernandez Fort WorthRene Haas Corpus ChristiJuan Hinojosa McAllenJodie L. Jiles HoustonJoseph R. Krier San AntonioSteve Late OdessaWendy Marsh AmarilloJanie S. McGarr DallasAndrew Melontree TylerMartha Miller TexarkanaTom C. Nichols LubbockRay E. Santos, M.D. LubbockCarlos Villa El PasoPamela P. Willeford Austin

Coordinating Board Mission

The mission of the Texas Higher Education Coordinating Board is to provide theLegislature advice and comprehensive planning capability for higher education, tocoordinate the effective delivery of higher education, to efficiently administer assignedstatewide programs, and to advance higher education for the people of Texas.

Coordinating Board Philosophy

The Texas Higher Education Coordinating Board will promote access to qualityhigher education across the state with the conviction that access without quality ismediocrity and that quality without access is unacceptable. The Board will be open,ethical, responsive, and committed to public service. The Board will approach its workwith a sense of purpose and responsibility to the people of Texas and is committed tothe best use of public monies.

Annual Financial Reporting Requirements

Texas Public Community and Junior Colleges

Fiscal Year 1996

TABLE OF CONTENTS

CHAPTER 1 Introduction and Highlights

CHAPTER 2 Report Content

CHAPTER 3 Balance Sheet

CHAPTER 4 Statement of Changes in Fund Balances

CHAPTER 5 Statement of Current Funds Revenues, Expenditures and OtherChanges

CHAPTER 6 Statement of Unrestricted Current FundsEducational and General Expenditures SummarizedBy Elements of Institutional Costs

CHAPTER 7 Specific Procedures for PreparingThe Annual Financial Report

CHAPTER 8 Schedule of Federal Financial Assistance

CHAPTER 9 Notes to the Financial Statements

CHAPTER 10 Statements and Schedules

ADDRESSES

The following addresses are to be used when mailing or delivering the college's AnnualFinancial Report by January 1 of each year.

Mailing Address

Texas Higher EducationCoordinating BoardFinancial PlanningP. 0. Box 12788Austin, Texas 78711

Street Address

Coordinating Board7745 Chevy Chase Drive, Bldg.. VFinancial Planning, Room 230Austin, Texas 78752

(Enclose three copies)

Office of the ComptrollerFund Accounting DivisionFinancial Reporting SectionP.O. Box 13528Austin, Texas 78711

Office of the ComptrollerLBJ State Office Building111 E. 17th StreetRoom 901Austin, Texas 78774

Enclose two co tes

Mr. Lawrence AlwinState Auditor's OfficeP. 0. Box 12067Austin, Texas 78711

State Auditor's OfficeTwo Commodore Plaza206 E. Ninth StreetAustin, Texas 78701

(Enclose three copies)

Governor's Budget & Planning OfficeOffice of the GovernorP. O. Box 12428Austin, Texas 78711

Governor's OfficeSam Houston Building201 E. 14th StreetAustin, Texas 78701

(Enclose one copy)

Legislative Budget BoardP. 0. Box 12666, Capitol StationAustin, Texas 78711

Legislative Budget BoardJohn H. Reagan Building105 W. 15th Street, Room 304Austin, Texas 78701

(Enclose one copy)

Office of the TreasurerP. 0. Box 12608Capitol StationAustin, Texas 78711

Office of the TreasurerLBJ State Office Building111 E. 17th StreetAustin, Texas 78774

(Enclose one copy)

House Appropriations CommitteeP. 0. Box 2910, Capitol StationAustin, Texas 78769

House Appropriations Committee200 John H. Reagan BuildingAustin, Texas 78701

(Enclose one copy)

Senate Finance CommitteeP. 0. Box 12068, Capitol StationAustin, Texas 78711

Senate Finance Committee915 Sam Houston BuildingAustin, Texas 78701

(Enclose one copy)

Legislative Reference LibraryP. 0. Box 12488, Capitol StationAustin, Texas 78711

Legislative Reference Library207-B Capitol BuildingAustin, Texas 78701

(Enclose one copy)

Federal Audit ClearinghouseBureau of the CensusP.O. Box 5000Jeffersonville, IN 47199-5000

(Enclose two copies)

6

m

CHAPTER 1

INTRODUCTION AND

HIGHLIGHTS

CHAPTER 1

INTRODUCTION AND HIGHLIGHTS

A. Introduction

1. This manual provides a comprehensive set ofdefinitions, rules, formats and illustrations forpublic community and junior colleges in Texasto use for consistent and uniform reporting.This manual is in substantial conformity withthe American Institute of Certified PublicAccounts (AICPA) Industry Audit Guide, Auditof Colleges and Universities, as amended byAICPA Statement of Position (SOP) 74-8,Financial Accounting and Reporting byColleges and Universities, and as modified byapplicable Financial Accounting StandardsBoard (FASB) pronouncements issued throughNovember 30, 1989, and as modified by allapplicable Governmental AccountingStandards Board (GASB) pronouncementscited in Codification Section Co5, "Collegesand Universities." it is intended that eachpublic community and junior college adopt theAICPA model for use in preparing their annualfinancial reports. If discrepancies existbetween the AICPA Audit Guide and thisAnnual Financial Reporting RequirementsManual, the audit guide would prevail.

B.It should also be noted that colleges should notchange their accounting and reporting fordepreciation of capital assets as a result ofFASB 93. However, colleges and universitiesare not precluded from depreciating their C.capital assets under an option permitted by theAICPA audit guide (GASB Statement No. 8).This option permits reporting a depreciationallowance for capital assets on the balancesheet and a provision for depreciation on thestatement of changes in the balance of theinvestment in plant subsection of the plant fundgroups, in accordance with Audits of Collegesand Universities.

The concepts and formats attempt to complywith Generally Accepted Accounting Principles(GAAP), which include pronouncements of theGASB and FASB where applicable. Anydeviation from the reporting requirementsspecified in this manual or GAAP because ofinstitutional policy should be minimal and notmislead an informed reader. Chapter Nine,Notes to the Financial Statement, includesexamples that may need to be modified to fit

each particular institution's actualcircumstances. If a footnote is clearly notapplicable, a negative assurance footnote isnot required.

2. Deviations from the concepts and/or formatspresented in this manual should be approvedby the Texas Higher Education CoordinatingBoard prior to the submission of the annualfinancial report. Deviations should bedisclosed in the Notes to the FinancialStatements.

3. These requirements have been reviewed andapproved for use by the State Auditors Office.Questions may be directed to the StateAuditor's Office (512) 479-4700 or theCoordinating Board staff at (512) 483-6130.

Windows version of Lotus 123 worksheets filesof the exhibits and schedules are available bye-mail or calling the Research, Planning &Finance Division.

The institution's audited financial statements(in quantity indicated) should be forwarded toeach agency listed on pages ii and iii of thismanual by January 1st each year.

Changes For FY 96

1. Definition of Auxiliary Enterprises has beenclarified in recognition of state expectations ofAuxiliaries. (Chapt 2, E and Chapt 5, B.2.)

2. Reporting of the proportionality retirementexpenditures and the differential of theOptional Retirement Plan (ORP). (Chapt 5,A.1., Chapt 6, Schedules C-1 and C-3)

3. Updated the Report Guidelines in Footnote 2 toclarify applicability of FASB and GASBpronouncements. (Chapt 9)

4. Recognizing the new Public Funds InvestmentAct of 1995 in Footnote 3. (Chapt 9)

5. Fund Group Definitions were moved fromChapter 3 to Chapter 2.

Revised as of April 30, 1996

Chapter 1 - Introduction and Highlights Page 2

6. Schedule A-1 and A-2 were combined into oneschedule. (Chapt 10)

7. Various paragraphs in Chapter 7 were movedand combined with the applicable topic inChapters 3, 4, and 5 to consolidate commentsin one, place.

8. Federal loan programs to students are not tobe included in Schedule D-3. (Chapt 8 and 10)

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CHAPTER 2

REPORT CONTENT

CHAPTER 2

REPORT REQUIREMENTS

A. Report Due Date The audited annual financialreport as described below is due by January 1 ofeach year.

B. Report Content Each published auditedfinancial report must include the items listed below.Examples are included in Chapter 10, Statementsand Schedules:

Name and Terms of the Board ofTrustees/Regents

Officers of the College

Independent Auditor's Opinion on the GeneralPurpose Statements

Balance Sheet

Statement of Changes in Fund Balances

Statement of Current Funds Revenues,Expenditures and Other Changes

Notes to Financial Statements

Supplementary Schedules listed in paragraphF. of this chapter.

Single Audit Reports Required by OMBCircular A-128:

Compliance ReportBased on an Audit ofGeneral-Purpose or Basic FinancialStatements Performed in Accordance withGovernment Auditing Standards

Report on the Internal Control StructureBased on an Audit of the General-PurposeFinancial Statements Performed inAccordance with Government AuditingStandards

Report on Internal Control Structure Usedin Administering Federal FinancialAssistance Programs

Single Audit Report on Compliance Withthe General Requirements Applicable toFederal Financial Assistance Programs

Single Audit Opinion on Compliance With

C.

D.

E.

Specific Requirements Applicable to MajorFederal Financial Assistance Programs

Single Audit Report on Compliance withRequirements Applicable to Non-majorFederal Financial Assistance ProgramTransactions

Report on Fraud, Abuse, or Illegal Acts(Only when observed)

Schedule of Findings and QuestionedCosts

The items should be arranged in the order listedabove.

Comparative Statements Current year totalsand prior year totals should be included in thepresentation of Exhibits A, B, and C. See Chapter10, Statements and Schedules.

Rounding The dollar amounts on the primaryfinancial statements and the federal assistanceschedule should be rounded to the nearest dollar.

Supplemental schedules may be rounded to thenearest dollar at the option of the institution.

Fund Group Definitions Standardization of fundgroup definitions allows uniform reporting of fundgroups by all public community and junior collegesin Texas.

1. Current Funds funds expendable for currentoperating purposes.

a. Unrestricted Current Funds resourceswith no limitations or stipulations placed onthem by external agencies or donors.These funds are used for carrying out theprimary educational, research, extension,administration, and regulatory roles of theinstitution. Unrestricted current funds arereported in one additional category.

1) Auxiliary Enterprises Fundsactivities providing a service tostudents, faculty, or staff for a feedirectly related to, although not

Revised as ot April 30, 1996

Chapter 2 - Report Content Page 2

necessarily equal to, the cost of theservice, e.g., bookstores, dormitories,dining halls, and intercollegiateathletics.

The state of Texas expects auxiliaryenterprises to be self-supporting.

b. Restricted Current Funds operatingfunds carrying external restrictions on theiruse.

2. Loan Funds funds available for loans tostudents, faculty and staff.

3. Endowment and Similar Funds includesthese funds:

a. Endowment Funds funds for which adonor or other external agency hasstipulated as a condition of a gift that theprincipal is to be maintained inviolate andin perpetuity, and that only the incomefrom the investments of the funds may beexpended.

b. Term Endowment Funds funds similarto endowment funds, except that all or partof the principal may be used after a statedperiod of time or upon the occurrence of acertain event.

c. Funds Functioning as Endowmentfunds that the governing board of theinstitution, rather than a donor or otherexternal agency, has determined are to beretained and invested with only the incomefrom the investments of the funds beingexpended. However, the principal as wellas the income may be entirely used at thediscretion of the governing board, subjectto any donor-imposed restrictions on use.

4. Annuity and Life Income Funds includesthese funds:

a. Annuity Funds funds donated to aninstitution on condition that the institutionpay a stipulated amount to the donor ordesignated individuals for a specified timeor until the time of death of the annuitant.

b. Life Income Funds similar to AnnuityFunds, except that the institution isrequired to pay to the donor or designated

individuals only the income earned by theassets of the funds after deduction ofappropriate management expenses.

5. Plant Funds includes these funds:

a. Unexpended Plant Fund funds for theconstruction, rehabilitation, and acquisitionof long-lived properties for institutionalpurposes.

b. Renewals and Replacements funds forthe renewal and replacement of plant fundassets, but not additions andimprovements to plant.

In some instances, there is a fine line ofdistinction between a renewal orreplacement and an improvement.Improvements are expenditures thatextend the useful life of an asset orimprove its performance or increase theasset value over that of the original.Renewals, in contrast, do not extend theasset's useful life. Like repairs andmaintenance, renewals maintain theservice level anticipated from the asset.

In general, an improvement constitutes theremoval of a major part or component of abuilding or piece of equipment and thesubstitution of a different part orcomponent with improved or superioroperating capabilities. A renewal orreplacement, on the other hand, involvesthe removal of a major part or componentof a building or piece of equipment and thesubstitution of a different part orcomponent of essentially the same typeand with the same performancecapabilities as what was removed.

c. Retirement of Indebtedness funds tomeet debt services charges and theretirement of indebtedness incurred toacquire long-lived properties.

d. Investment in Plant the total carryingvalue of all plant properties and facilitiesexcept those real properties that are theinvestment of endowment funds.

S. Agency Funds funds held by the institutionas custodian or fiscal agent for others, e.g.,student organizations, individual students, or

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Chapter 2 - Report Content

faculty members.

F. Supplementary Schedules The information andfinancial statements required above include theschedules listed below. These schedules shouldbe included in the published audited financial reportafter the Notes to the Financial Statement.Examples of these schedules are included inChapter 10, Statements and Schedules.

(A-1) Schedule of Cash, Cash Equivalents andInvestments

(C-1) Schedule of Current Funds Revenues(This schedule should include all currentfund groups and tie to Exhibit C)

(C-2) Schedule of Current Funds Expendituresby Object Classification

(C-3) Schedule of Unrestricted Current FundsEducational and General ExpendituresSummarized by Elements of InstitutionalCosts

(C-4) Statement of Changes in TaxesReceivable

(D-1) Schedule of Bonds Payable and DebtService Requirements

(D-2) Schedule of Pledged Revenues and FundBalances for Revenue Bonds

(D-3) Schedule of Federal Financial Assistance-preceded by the auditor's Report onSupplementary Schedule of FederalFinancial Assistance

If an institution does not use some of the primarysupporting schedules listed here, it should includethe disclaimer "Schedule not used" and continuewith the numbering scheme.

Additional schedules may be included in thepublished financial report as required for internalmanagement needs. Supplemental schedulesshould not be numbered in a way that wouldconfuse them with the numbering scheme providedhere.

Page 3

Revised as a April 30, 1996

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CHAPTER 3

BALANCE SHEET

14

CHAPTER 3

BALANCE SHEET

A. Assets

1. Cash and Cash Equivalents--includes cashon hand, cash in banks (demand deposits,time deposits, and certificates of deposit),treasury bills, and treasury notes with originalmaturities of less than 90 days.

a. Cash on Hand any cash on hand at theend of the fiscal year.

b. Cash in Bank total amount of cash inlocal bank accounts. Note: this shouldreflect only cash in demand accounts.

c. Cash Equivalents any short term,highly liquid investments that are readilyconvertible to known amounts of cash andare so near their maturity that they presentinsignificant risk of changes in valuebecause of changes in interest rates.

2. Short-Term Investments investments withmaturities of less than one year based on theoriginal date of purchase, or other investmentswith longer maturity dates, if the entity plans tosell the investment during the next fiscal year.Investments in TEXPOOL would usually bereported as a short-term investment.

3. Accounts Receivable includes only the netamount of accounts receivable. Allowancesfor doubtful accounts should be disclosedparenthetically as follows: AccountsReceivable, (net of $XXX allowance fordoubtful account at August 31, 19XX).Additional details desired are to be handled ina footnote.

The calculation of the allowance for doubtfulaccounts should be on a reasonable, realisticand supported basis. The remaining balancemay be reflected as a reserve for accountsreceivable (or non-liquid assets if combinedwith other non-monetary assets).

4. Taxes Receivable includes the net amountof current and delinquent taxes receivable.Allowances for doubtful accounts should bedisclosed parenthetically as follows: TaxesReceivable, (net of $XXX allowance fordoubtful account at August 31, 19XX).

5. Due From Other Funds accounts peculiarto institutional organizations using fundaccounting. Each fund group must exist incomplete independence of other fund groups.Each fund section is balanced in itself. A "duefrom" account must have a contra "due to"account in the other fund involved. The "duefrom" account would appear as an asset in thefund group loaning the funds. "Due from otherfunds" should be short-term only.

6. Investments assets held by an institution toproduce revenues. Assets include land orother real property, market investments,business enterprises, etc. Common marketinvestments are corporate bonds and commonor preferred stock.

These assets should be considered long-terminvestments by definition and should not beconfused with the investment of a temporarycash surplus. Management intent should alsobe a factor in determining whether aninvestment should be classified as long term.

7. Accrued Interest Receivable interest thathas been earned but not collected. Interest onnotes, time deposits, etc., that is outstanding atthe end of an accounting period should becalculated, recorded, and reported in thefinancial statements.

8. Prepaid Expenses expenses that are assetswhen paid because they were incurred forfuture accounting periods and will beconsumed in a relatively short period of time.All inventory items should be excluded fromthis category and disclosed as a separate lineitem under the proper heading for the type ofinventories. Examples are insurance, rent,postage, etc., that are paid in advance and areapplicable to future accounting periods.

9. Deferred Charges long term prepaymentsof expenses subject to amortization. Examplesare the cost of issuing bonds and certainpension costs.

10. Federal Receivables funds expended orservices performed for which federal contractand/or grant funds have not yet been collectedduring the current fiscal year are to be reportedas Federal Receivables. Funds expended


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Chapter 3 - Balance Sheet Page 2

and/or services performed for which non-federal contract and grant funds have not beencollected should be reported as AccountsReceivable.

Grant awards not yet funded and for which theinstitution has not yet performed servicesshould not be considered as assets to beaccounted for in the financial statements. Thetotal amount of such uncollected grant awardsat the balance sheet date is disclosed in theNotes to Financial Statements.

11. Deposits funds used to establish an accountto be used regularly. Examples are: utilitydeposits or funds placed with the federalgovernment to participate in a loan program.

12. Notes Receivable written contractualagreements containing an unconditionalpromise to pay a certain sum of money underterms specified in the note.

13. Bond Proceeds Receivable the net amountof funds to be received from the sale andissuance of interest bearing certificates to thegeneral public. The sale must occur beforethe end of the accounting period, with thefunds not being received until the followingaccounting period.

a. Bond proceeds receivable should bedisclosed as a separate line item on thebalance sheet.

b. Notes and Loans receivable should alsobe separately disclosed as a line item onthe balance sheet and not included withbond proceeds.

14. Inventories

a. Goods for Resale finished goodspurchased by an entity for sale to anotherentity at an increased price. The total costof goods for resale on hand as of areporting date should be the amountreported as Goods for Resale Inventories.

b. Consumable Supplies goods and/oritems purchased for daily operations (i.e.,office supplies) and not for resale. Thisshould be a line item disclosure and tied tothe reserve amount in the analysis of fundbalance for Unrestricted Current Funds.

The method used in costing the inventorymust be explained in detail in the footnotesto the Financial Statement.

15. Land real property acquired by purchase orgift to be used in the operations of theinstitution. Land is characterized by anunlimited life. The value of land purchasedincludes the amount paid, any costs involvingthe purchase, such as legal fees and recordingfees, and any costs in the preparation of theland for its intended use, such as grading andclearing. The value of land acquired by gift isthe fair market value at the time of the gift.

16. Buildings the cost of permanent structuresused in the operations of the institution. Thisincludes any permanently attached fixtures ormachinery which cannot be removed withoutimpairing the use of the building.

17. Improvements Other Than Buildings allimprovements to land other than buildings.This category includes streets, roads, bridges,pavements, landscaping, and utility distributionsystems. The valuation method is the same asfor buildings.

18. Equipment permanent, movable property.Except for library books, museums and artcollections, and livestock, which are accountedfor separately, equipment includes all personalproperty having all of these characteristics: (1)an acquisition value in excess of a specificminimum (dollar amount) for each unit (It isrecommended that the equipment have auseful life of two or more years and anacquisition cost of $500 or more per unit. Thisdefinition is consistent with federal requirementoutlined in Circular A-21.), (2) an expecteduseful life in excess of a specific minimumperiod, and (3) an identity which is not alteredmaterially through use.

19. Library Books all library books, boundperiodicals, microfilm, and other library itemsare included, regardless of the source of fundsused in acquiring them. Library acquisitionsare valued at cost or other reasonable basis;deletions are valued at annually-adjustedaverage cost. The general library shouldmaintain records of all books and other libraryitems. These records will suffice as detailedinventory records and should not be duplicatedin the inventory records of the business office.

Revised as of April 30. 1996

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20. Museums and Art Collections all museumitems, art and scientific collections, slidecollections, etc., wherever located, areincluded, except those that are a part of thelibrary holdings.

21. Livestock are classified under plant assets.It includes, but is not limited to cattle, horses,mules, swine, sheep, goats and poultry.

22. Construction in Progress this classificationincludes construction of buildings, otherimprovements, and equipment which are inprogress at the end of the fiscal year. Theamount completed during the fiscal yearshould be capitalized.

B. Liabilities.

1. Accounts Payable a liability or amountowed to a creditor for goods or servicesreceived which resulted from an oral or impliedpromise to pay. Most accounts payable resultfrom the purchase of goods, supplies,equipment, and/or services received.

At year-end amounts owed on goods receivedshould be classified as accounts payable.Encumbrances represent outstandingpurchase orders and other commitments formaterials or services not received as of thereporting date. Encumbrances should not bereported as expenditures nor included inliabilities in the balance sheet, but they shouldbe reported as a reservation of Fund Balanceon the Balance Sheet (see Exhibit A FundBalance section).

2. Accrued Liabilities obligations thataccumulate systematically over time. Therecording of these liabilities and theaccompanying expenses is usually deferred tothe end of the accounting period. An accruedexpense is an expense that has been incurredduring the accounting period but has neitherbeen paid nor recorded. Examples of accruedliabilities would be payroll, payroll taxes, andinterest.

3. Deposits liabilities resulting from receiptswhich the institution may be required to repayin whole or in part. Examples are roomdeposits, property deposits, and deposits forkeys and equipment.

4. Due To Other Funds accounts peculiar toinstitutional organizations using fundaccounting. Each fund group must beindependent of other fund groups. Each fundsection is balanced in itself. A "due to" accountmust have a contra "due from" account in theother fund involved. The "due to" accountwould appear as a liability in the borrowingfund groups. "Due to other funds" should beshort-term only.

5. Deferred Revenues and Credits paymentsreceived by the institution in advance, for goodsor services to be rendered in a subsequentperiod. Deferred Revenue should only bereported when cash has been received andshould not be reported as revenue untilearned.

An example of deferred revenues would betuition and fees collected from students nearthe end of a fiscal year for the next term whichbegins in the next fiscal period.

6. Accrued Compensable Absences Payableliabilities for the vacation and compensatoryleave accrued by employees as of August 31.Accrued compensable absences payableshould be disclosed as a separate line item onthe balance sheet.

T. Annuities Payable liabilities resulting froman agreement in which money or property ismade available to the institution on thecondition that the institution will periodically payto the donor or designated individualsstipulated amounts for a specified length oftime or until the death of the donor.

8. Bonds Payable an interest-bearingcertificate issued to derive resources to financeacquisition of long-lived assets. BondsPayable are reported in Unexpended PlantFunds to the extent unexpended and inInvestment in Plant to the extent expended.

a. Bonds payable should be disclosed as aseparate line item on the balance sheet.Variable Rate Notes Payable, which insubstance are bonds should be reportedas Bonds Payable on Exhibit A.

b. Variable Rate Notes payable, which insubstance are not bonds, should beseparately disclosed as Notes and Loans

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Payable on the balance sheet.

c. Bonds Payable should be reported at thenet of unamortized discounts or premiums.The balance of unamortized discounts/premiums should be disclosed inparenthesis as follows: Bonds Payable(net of $icor unamortized discounts/premiums).

9. Lease-Purchase Agreements Payableamounts owed under long-termlease-purchase agreements for the acquisitionof equipment.

10. Funds Held in Custody for Others funds inthe custody of the institution but not belongingto it. Colleges and universities often serve asdepositories or fiscal agents for studentorganizations, faculty committees, or for othergroups connected with the institutions.Receipts and disbursements of agency fundsdo not constitute current funds revenues andexpenditures and should not be included in thecurrent funds operating statements.

C. Fund Balances

1. Unrestricted Current Funds Balances thenet accumulation over years of the excess ofcurrent funds revenues over current fundsexpenditures and transfers. It is available forfuture operating purposes or any other usedetermined by the governing board to theextent that the total fund balance exceeds theamount reported as Unrestricted-Reserved.

Reservations should be made for valid reserveamounts. If disclosing the valid or requiredreserve amounts results in a deficit balance,the deficit would be identified as UnreservedUndesignated. Reservations of unrestrictedfund balances should be used to identify:

Third-party claims against resources thathave not materialized as liabilities atbalance sheet date.

Assets that because of theirnon-monetary nature or lack of liquidity,represent financial resources not availablefor current appropriation or expenditure.

Examples of Reserved Fund Balances (SeeExhibit A for examples):

Reserved for Encumbrances.

Reserved for State Appropriations to beLapsed.

Examples of Reserved Fund Balances forNon-Liquid Assets in Current Fundsinclude: Accounts Receivable, Inventories,Prepaid Expenses, Consumable Supplies,Deposits, Travel Advances and ImprestFunds. Reserved Fund Balances do notinclude Interest and Other Receivablesand Due from Other Fund Groups.

The unreserved fund balance should becomposed of "Designated" and"Undesignated" components. The designatedportion of fund balance is used to identifytentative resources. The designations of fundbalance should be supported by definitiveplans and approved by the Board ofTrustees/Reg ents or institutionaladministration. By definition, fund balances inAuxiliary Enterprises would be considereddesignated except for valid reserves.

Examples of Unreserved Designated FundBalance:

Provision for FY 19XX OperatingBudget

Provision for Contracts and GrantsOverhead and Adjustments

Provision for Inventories (UnrestrictedCurrent Fund Inventories areReserved)

Provision for Balances Subject toReappropriation

Provision for Capital Projects

Provision for Service DepartmentsOperating Funds

Provision for Auxiliary EnterprisesOperating Funds

Provision for Departmental OperatingFunds

The fund balance remaining afterreduction for reserves and designated

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balances is identified as the UnreservedUndesignated fund balance, which isavailable to fund future budgets.

2. Restricted Current Funds Balancesunexpended balances of funds restricted bydonors or other outside agencies to specificoperating purposes. They originate fromincome on restricted endowment funds, giftswhose donors have placed limitations on theiruse, and grants from private or governmentalsources for research, training, and othersponsored funds. They are reported as currentrevenues only to the extent they are spentduring the year. Funds received this way, butnot expended as of the date of the report, mustbe disclosed.

3. Loan Funds Balances accounts forresources available for loans to students,faculty, and staff. Loan funds balances are tobe identified as "United States GovernmentGrants Refundable" with specific identificationof each grant refundable and detail as tofederal government equity and institutionalmatching funds and "University Loan Funds"with balances identified as restricted andunrestricted. Restriction of balances can onlybe imposed by outside donors or agencies.

4. Endowment and Similar Funds Balancesaccounts for the resources for which donors,external agencies, or the governing board havestipulated that the principal of the fund is notexpendable and is to be invested for thepurpose of producing present and futureincome. That income may be expended oradded to principal. Endowment fundsbalances are to be identified as:

a) Endowments funds for which donors orother external agencies have stipulatedunder the terms of the gift instrumentcreating the fund that the principal of thefund is not expendable. It is to remaininviolate in perpetuity and is to be investedfor the purpose of producing present andfuture income which may be expended oradded to principal.

b) Term Endowments funds which are likeendowment funds, except that all or part ofthe principal may be used after a statedperiod of time or the occurrence of acertain event.

c) Funds Functioning as Endowmentsfunds that the governing board of theinstitution, rather than a donor or otherexternal agency, has determined are to beretained and invested. The governingboard may utilize principal and interestsubject to donor restrictions. Balancesshould be shown as "restricted" or"unrestricted" to insure compliance withdonor restrictions on use of income orprincipal.

5. Annuity and Life Income Funds Balances

a. Annuity Funds Balances accounts forfunds donated to the institution oncondition that the institution pay astipulated amount to the donor ordesignated individuals for a specific time oruntil the time of death of the annuitant.

b. Life Income Funds Balances accountsfor funds donated to the institution oncondition that the institution pay to thedonor or designated individuals only theincome earned by the assets of the fundsafter deduction of appropriatemanagement expenses.

6. Plant Funds Balances

a. Unexpended Plant Funds Balancesaccounts for funds for the construction,rehabilitation, and acquisition of physicalproperties for institutional purposes. FundBalances are to be identified as restrictedor unrestricted.- This category does notinclude unexpended bond proceeds whichare shown as Bonds Payable.

b. Funds for Renewals and Replacementsaccounts for funds for the renewal and

replacement of plant assets, but not fromadditions and improvements to plant.Fund balances are to be identified asrestricted and unrestricted.

c. Funds for Retirement of IndebtednessBalances accounts for funds to meetdebt service charges and the retirement ofindebtedness. Fund balances are usuallyidentified as restricted. In the event of overfunding of indebtedness the over fundedamount should be reported asunrestricted.


19BEST COPY AVAiLABLE

Chapter 3 - Balance Sheet

d. Net Investment in Plant the fundbalance representing the excess of thecarrying value of assets over long-termliabilities. It is increased throughacquisition of plant assets, less associatedliabilities, as well as through liquidation ofindebtedness incurred for plant purposes.It is decreased through disposal of assets.

Page 6


20

CHAPTER 4

STATEMENT OF CHANGES

IN FUND BALANCES

21

CHAPTER 4

STATEMENT OF CHANGES IN FUND BALANCES

A. Purpose The Statement of Changes in FundBalances is a statement of changes in financialposition between reporting dates and is presentedfor all fund groups except agency funds, whichhave no fund balances. This statement reflects theresults of all increases, decreases, and transfersaffecting each of the fund groups. It presents asummary of total activity from the beginning to theend of the reporting period, including the resourcesflowing into and out of each fund group and theeffect on the net increase or decrease in fundbalance.

All beginning balances for the current year reportmust equal the corresponding ending balancespresented in the published report from the previousyear.

When there is a need to close or transfer oneaccount balance to another account, the beginningbalance of the account balance which isclosedAransferred will be included. Two accountswill not be treated as one account for the year bypresenting the activity on one line. Such "lumpingtogether" of accounts would erroneously imply thatonly the one account existed throughout the yearfor that activity.

Where material, prior period adjustments should bemade through adjustments to the beginning fundbalance and explained in the notes to the financialstatements.

B. Revenues and Other Additions

1. Unrestricted Current Funds RevenuesThis category includes resources an institutionreceives that have no limitations or stipulationsplaced on them by external agencies ordonors. They are summarized on theunrestricted current funds revenue line onExhibit B. Funds for which there are norestrictions are recorded as revenue in theperiod in which they are earned.

The term "additions" is in contrast to"revenues" and "transfers." Additions areamounts received or made available to therestricted current funds during the reportingperiod, and should be reported in theStatement of Changes in Fund Balance. Theamounts of restricted funds expended duringthe fiscal period are reported as restricted fundrevenues, and should be reported in the

Statement of Current Funds Revenues,Expenditures and Other Changes.

2. State Appropriations-Restricted Groupinsurance and retirement matching fundswould be reported in Restricted Current Funds.

3. Federal Grants and Contracts Thiscategory includes (1) all unrestricted amountsreceived by grants, contracts, and agreementsfrom federal governmental agencies forcurrent operations, (2) all amounts received ormade available through restricted grants,contracts and cooperative agreements to theextent expended for current operations, and (3)all pass-through funds received.

Indirect cost recoveries on grants, contractsand agreements should be reported asunrestricted current funds revenue. Thecorresponding amounts of indirect costsincurred by the grants, contracts oragreements should be shown as otherdeductions in the Restricted Fund Group onExhibit B rather than as expenditures. Interestsubsidy or construction grants should berecorded directly in Retirement ofIndebtedness or Unexpended Plant Funds.They should also be included in the federalschedule and as a reconciling item in Note 1 ofthat schedule.

4. State Grants and Contracts This categoryincludes restricted grants and contractsreceived from the State of Texas or from otherstates. This category also includes interagencycontracts with other Texas agencies.

5. Local Grants and Contracts This categoryincludes restricted amounts received forcurrent operations from governmentalagencies below the state level for currentoperations.

6. Private Gifts, Grants and Contracts Thiscategory includes amounts fromnon-governmental organizations andindividuals, including funds resulting fromcontracting for the furnishing of goods andservices of an instructional, research, or publicservice nature. It includes all restricted gifts,grants and bequests from non-governmentalsources for current operations. Gifts, grants,and contracts from foreign governments


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Chapter 4 - Statement of Changes in Fund Balances Page 2

should be included in this category. If material,non-monetary donations of services (e.g.,professionals or members of religious groupsdonating their services, or computer timedonated to the institution by an organization),should be recorded as gift revenue at a rate asclose to fair market value as can be objectivelydetermined. An equivalent value should bereported as expenditures by the department ordivision receiving the services, following thesame classification as other expenditures.

7. Investment/Endowment Income Thiscategory normally represents interest incomefrom long-term investments, includingendowments, term endowments, and fundsfunctioning as endowments. Life Income andAnnuity Funds also may be administered on asimilar basis. Current funds not neededimmediately for operating purposes and other C.funds earmarked for use as needed for plantconstruction or other capital improvementsmay be used for short term investments.

8. Realized Gains on Investments This is theamount of income realized over the book valueof the investment.

9. Interest on Loans Receivable This amountrepresents interest received from Perkins,Nursing Student Loans, and emergency loansfor students. The accrual basis should beemployed for determining interest earned.However, if the amount is immaterial, it may beaccounted for on the cash basis.

10. U.S. Government Advances These arefunds advanced by the federal government tocover Perkins and other federal loanprograms.

11. Net Change in Bonds Payable Thisamount represents the net change betweenthe beginning balance in bonds payable andthe ending balance.

The net change in Variable Rate Notes, whichare not in substance bonds should be includedin the net change for Notes and LoansPayable.

12. Expended for Plant Facilities Thisrepresents amounts that have been capitalizedfrom expenditures of each fund group.Normally this capitalized amount would be forland, buildings, improvements other than

buildings, equipment, library books andconstruction in progress. Gifts of propertiesshould be reported as gifts.

The amount charged to Current FundsExpenditures should be shown parenthetically.

13. Other Detail as Needed Any additions whichdo not fall within one of the categories aboveshould be included at this point. Thoseamounts that are immaterial can be addedtogether under "Other Additions." If amountsare material, they should be listed separately.

Interest income, if it cannot be properlyclassified as Investment Income, shouldbe disclosed as a separate line item withthe caption "Other Interest Income."

Expenditures and Other Deductions

1. Expenditures Expenditures represent thecost incurred from all fund groups. However,except for the unrestricted and restrictedcurrent fund groups, expenditures shown onthis line item should be limited tomiscellaneous (i.e. non-material expenditures).

2. Expended for Plant Facilities This amountrepresents capitalized cost expended fromplant funds.

3. Indirect Cost Recovered This amountrepresents the reimbursement of overhead foradministering contracts and grants.

4. Refunded to Grantors This is theunexpended portion of a grant that has beencompleted or has reached its termination date.

5. Loan Cancellations and Write-Offs Thisamount represents uncollectible loans thathave been written off or loans that have beencharged off due to the Attorney General'sopinion that allows the assignment ofuncollectible Perkins or other federal loanprogram notes to the federal government.

6. Administrative and Collection Costs Thiscategory represents the cost of administeringstudent aid loan programs.

7. Retirement of Indebtedness This is theamount of bonds which have been retired. Theamount of variable rate notes retired should bedisclosed as a separate line item.

Revised as at April 30, 1996

Chapter 4 - Statement of Changes in Fund Balances Page 3

8. Interest on Indebtedness Interest paid on

41111all long term indebtedness.

a. Interest paid for Bonds Payable should bedisclosed as a separate line item on thisstatement.

b. Interest paid on Variable Rate Notesshould be separately disclosed as a lineitem.

9. Disposal of Plant Facilities This amountrepresents the reduction in capitalized assetssuch as buildings and equipment. Thisreduction is normally due to obsolescence.

10. Other Detail as Needed Any deductionswhich do not fall within one of the categoriesabove should be included at this point. Thoseamounts that are immaterial can be addedtogether under "Other Deductions." If theamounts are considered material, they shouldbe listed separately.

This disclosure leaves the Other Deduction lineitem clean with respect to expenditure of funds.

D. Transfers Among FundsAdditions (Deductions)

1. Mandatory Transfers This category shouldinclude transfers between fund groups arisingout of:

a. binding legal agreements related to thefinancing of educational plant, such asamounts for debt retirement, interest, andrequired provisions for renewals andreplacement of plant, that are not financedfrom other sources, and

b. grant agreements with agencies of thefederal government, donors, and otherorganizations to match gifts and grants.Transfers from unrestricted to restrictedfunds must be discretely identified byprogram. (Examples are TPEG, SEOG,and CWS.)

2. Non-Mandatory Transfers This categoryshould include those transfers between fundgroups made at the discretion of the governingboard to serve a variety of objectives, such asadditions to loan funds, additions to fundsfunctioning as endowments, general or specificplant additions, voluntary renewals and

replacements of plant, and prepayments ondebt principal. It also may include theretransfer of resources back to current funds.

It is permissible to enter a lump sum accountfor non-mandatory transfers, but significantallocations should be footnoted.


CHAPTER 5

STATEMENT OF CURRENT FUNDS

REVENUES, EXPENDITURES AND

OTHER CHANGES

25

CHAPTER 5

STATEMENT OF CURRENT FUNDS REVENUES EXPENDITURES AND OTHER CHANGES

A. Current Funds Revenues The Statement ofCurrent Funds Revenues and Expenditures doesnot purport to match expenses with revenues toderive a net income. It presents in detail thecurrent funds revenues by source and the currentfunds expenditures by functions to provide thereader with adequate information concerning thedetails of the sources and uses of current funds.Listed below are various sources of current fundsrevenues. Table 1, at the end of this chapter,reflects recommended statement distribution ofsample revenues.

Unrestricted Current Funds resources receivedwith no limitations or stipulations placed on them byexternal agencies or donors.

Restricted Current Funds resources providedwith externally established limitations or stipulationsplaced on their use. Funds received in therestricted current funds category are consideredadditions and are not recognized as revenue untilexpended for their intended purpose.

Restricted receipts in excess of restrictedexpenditures should be shown as an addition to therestricted fund balance and not as deferredrevenue.

Restricted funds revenues will be reported only tothe extent expended.

Restricted revenues should be equal toexpenditures and mandatory transfers.

In classifying revenues on accounts with multiplesource funding, the general order of priorities isgifts, grants and contracts first, followed by otherrevenues and endowment income. Care should betaken to avoid reporting revenues from a sourcethat may be depleted by deductions other thanexpenditures. (Example: indirect cost recoveriesearned should be excluded from 'gifts, grants andcontracts" before applying expenditures againstthat fund source.) Where expenditures are greaterthan current years fund additions (afterabove-mentioned exclusions), the excess ofexpenditures over such additions should comefrom the primary fund sources of the beginningbalance.

1. State Appropriations

a. Education and General State SupportState legislative appropriations for currentoperations will be included in this categoryin Unrestricted Current Funds.

b. State Group Insurance Groupinsurance premiums paid by the state onbehalf of current or former collegeemployees should also be included as"State Appropriations" in RestrictedCurrent Funds.

c. State Retirement Matching Eventhough the funds do not flow through theinstitution's accounts, amounts paiddirectly into a state or local retirementsystem on behalf of the college should berecorded as revenue of the institution forfinancial statement purposes. Thecontribution made by the state to theemployee's retirement plan (TRS, ORP, orERS) should be included as "StateAppropriations" in Restricted CurrentFunds. An equal amount also would berecognized in the appropriate functionalexpenditure categories.

d. Non-Course-Based Remedial Education- - State legislative appropriations trusteedto the Coordinating Board for non-course-based remedial education which isallocated to tfie institutions should beincluded as "State Appropriations" inRestricted Current Funds.

e. State Retirement Adjustment Theretirement adjustment allocated to. theCoordinating Board for CommunityColleges includes funds for OptionalRetirement Differential (differencebetween 7.31% and 6.00%) andproportional retirement contributions. Thisrevenue should be reported as restricted.

f. Other Sources

2. Tuition This category covers all tuitionassessed against students (net of refunds) for


Chapter 5 - Statement of Current Funds Revenues, Expenditures and Other Changes Page 2

educational purposes. The amount of tuitionremissions and exemptions will be reported asunrestricted current funds revenues. (Thecorresponding amount will be reported asunrestricted current funds expendituresclassified as "Scholarships and Fellowships.")This income category shall include amountspledged to General Tuition Revenue Bonds.The dedicated amount would be shown as amandatory transfer to Plant FundsRetirement of Indebtedness on the Statementof Changes in Fund Balances.

Tuition remissions and exemptions will bereported as revenues and expenditures ofUnrestricted Current Funds - Generally in thefollowing manner:

a. Revenues classified as "Tuition and Fees"in total and labeled "Tuition Remissionsand Exemptions" on the Statement ofCurrent Funds Revenues.

b. Expenditures classified as "Scholarshipsand Fellowships" on the Statement ofCurrent Funds Expenditures.

The portion of tuition that must be dedicated tothe Texas Public Education Grant (TPEG)program (Texas Education Code section56.033) is transferred to current restrictedfunds. This transfer must be discretelyreported as a mandatory transfer. When theamount of TPEG funds transferred to restrictedfunds exceeds the amount of grants awarded,the excess should be reported as "Excess ofTPEG Transfers over Grants Awarded."

3. Fees This category covers all fees assessedagainst students (net of refunds) foreducational purposes. Mandatory feesassessed students for auxiliary enterpriseusage will be reported as Tuition and Fees inAuxiliary Enterprise Funds. (Student ServiceFees as defined in the Texas Education Codesection 5.4.503.)

A detailed presentation of fee revenue on theStatement of Current Funds Revenues hasbecome a necessity. Fees should be definedas Building Use/General Fees, Student ServiceFees and Other Fees. Tuition and Remissionsand Exemptions should continue to beseparate as well. (See Chapter 10,Statements and Schedules)

When specific fees are assessed underbinding external restrictions for other thancurrent operating purposes for example,debt service on educational plant or onrenewals, replacements, or additions to plantthey should be treated as a mandatory transferreported as additions to the appropriate non-current fund group (in the above example,plant funds), since they are not legallyavailable for current operating purposes.

If some portion of tuition or fees is allocated forother than operating purposes by thegoverning board or management, or subject tochange by the governing board alone, theentire amount should be recorded asunrestricted current fund revenues and theportion allocated should be treated as a non-mandatory transfer to the appropriate fundgroup (in the above example, plant funds).

4. Taxes for Current Operations Thiscategory includes all revenue derived from thecollection of ad valorem taxes levied by thegoverning board for the operation andmaintenance of the junior college district.

5. Federal Grants and Contracts Thiscategory includes (1) all unrestricted amountsreceived by grants, contracts, and agreementsfrom federal governmental agencies forcurrent operations, (2) all amounts received ormade available through restricted grants,contracts and cooperative agreements to theextent expended for current operations, and (3)all pass-through funds received.

Indirect cost recoveries on grants, contractsand agreements should be reported asunrestricted current funds revenue. Thecorresponding amounts of indirect costsincurred by the grants, contracts oragreements should be shown as otherdeductions in the Restricted Fund Group onExhibit B rather than as expenditures.

Interest subsidy or construction grants shouldbe recorded directly in Retirement ofIndebtedness or Unexpended Plant Funds.They should also be included as a reconcilingitem in Note 1 of the federal schedule.

6. State Grants and Contracts This categoryis similar to federal grants and contracts exceptit includes grants and contracts received from


7


the State of Texas or from other states. Thisincome classification includes inter-agencycontracts with State of Texas agencies. Note,federal pass-through funds from state entitiesshould not be included in this category (SeeChapter 8, Section D).

7. Local Grants and Contracts similar to thepreceding two revenue classifications exceptthat it covers amounts received fromgovernmental agencies below the state leveland applies to the extent funds are expendedfor current operations.

8. Private Gifts, Grants and Contracts Thiscategory includes amounts fromnongovernmental organizations andindividuals, including funds resulting fromcontracting for the furnishing of goods andservices of an instructional, research, or publicservice nature. It includes all unrestricted gifts,grants and bequests as well as all restrictedgifts, grants and bequests fromnongovernmental sources to the extentexpended in the current fiscal year for currentoperations.

Grants and contracts from foreigngovernments are included in this category. Ifmaterial, non-monetary donations of services(e.g., professionals or members of religiousgroups donating their services, or computertime donated to the institution by anorganization) should be recorded as giftrevenue at a rate as close to fair market valueas can be objectively determined. Anequivalent value should be reported asexpenditures by the department or divisionreceiving the services, following the sameclassification as other expenditures.

9. Investment/Endowment Income includes(1) unrestricted income from endowment andsimilar funds and (2) restricted income fromendowment and similar funds to the extentexpended for current operations.

The unrestricted income from investments ofendowment and similar funds credited to B.unrestricted current funds revenues should bethe total ordinary income earned (or yield),except for income that must be added back tothe principal in accordance with the terms ofthe agreement of donation which is amandatory transfer.

10. Sales and Services of Educational Activitiesincludes revenues that are related

incidentally to the conduct of instruction,research and public service and revenues fromactivities that exist to provide an instructionaland laboratory experience for students thatincidentally create goods and services thatmay be sold.

11. Sales and Services of Auxiliary EnterprisesThis category is limited to revenues derived

directly from the operation of the auxiliaryenterprises themselves. Revenues from gifts,grants, or endowment income restricted forauxiliary enterprises should be reported undertheir respective sources categories.

Auxiliary Enterprises revenues on Exhibit C willbe detailed to recognize Auxiliary Enterprisesrevenues from Tuition and Fees, Sales andServices, Gifts and Grants (Federal, State andPrivate) and Other Sources. The Statement ofCurrent Funds Revenues will detail othersources.

An auxiliary enterprise is an entity that existspredominantly to furnish goods or services tostudents, faculty, or staff, and that charges afee directly related to, although not necessarilyequal to, the cost of the goods or services.Examples are residence halls, food services,intercollegiate athletics, college unions, andcollege stores.

12. Interest Income and Gains/Losses onInvestments This category includes theinterest income and gains or losses oninvestment in current funds.

13. Other Sources This category should includeall sources of current funds revenue thatcannot properly be included in otherclassifications. Examples are miscellaneousrentals and sales, expired term endowmentsand terminated annuity or life incomeagreements, if they are not material.

Current Fund Expenditures Current fundsexpenditures represent the cost incurred for goodsand services used in the conduct of the institution'soperations. They include the acquisition cost ofcapital assets, such as equipment and librarybooks, to the extent current funds are budgeted forand used by operating departments for such


28


purposes.

If the amount of ending inventories or the cost ofservices benefiting future fiscal periods is material,both inventories and deferred charges should berecorded as assets. Previously recordedexpenditures should be appropriately decreased.In a subsequent fiscal period, these inventories anddeferred charges should be included asexpenditures of that period as they are consumed.

Interdepartmental transactions ordinarily should beaccounted for as an increase in current fundexpenditures of the department receiving thematerials, services or capital assets and as adecrease in current fund expenditures of thetransferring department. Institutional expendituresare not inflated by the transactions. Any differencebetween charges to users for sales and servicesand the operational cost of service departments orcentral stores, whether debits or credits, are treatedas Institutional Support expenditures. On the otherhand, sales and services of an auxiliary enterpriseto another department or auxiliary enterprise, orsales of materials produced by an instructionaldepartment to another department or auxiliaryenterprise, would be reported as an expenditure ofthe department or auxiliary enterprise receiving thematerials or services and as revenue of thedepartment or auxiliary enterprise selling thematerials or services.

1. Educational and General

a. Instruction includes expenditures for allactivities that are part of an institution'sinstruction program. Expenditures forcredit and non-credit courses, foracademic, vocational, and technicalinstruction, for remedial and tutorialinstruction, and for regular, special, andextension sessions should be included.

Expenditures for departmental researchand public service that are not separatelybudgeted should be included in thisclassification.

Expenditures of department chairmen, inwhich instruction is still an important role ofthe administrator, are included in thiscategory.

This category excludes expenditures foracademic administration when the primary

assignment is administration forexample, academic deans.

b. Research This category should includeall expenditures for activities specificallyorganized to produce research outcomes.Expenditures included in this category canbe either internally or externallysponsored, but must be separatelybudgeted.

c. Public Service This category includesfunds expended for activities that areestablished primarily to provide non-instructional services beneficial toindividuals and groups external to theinstitution.

d. Academic Support This categoryshould include funds expended primarily toprovide support services for the institution'sprimary missions instruction, researchand public service. It includes (1) theretention, preservation and display ofeducational materials, i.e., libraries,museums and galleries; (2) academicadministration, i.e., dean's salaries andoffice expenses; (3) technical support, i.e.,computer services and audio-visUalinformation; and (4) separately budgetedsupport for course and curriculumdevelopment, and related items.

e. Student Services This category shouldinclude funds expended for offices ofadmissions and the registrar and activitiesthat primarily -contribute to students'emotional and physical well- being and totheir intellectual, cultural, and socialdevelopment outside the context of theformal instruction program.

f. Institutional Support This categoryshould include expenditures for (1) centralexecutive level management andlong-range planning of the entireinstitution; (2) fiscal operations; (3)administrative data processing; (4) spacemanagement; (5) employee personneland records; (6) logistical activities thatprovide procurement, storerooms, safety,security, printing and transportationservices to the institution; (7) supportservices for faculty and staff that do notoperate as auxiliary enterprises; and (8)


2


g.

activities concerned with community andalumni relations, including developmentand fund raising.

Operations and Maintenance of Plant - -This category should include allexpenditures of current funds for theoperation and maintenance of physicalplant, net of amounts charged to auxiliaryenterprises, hospitals and independentoperations.

h. Scholarships and Fellowships Thiscategory includes expenditures forscholarships and fellowships includingtuition remissions and exemptions fromrestricted and unrestricted funds ingrants to students either from selection bythe institution or from an entitlementprogram. If the institution does not selectthe recipient of the award and is onlycustodian of the funds, as with ROTCscholarships, the funds should be reportedin the Agency Fund group.

Recipients of grants are not required toperform service to the institution asconsideration of the grant, nor are theyexpected to repay the amount of the grantto the funding source. When services arerequired in exchange for financialassistance, as in the federal CollegeWork-Study Program, the charges shouldbe classified as expenditures of thedepartment or organizational unit to whichthe service is rendered.

2. Auxiliary Enterprises includes allexpenditures relating to the operation ofauxiliary enterprises, including expenditures foroperation and maintenance of plant andinstitutional support.

To record expenditures for E&G purposesfrom auxiliary enterprises funds, the fundsshould be transferred (non-mandatory) toUnrestricted Funds and the expendituresreported there.

Auxiliary enterprises that do not generatesufficient revenue in addition to the allocatedstudent service fees to support their operationsshould show a transfer (non-mandatory) ofnon-appropriated funds (local taxes) that areused to support the operations of thatenterprise.



TABLE 1: CURRENT FUNDS REVENUE DISTRIBUTION

Recommended. Reno, lino of Current Funds Revenues

Current Funds RevenuesUnrestricted Auxiliary Restricted

State AppropriationEducation and General State Support - XState Group Insurance XState Retirement Matching

State Retirement Adjustment XNon-Course-Based Remedial Education XOther Sources X

Tuition (Note A) XFees (Note B) X XTaxes for Current Operation XFederal Grants and Contracts

Restricted grants & contracts XIndirect cost allowance X

State Grants and ContractsRestricted grants & Contracts X

Indirect cost allowance XLocal Grants and Contracts

Restricted grants & contracts XIndirect cost allowance X

Private Gifts, Grants and ContractsUnrestricted for current operations XRestricted grants & contracts X

Indirect cost allowance X

Investment/Endowment IncomeRestricted - X

Unrestricted XSales and Services of Educational Activities XSales and Services of Auxiliary Enterprises XInterest Income and Gains/Losses onInvestments

X X X

Other Sources X X X

Note A: Tuition revenue would indude the amount dedicated to payment of Tuition Revenue Bonds. The dedicatedamount would be reflected as a mandatory transfer to Plant Funds Retirement of Indebtedness.

Note B: The portion of General Fees (Building Use Fees) required to meet long term debt service would be amandatory transfer to Plant Funds Retirement of Indebtedness.


31

CHAPTER 6

STATEMENT OF EDUCATIONAL AND

GENERAL EXPENDITURES

SUMMARIZED BY ELEMENTS

OF INSTITUTIONAL COSTS

CHAPTER 6

STATEMENT OF UNRESTRICTED CURRENT FUNDS EDUCATIONAL AND GENERALEXPENDITURES SUMMARIZED BY ELEMENTS OF INSTITUTIONAL COSTS

The Statement of Unrestricted Current Funds Educational and General Expenditures Summarized by Elementsof Institutional Cost (Schedule C-3) reclassifies the Current Funds Educational and General Expenditures for eachacademic institution into the elements of institutional cost developed by the Texas Higher Education CoordinatingBoard. Refer to the current definitions as adopted by the Texas Higher Education Coordinating Board.

Schedule C-3 includes only actual expenditures directly incurred by the institution.

The increase/decrease in the accrued liability for compensable absences should not be included as an expenditurein Schedule C-3. If the increase/decrease in the accrued liability for compensable absences is included in ExhibitC (Statement of Current Funds Revenues Expenditures and Other Changes) as an expense, then the amount ofthe expense should be included in the reconciliation between Exhibit C and Schedule C-3.

Tuition remission and exemptions should not be reported as an expenditure in Schedule C-3.

The following types of expenditures/expenses included in the Statement of Current Funds Revenue, Expendituresand Other Changes should NOT be included in this schedule:

Increase in accrued liability for compensated absences,Tuition Remission and Exemption, andAny other items which are not included in the elements of cost which determine General Revenue funding.

The 74th Legislature reduced appropriations forthe employer matched Optional Retirement Program from7.31 percent to 6.0 percent and also included a rider that reouired the payment of salaries and fringebenefits to be paid proportio to the source of funds. The lature also appropriated funds toessentially hold community colleges harmless for fiscal years 1996 and 1997 with funds trusteed to theCoordinating Board as State Retirement Adjustment funds. These funds are restricted for this purpose,but should be included in this schedule under Staff Benefits and included in the reconciliation back tounrestricted funds. The expenditure of these funds will also be included in the annual Cost Study,

Table 2, on the next page, reflects the normal reclassification of the Elements of Institutional Cost and the functionalclassification of the Annual Financial Report.

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Revised as at May 22, 1995

Chapter 6 - Expenditures Summarized by Elements of Institutional Costs Page 2

TABLE 2: ELEMENTS OF INSTITUTIONAL COSTS

Institutional Cost Functional Classification

InstructionAcademic

Faculty Salaries InstructionDepartmental Operating Expense InstructionOrganized Activities Related to Instructional Departments Instruction

Academic SupportVocational

Faculty Salaries InstructionDepartmental Operating Expense InstructionOrganized Activities Related to Instructional Departments Instruction

Academic SupportResearch

Research Enhancements Research

Public ServicesExtension and Public Services Public Service

InstructionAcademic Support

Library Academic SupportInstructional Administration Academic Support

Student Services Student Services

Institutional SupportGeneral Administration Institutional SupportGeneral Institutional Expense Institutional SupportCampus Security Institutional Support

Operation & Maintenance of PlantPlant Support Services 0 & M of PlantBuilding Maintenance 0 & M of PlantCustodial Services 0 & M of PlantGrounds Maintenance 0 & A4 of PlantUtilities 0 & M of Plant

Staff Benefits All Categories

Special Items Scholarships & FellowshipsDependent upon type

Major Repairs and Rehabilitation ofBuilding and Facilities 0 & M Plant

Reconciliation Tuition Remission & ExemptionsState Retirement Adjustment

Increase/decrease in compensable absences allocationI

Revised as of May 22, 1995

CHAPTER 7

SPECIFIC PROCEDURES FOR

PREPARING THE

ANNUAL FINANCIAL REPORT

CHAPTER 7

SPECIFIC PROCEDURES FOR PREPARING THE ANNUAL FINANCIAL REPORT

A. Purpose The Specific Procedures for Preparingthe Annual Financial Report provides requirementsand clarification for the reporting of certain items.

B. Bonds Payable Bonds payable will be reportedon Exhibits A and B of the Report as follows:

1. Exhibit A

a. Unexpended Plant Funds the amountof unexpended bond proceeds will bereported as bonds payable in this fundgroup. The amount of unexpendedvariable rate note proceeds will bereported as variable rate notes payable inthis fund group.

D.

b. Investment in Plant Report theexpended amounts of bond proceeds asbonds payable in this fund group. Reportthe expended amounts of variable rate E.notes as variable rate notes payable in thisfund group.

2. Exhibit B

a. Unexpended Plant Funds Report thenet change in the beginning and endingbonds payable balance and variable rate F.notes payable balance.

b. Investment in Plant Report the netchange in the beginning and ending bondspayable balance and variable rate notespayable balance.

C. Staff Benefits should be reported as follows: G.

1. Benefits paid directly by the state include groupinsurance premiums, employer matchingretirement contributions and state retirementadjustment . These benefits should bereported as State Appropriation in CurrentRestricted Funds.

H.2. Benefits will be reported in the expenditure

classification to which they are applicable. Ifan institution is unable to determine preciselyto which expenditure classification the benefitsapply, these costs should be allocated basedon salaries and wages paid in each category.

Equipment acquired by lease-purchaseagreements should be capitalized in theInvestment in Plant account at the total cost of theequipment at the time the equipment is received.The cost of the equipment should not include thecomputed interest and maintenance fees. Theunpaid portion of the cost of the equipment shouldbe reported as a long-term liability in theInvestment in Plant and a note to the financialstatements should disclose the principle andinterest requirements for each of the following fivefiscal years. (See Chapter 9, Notes to the FinancialStatements, Note 12)

Insignificant transactions by lease-purchaseagreements may continue to be reported on a cashbasis. Also, the intent is the major factor indetermining if the institution is acquiring or leasingthe equipment.

Equipment Held in Trust This includesequipment for which the institution has custodialresponsibility but the title remains with an externalagency, such as the federal government or afoundation. This equipment should be included inthe assets but excluded from the Net Investment inPlant and shown as Equipment Held in Trust.

Service Department Operations Servicedepartment operations are to be reported inUnrestricted Current Funds. Net revenues are tobe reported as an increase or decrease toinstitutional support expenditures. Transfers andother additions or deductions are to be reportedaccordingly.

Interest Subsidy Grants Interest subsidy grantsare to be reported as revenues in the Retirement ofIndebtedness fund group as a separate line item.If the only federal revenue in the Retirement ofIndebtedness fund group is Interest SubsidyGrants, separate line item disclosure is notrequired.

Allowance for Uncollectible Notes The changein the "Allowance" from the beginning balanceshould be reported as "Other Addition" or "OtherDeduction" as appropriate.

If the amount is material for an institution's fundgroup, the amount should be disclosed on thestatement as a separate line item.


Chapter 7 - Specific Procedures for Preparing the Annual Financial Report Page 2

I. Accrued Compensable Absences Accruedcompensable absences are a required accountingentry for financial report purposes and as suchshould not be reported as an expenditure item onthe element of institutional cost schedule. Theamount should be shown as a reconciling item inthe same manner as tuition remissions andexemptions.

The net increases or decreases in AccruedCompensable Absences Payable are preferred tobe reported as an expense on Exhibit C. Analternative method is to report the net increase ordecrease on Exhibit B as an other addition or otherdeduction to fund balance.

J. Presentation of Cash and InvestmentInformation The following disclosures are fullydescribed in GASB Statement No. 3, Deposits withFinancial Institutions, Investments (includingRepurchase Agreements) and ReverseRepurchase Agreements which applies to financialreports of "all state and local governmental entities,including . . . colleges and universities" (GASBCode, Sec.I50, P.333, May 31, 1990.

The districts should present the followinginformation in their Notes to the FinancialStatements. (See Footnotes 3 and 4)

1. Brief description of the types of investmentsauthorized by legal or contractual provisionsfor your institution. Disclose any significantviolations of these or other legal or contractualprovisions during the period. An example of aviolation requiring disclosure would be anyunder-collateralization that occurred during theyear even if sufficient collateral exists at theBalance Sheet date.

2. Deposits and Investments. If the bankbalances of deposits as of the balance sheetdate are entirely insured or collateralized withsecurities held by the institution or by its agentin the institution's name, that fact should bestated. If not, the following disclosures shouldbe made:

a. Carrying amount of total deposits.

b. The amount of total bank balanceclassified in these three categories ofcredit risk:

(1) Insured or collateralized with securitiesheld by the institution or by its agent in the

institution's name.

(2) Collateralized with securities held bythe pledging financial institution's trustdepartment or agent in the institution'sname.

(3) Uncollateralized. This categoryincludes any bank balance that iscollateralized with securities held by thepledging financial institution, or by its trustdepartment or agent but not in theinstitution's name.

c. NOTE: Certificates of Deposit for this notemust be reported as deposits and notinvestments if they are subject to federaldepository insurance coverage or tocollateralization. CDS may continue to beshown within Investment categories on thebalance sheet in accordance with the mostappropriate method of presentation forfinancial reporting purposes.

3. Carrying amounts and market value ofinvestments (including repurchaseagreements) as of the balance sheet date intotal and for each type of short-term and long-term investment. Investments must becategorized to give an indication of the level ofrisk assumed by the agency at year end. Thethree categories are:

Category 1: Investments that are insuredor registered or for which the securities areheld by the institution or its agent in theinstitution's name.

Category 2: Uninsured and unregisteredinvestments for which the securities areheld by the broker's or dealer's trustdepartment or agent in the institution'sname.

Category 3: Uninsured and unregisteredinvestments for which the securities areheld by the broker or dealer, or by its trustdepartment or agent but not in theinstitution's name.

The categories above may not apply to alltypes of investments. In general,investments in pools managed by othergovernments or in mutual funds orinvestments in real estate should bedisclosed but not categorized because

Revised as of April 30,1996

3'7

Chapter 7 - Specific Procedures for Preparing the Annual Financial Report

they are not evidenced by securities thatexist in physical or book entry form.Securities underlying reverse repurchaseagreements should also be disclosed butnot categorized, because they are held bythe buyer-lender.

Examples of the appropriate disclosure forDeposits and Investments is provided inChapter 9, Notes to the FinancialStatements, Note 4).

4. A financial institution's safekeeping departmentis different from a financial institution's trustdepartment because the latter is a separatefiduciary entity that is regulated by law.

The term "agent* means that a person or firmis empowered to act for another. To determinewhether a custodian is an agent of theuniversity (functions to protect the rights of theuniversity in the securities), the followingfactors should be considered:

a. Authority to release securities (primaryevidence): The primary evidence is that asecurities custodian (1) will have the powerto release securities based solely on theauthorization given by the university and(2) will not have the power to release thesecurities without the authorization by theuniversity.

b. Process of selecting custodian (additionalevidence): Additional evidence of anagency relationship is that the universityselects the custodian. Nonetheless, anagent chosen by another party could stillbe considered the university's agent.

c. Existence of written evidence (additionalevidence): Additional evidence ariseswhen there is a written agreementbetween the two parties. The absence ofwritten evidence does not preclude theexistence of an agency relationship;however, the duties and responsibilities ofthe other party would have to be closelyexamined to determine whether an agencyrelationship exists with the governmentalentity.

K. Presentation of Bond Payable Information -Much of the descriptive information on bonds aredisclosed in Schedule D-1 (Schedule of BondsPayable and Debt Service Requirements). The

Page 3

Notes to the Financial Statements, (Notes 5, 6, and7) should at least provide a description of eachissue outstanding that has a distinct purpose andinclude the following:

1. Bonds Payable When presenting generalinformation relating to bonds payable in theNotes to the Financial Statements, the sampleformat shown below should be used by allinstitutions.

General information related to bonds payableis summarized below:

a. Bond Issue Name, Series 19XX

b. Purpose of bond issue (e.g. to construct astudent demonstration building).

c. Original amount of issue

d. Issued (mm-dd-yy)

e. Type of bond (general obligation, revenue,etc.)

f. Disclose bonds authorized, but not issuedas of the balance sheet date ($xx,xxx,xxxauthorized, $xx,xxx,xxx issued) If allauthorized have been issued, disclose thetotal amount authorized and issued.($ior,ilxiciooc; all authorized bonds havebeen issued.)

9. Maturity date range

h. Change in debt

I. Debt service requirement

Source of revenue for debt serviceGeneral Fees, Department of Educationannual interest grant.

k. Outstanding Balance by Bond Issue

Note, this is the prescribed format that eachinstitution should use for each bond issue orvariable rate note. Avoid lengthy paragraphformats. The extra information provided byparagraph formats is too time consuming toanalyze.

Each bond issue should continue to have thesame issue description (as recorded in theOfficial Statement) annually until, and


38


including, the year in which it is extinguished or L.retired.

2. Refunding Bonds With the issuance ofGASB Statement 7, "Advance RefundingsResulting in Defeasance of Debt," the followingdisclosure should be added to the bondinformation presented in the Notes to theFinancial Statements.

a. Describe the refunding transaction andinclude the following:

Amount of bonds issued.

Amount of bonds to be refunded.

Type of bonds to be refunded.

Net proceeds of the issue (disclose

Any additional amounts contributed topay the debt service requirements

Disposition of the funds used to paythe debt service requirements on thedefeased bonds

b. Explain the difference between the cashflow required to service the old debt andthe cash flow required to service the newdebt and to complete the refunding.

c. Disclose the economic gain or lossresulting from the transaction.

3. Defeased Bonds -- should be disclosed in theNotes until the issue has been completelyretired, even though the liability has beenremoved from the appropriate plant fundgroup. The information required includes: adescription of the defeased bond, e.g.Veterans Lands Bonds-Division E; the calendaryear the bond was refunded; and the par valueoutstanding at the balance sheet date. SeeChapter 9, Note 5 for a sample format.

4. Schedule of Pledged Revenues for RevenueBonds An illustration of a schedule ofpledged revenues for revenue bonds ispresented in Chapter 10, Statements andSchedules. This information should bepresented in your report as a supplementalschedule (D-2).

Auxiliary Enterprise Property, Plant andEquipment Auxiliary Enterprises is shown in aseparate column under current funds on Exhibits A,B & C. This does not mean property, plant, andequipment used in auxiliary enterprises activitiesshould be listed here. The appropriate amountsshould be shown in Plant Fund under Investment inPlant.

BEST COPY AVAILABLE


'3 3


The following Reports and Schedules are required:

1. Report on General-Purpose Financial Statements(Inserted before the Balance Sheet)

2. Compliance ReportBased on an Audit of General-Purpose or Basic Financial Statements Performedin Accordance with Government Auditing Standards

3. Report on the Internal Control Structure Based on an Audit of the General-Purpose Financial StatementsPerformed in Accordance with Government Auditing Standards

4. Report on Supplementary Schedule of Federal Financial Assistance (Inserted before the Schedule ofFederal Financial Assistance)

5. Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs

6. Single Audit Report on Compliance With the General Requirements Applicable to Federal FinancialAssistance Programs

7. Single Audit Opinion on Compliance With Specific Requirements Applicable to Major Federal FinancialAssistance Programs

8. Single Audit Report on Compliance With Requirements Applicable to Non-major Federal FinancialAssistance Program Transactions

9. Report on Fraud, Abuse, or Illegal Acts (Only when observed)

10. Schedule of Findings and Questioned Costs

The independent auditor should follow the pronouncements of the American Institute of Certified PublicAccountants. (Statement of Position 92-7 or subsequent pronouncements).


CHAPTER 8

SCHEDULE OF FEDERAL

FINANCIAL ASSISTANCE

CHAPTER 8

SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

A. Introduction

The Single Audit Act (PL 98-502) establishesthe financial and compliance audit requirementsfor all state and local government entities whichreceive federal financial assistance. Any suchentity receiving more than $100,000 in federalfinancial assistance is required to have an auditin accordance with the act and regulationsestablished by the Office of Management andBudget. Those entities which receive between$25,000 and $100,000 have the option to havean audit in accordance with the act andregulations or to comply with any auditrequirements for each federal financialassistance program in which it participates.Entities receiving less than $25,000 are exemptfrom the audit requirements, but are required tomaintain adequate records.

Each college that receives federal funds mustprepare a Schedule of Federal FinancialAssistance (D-3). The federal schedule reportstotal expenditures, including accruals (accountspayable), for all federal financial assistance byfederal program.

Federal financial assistance is any assistanceprovided by a federal agency in the form ofgrants, contracts, loans, loan guarantees,property, cooperative agreements, interestsubsidies, insurance or direct appropriations.The term does not include direct federal cashassistance to individuals.

See Chapter 10, Statements and Schedules fora sample schedule of federal financialassistance.

B. Federal Grantor/Pass-Through Grantor/Program

1. List all federal programs under separateheadings for each federal grantor agency.The federal programs should be identifiedby the program name as listed in theCatalog of Federal DomesticAssistance(CFDA) and should be innumerical sequence Using the CFDANumber.

2. Identify all federal program funds receivedunder the heading "Direct Programs" or"Pass-Through From."

a. Identify all federal program fundsreceived directly from federal grantoragencies under the heading "DirectPrograms."

b. Identify program funds passed throughto your college from anothergovernment agency as pass-throughfunds under the heading"Passed-Through From: Agency'sName".

3. Under the heading "Direct Programs" or"Pass-Through From," identify theapplication of the funds as follows:

a. Identify program funds that areexpended by the college under thecolumn heading "Expenditures."

b. Identify program funds passed throughto a subrecipient under the heading"Pass-Through To," plus the entity'sname.

4. Include all federal programs not assigned aCFDA number under the separate heading"Other Federal Assistance" and follow thesame guidelines in this section. For eachfederal program, identify the federal grantorand federal grantor number followed by aperiod and three zeroes. For example, theU.S. Department of Transportation would beidentified as 20.000. Refer to the List ofFederal Grantor Numbers at the back of theStatements and Schedules Section. Followthe same guidelines in B.2 and B.3 of thissection to report the source and applicationof each of the federal programs under"Other Federal Assistance."

C. Federal CFDA Number

1. Identify all federal financial assistance byCatalog of Federal Domestic Assistance(CFDA) name and number. All CFDAnumbers consist of five dgits (no letters)separated by a.period between the second


Schedule of Federal Financial Assistance

and the third digit. The first two digitsrepresent the federal grantor agency andthe last three digits represent the specificgrant. For example, the CFDA number ofthe Vocational Education program is 84.048,in which 84 stands for the U.S. Departmentof Education and 048 stands for theVocational Education program. Ensure thatthe most current CFDA Grogram title andnumber are used to identify all federalfinancial assistance, All grants that comeunder one CFDA program name can bereported as one line item. (The detailedinformation must be maintained by theagency.) However, each different type ofpass-through must be reported on separatelines.

2. If the program name and number are notlisted in the CFDA, and the grantor agencycan not provide the information, list theprogram in a descriptive name on theschedule under the heading "Other FederalAssistance" and identify its grantor agencyand grantor agency number (not a contractnumber) as explained in B.4 of this section,above.

3. The Department of Defense (DOD) fundsthat are not assigned with a CFDA numbermust be identified with the contract numberassigned by the DOD. See Section D.4. ofthis chapter for the reporting of DOD funds.

D. Pass-Throughs

Pass-throughs are the federal funds "passedthrough" from one entity (recipient) to otherentities (subrecipients) that administer thefederal program on behalf of the state. If atransaction is not a pass-through, it is anexpenditure. There are no exceptions.Pass-throughs should also include accruals.

1. Recipients

The recipient, which is the entity that passesthe funds through to the subrecipient, willreport these transactions on the federalschedule as "Pass-Through To."

If, at year-end, recipient colleges are holdingmaterial amounts of funds to be passed-through to others, these should be reportedin Agency Funds since they are not assets of

Chapter 8 Page 2

the recipient. Immaterial amounts may bereported as assets and current liabilities inrestricted Funds. Funds passed through toothers will not be reported as revenues orexpenditures on Exhibit C. They also shouldnot be reported on Exhibit B. Fundspassed through to others will be areconciling item on the federal schedulereconciliation. (Note 1)

The recipient must inform the subrecipientthat the funds they are receiving are federalfunds and providing the correct CFDA nameand number.

2. Subrecipients

A subrecipient is defined by OMB CircularA-128 as any person or governmentdepartment, agency or establishment thatreceives federal financial assistance from astate entity or any other entity to administera program.

The subrecipient actually administers orcontrols the program as opposed to thesubcontractor who contracts for a specificservice on a per unit basis. A key factor indetermining the subrecipient is determiningif the entity assumed the responsibility toadminister the program. Procurementcontracts with the federal government orwith a state entity or any other entity, inwhich goods or services are provided by apublic community and junior college are notconsidered to be federal financialassistance because, the college isperforming a service, not administering theprogram. Therefore, procurement contractsshould not be included on the federalschedule by the performing college.Revenue received under a procurementcontract is not Federal Contract and Grantrevenue; generally, it should be reported asSales and Services on Exhibit C.

The subrecipient should include itsexpenditures of the pass-through fundsreceived from recipients as expenditures onthe federal schedule and should include thesame amount in federal revenue on ExhibitC. A reconciliation which ties the totalfederal revenues in Exhibit C to total federalexpenditures and pass-through funds on thefederal schedule should be included in the

Revised as at May 22, 1995

43


"notes" to the federal schedule.Pass-through funds should not be reportedas state revenues and expenditures, but asfederal by a subrecipient. This affects theSchedule of Changes in Fund Balance ofRestricted Funds, Exhibit C, and the federalschedule.

It is the responsibility of the subrecipient torequest all information from the recipient if ithas not been provided, and the subrecipientis aware that the funds received are federalfunds.

3. Recipient vs Subrecipient

The following example illustrates the role ofthe recipient versus the subrecipient:

Entity X retains the ultimate authority andresponsibility for operational results offederal program ABC. The objective ofthe program is to provide job training topeople currently on welfare. Entity Xestablishes the man-hour budget andassigns the staff responsible for thework.

Entity Y is responsible for the first linemanagement of program ABC. Entity Yis in charge of coordinating, planning,assigning specific tasks to the staff andmonitoring the daily activities of theprogram based on establishedadministrative controls.

In this example, Entity X is the recipientand Entity Y is the subrecipient.Although Entity X has the ultimateresponsibility of assuring that thepass-through funds are spent accordingto the program guidelines, Entity Yadministers and controls the day-to-dayoperations in accordance with theguidelines.

4. Expenditures

Expenditures are the federal fundsexpended in administering federalprograms. Payments to subcontractors areexpenditures and should be distinguishedfrom pass-through funds to subrecipients.(See discussion above.)

Chapter 8 Page 3

Specific Conditions

The following items require specialattention when determining expendituresfor the federal schedule. These arealso items that should be included in thereconciliation of the federal revenue(federal grant and contract revenue andfederal appropriations revenues) inExhibit C to federal expenditures andpass-through funds (see Note 2).

Expenditures from federalassistance that are not subject to anA-128 audit are not reported asexpenditures on the federalschedule. Because theseexpenditures are included in thefinancial statements. include gnote explainina why theexpenditures are not in thefederal schedule.

Funds from the U.S. Department ofDefense (DOD), are to be subject toOMB Circular A-128 and should bereported on the federal schedulejust like other federal funds. ThoseDOD funds will not be a reconcilingitem for the reconciliation in Note 2.DOD funds that are not assignedwith a CFDA number must beidentified with the contract numberassigned by the DOD. You maydisclose the DOD contract names,numbers and amounts in asupplement to the annual financialreport if such disclosure requiresextra pages in the federal schedule.

Student Financial Assistance Programsprovide low-interest loans or guaranteedloans to eligible needy students foreducational purposes at Texas collegesand universities. The programsreported in the federal schedule includethe Federal Family Education LoanProgram; Federal Perkins LoanProgram; Health Professions StudentLoans; Health Professions EducationalInitiatives; and Nursing Student Loans.

The amounts reported in the federalschedule should include, as separate



line items, the dollar value of new loansprocessed during the fiscal year as wellas any administrative costs recoveredfrom the federal government.

The amount of the new loans processedfrom the federal government during thefiscal year is not reported on Exhibit C.New loans processed are reported as anincrease (loans receivable) anddecrease (disbursement of cash) of theasset accounts on the balance sheet.Consistent with this treatment and inorder to provided disclosure on thisschedule new loans processed and anyadministrative costs recovered should bereported in Note 2. These items will nolonger be a reconciling item for thereconciliation in Note 1.

Net difference between unrestrictedcurrent funds federal appropriationsrevenue and the expenditure of currentfunds federal appropriations

Certain institutions receive unrestrictedfederal appropriations for currentoperations by federal legislative acts.These unrestricted federalappropriations are recognized asrevenue on Exhibit C when received ormade available to the institution. Thefederal schedule should only include theactual expenditure of theseappropriations.

Therefore, there should be a reconcilingitem on the reconciliation in Note 1 forthe net difference between unrestrictedcurrent funds federal appropriationrevenue and the expenditure of currentfunds federal appropriations.

5. Indirect Costs

Indirect costs are administrative costs and allother such costs related to theadministration of a federal program whichare not direct costs of the program.

Indirect cost recoveries on federal grants,contracts, and agreements should bereported as Unrestricted Current FundsRevenue (Federal Grants and Contracts) onExhibit C and as Other Deductions fromRestricted Funds on Exhibit B rather than as

Chapter 8 Page 4

expenditures. Also, any unexpendedportion, including both direct and indirectcosts, of a federal contract that is awardedon a fixed cost basis should be reported asunrestricted revenue on Exhibit C andincluded as expenditures on the federalschedule. Therefore, in either of theseinstances, there should be no reconcilingitems between Exhibit C and the FederalSchedule's Note 2.

Indirect costs which are reimbursed withfederal funds are federal expenditures andshould be included in total expenditures onthe federal schedule for each federalprogram. Those indirect costs which arerelated to a federal program but notreimbursed with federal funds are notfederal expenditures and should not bereported on the federal schedule.

Example:

Entity X administers federal program ABC.Total direct costs for the program are $100,000and the indirect costs are $10,000. Thecontract states that the federal government willpay Entity X 80 percent of the indirect costrelated to the program. The remaining 20percent will be paid by the state.

Entity X will report $108,000 total federalexpenditures for program ABC. The $2,000 ofindirect costs to be paid by the state are notfederal expenditures and are not reflected onthe federal schedule.

E. Notes

The following notes are required to follow theinstitution's federal schedule.

These notes pertain only to the federalschedule and should not be included with thenotes to the financial statements.

Note 1 Reconciliation

A formal reconciliation tying the totalCurrent Funds's Federal Grants andContracts revenue and FederalAppropriations revenue on Exhibit C to totalexpenditures and pass-through funds on thefederal schedule is required.


Schedule of Federal Financial Assistance Chapter 8 Page 5

Total Federal Grants and Contractsrevenue and Federal Appropriationsrevenue on Exhibit C, plus/minus thereconciling items should tie to totalexpenditures and pass-through on thefederal schedule.

The following reconciling item classificationsmay be necessary:

Funds passed through to others.

Nonmonetary food stamps.

Nonmonetary commodities.

Expenditures not included on the federalschedule because they are not subjectto an A-128 audit.

Net difference between unrestrictedcurrent funds federal appropriationsrevenue and the expenditure of currentfunds federal appropriation (applicableonly to institutions with unrestrictedcurrent funds federal appropriationsrevenue).

Interest subsidy or construction grantsthat are recorded directly in Retirementof Indebtedness or Unexpended PlantFunds.

If these classifications do not match all thereconciling items, make sure all revenues andexpenditures are reported correctly:

Funds collected but not expendedshould be reported as deferredrevenues.

Subrecipients should includeexpenditures of pass-through funds asexpenditures on the federal schedule.

Classifications of federal funds as prioryear adjustments and/or changes in fundbalance indicate errors were made inrecording federal funds. Correct theseitems prior to preparing the federalschedule to ensure that federalrevenues and expenditures are reportedin the appropriate fiscal year.

Earned federal funds should not be areconciling item.

Note 2 Expenditures Not Subject to an A-128 Audit

This note describes federal funds notsubject to an A-128 audit. These funds arereported on the financial statements but arenot reported on the federal schedule. Thus,they will be a reconciling item in Note 2.

Include the following information in the note:

Name of federal grantor agency.

CFDA name and number.

(Dollar amount) of expenditures for thefiscal year.

Reason the program is not subject toaudits under A-128.

Note 3 Student Loans

The total amount of loans disbursed tostudents under the various student loanprograms should be reported in this note.

Federal Family Education LoanProgram

Federal Perkins Loan Program.

Health Professions Student Loans.

Health Professions EducationalInitiatives.

Nursing Student Loans.

The following information must be included in thenote:

Name of granting federal agency.

Catalog of Federal Domestic Assistance(CFDA) program name.

CFDA number.


4f


Total new loans processed for eachprogram.

Total administrative costs recoveredfrom program.

Note 4 Nonmonetary Assistance

Nonmonetary federal assistancereceived during the current fiscal yearshould be reported in this note. Includethe following:

CFDA name and number.

(Dollar amount) of all nonmonetaryfederal assistance (federally assignedvalue).

Federal agency from which theassistance was received.

If pass-through funds, include the nameof the other entity from which theassistance was received.

F. Special Problem Areas

1. Unexpended vs Expended Federal Funds

Any federal funds received in a fiscal year inwhich they are not expended should bereported as Additions to Fund Balance onExhibit B in that fiscal year.

Contracts and grants for which money hasnot been received but from whichexpenditures have been made should bereported as a receivable on Exhibit A.These expenditures should be reported onthe federal schedule.

2. Refunds To Grantors

Refunds to grantors are not federalrevenues or federal expenditures and shouldnot appear on the federal schedule or in thereconciliation.

3. Disallowed Prior Year Costs

Sometimes prior year costs are determinedto be disallowed by the federal governmentand need to be refunded by cash or by

Chapter 8 Page 6

means of a reduction in current year draws.In either case, the disallowed prior yearcosts should be netted against current yearrevenue on Exhibit C and current yearexpenditures on the federal schedule.These costs will not be a reconciling item forthe reconciliation Note 1.

4. Contingent Liabilities

Recipients of Federal Financial Assistancewho pass-through funds to subrecipients arerequired by Office of Management andBudget Circular A-128 to determine if theresults of subrecipient audits necessitateadjustment of the recipient's own records.To comply with this requirement, recipientsshould prepare a listing of its subrecipientsquestioned costs to determine if they mayhave a material impact on the recipient'sfinancial statements on the fund level orfederal program level. If the magnitude andnature of the subrecipients questionedcosts indicate a possible material impact onthe recipient's financial statements on thefund level or federal program level, thisshould be disclosed in the recipient's Notesto the Financial Statements (not in the notesto the federal schedule).

If ultimate resolution of questioned costsindicated that material refunds are owed tothe federal government, appropriateadjustment of the financial statements(exhibits) should be made and fullydisclosed in the Notes to the FinancialStatements.

17


Schedule of Federal Financial Assistance Chapter 8

UST OF FEDERAL GRANTOR NUMBERS(Sorted By Federal Grantors)

FEDERAL GRANTORFEDERAL GRANTOR

NUMBER

Action 72Agriculture, Department of 10Appalachian Regional Commission 23Architectural and Transportation Barriers Compliance Board (ATBCB) 88Commerce, Department of 11

Commission on Civil Rights 29Commission on the Bicentennial of the U.S. Constitution 90Commodity Futures Trading Commission (CFTC) 78Defense, Department of 12Education, Department of 84Energy, Department of (DOE) 81Environmental Protection Agency 66Equal Employment Opportunity Commission (EEOC) 30Federal Communication Commission (FCC) 32Federal Emergency Management Agency 83Federal Maritime Commission (FMC) 33Federal Mediation and Conciliation Service (FMCS) 34Federal Trade Commission (FTC) 36General Services Administration (GSC) 39Government Printing Office (GPO) 40Harry S. Truman Scholarship Foundation 85Health and Human Services, Department of (13 should be dormant) 13 or 93Housing and Urban Development, Department ofInterior, Department of the

1415

International Trade Commission (ITC) 61

Interstate Commerce Commission (ICC) 41

Justice, Department of 16

Labor, Department of 17Library of Congress 42National Aeronautics and Space Administration (NASA) 43National Archives and Records Administration (NARA) 89National Credit Union Administration (NCUA) 44National Foundation on the Arts and the Humanities 45National Gallery of Art (NGA) 68National Labor Relations Board (NLRB) 46National Science Foundation (NSF) 47Nuclear Regulatory Commission (NRC) 77Office of Personnel Management 27Overseas Private Investment Corporation (OPIC) 70Pension Benefit Guaranty Corporation (PBGC) 86President's Committee on Employment of People with Disabilities 53Railroad Retirement Board 57Securities and Exchange Commission (SEC) 58Small Business Administration (SBA) 59State, Department of 19Tennessee Valley Authority (TVA) 62Transportation, Department of 20Treasury, Department of the 21

United States Information Agency (USIA) 82Veterans Health Services and Research Administration 64

48

Page 7


Schedule of Federal Financial Assistance Chapter 8 Page 8

UST OF FEDERAL GRANTOR NUMBERS(Sorted By Federal Grantor Numbers)

FEDERAL GRANTORNUMBER FEDERAL GRANTOR

10 Agriculture, Department of11 Commerce, Department of12 Defense, Department of

13 or 93 Health and Human Services, Department of (13 should be dormant)14 Housing and Urban Development, Department of15 Interior, Department of the16 Justice, Department of17 Labor, Department of19 State, Department of20 Transportation, Department of21 Treasury, Department of the23 Appalachian Regional Commission27 Office of Personnel Management29 Commission on Civil Rights30 Equal Employment Opportunity Commission (EEOC)32 Federal Communication Commission (FCC)33 Federal Maritime Commission (FMC)34 Federal Mediation and Conciliation Service (FMCS)36 Federal Trade Commission (FTC)39 General Services Administration (GSA)40 Government Printing Office (GPO)41 Interstate Commerce Commission (ICC)42 Library of Congress43 National Aeronautics and Space Administration (NASA)44 National Credit Union Administration (NCUA)45 National Foundation on the Arts and the Humanities46 National Labor Relations Board (NLRB)47 National Science Foundation (NSF)53 President's Committee on Employment of People with Disabilities57 Railroad Retirement Board58 Securities and Exchange Commission (SEC)59 Small Business Administration (SBA)61 International Trade Commission (ITC)62 Tennessee Valley Authority (TVA)64 Veterans Health Services and Research Administration66 Environmental Protection Agency68 National Gallery of Art (NGA)70 Overseas private Investment Corporation (OPIC)72 Action77 Nuclear Regulatory Commission (NRC)78 Commodity Futures Trading Commission (CFTC)81 Energy, Department of (DOE)82 United State Information Agency (USIA)83 Federal Emergency Management Agency84 Education, Department of85 Harry S. Truman Scholarship Foundation86 Pension Benefit Guaranty Corporation (PBGC)88 Architectural and Transportation Barriers Compliance Board (ATBCB)89 National Archives and Records Administration (NARA)90 Commission on the Bicentennial of the U.S. Constitution

93 or 13 Health and Human Services, Department of (13 should be dormant)

49


CHAPTER 9

NOTES TO THE

FINANCIAL STATEMENTS

CHAPTER 9

NOTES TO THE FINANCIAL STATEMENTS

1. Reporting Entity

Public Community College (PCC) was established in 1962, in accordance with the laws of the State ofTexas, to serve the educational needs of Public and the surrounding communities. The Public CommunityCollege District (PCCD) is considered to be a special purpose, primary government according to thedefinition in Governmental Accounting Standards Board (GASB) Statement 14. While the College receivesfunding from local, state, and federal sources, and must comply with the spending, reporting, and recordkeeping requirements of these entities, it is not a component unit of any other governmental entity.

2. Summary of Significant Accounting Policies

Report Guidelines

The significant accounting policies followed by PCCD in preparing these financial statements are inaccordance with the Texas Higher Education Coordinating Board's Annual Financial ReportingRequirements for Texas Public Community and Junior Colleges. These requirements are in substantialconformity with, the AICPA Industry Audit Guide, Audis of Colleges and Universities, as amended by AICPAStatement of Position (SOP) 74-8, Financial Accounting and Repotting by Colleges and Universities, andas modified by applicable FASB pronouncements issued through November 30, 1989, and as modified byall applicable GASB pronouncements cited in Codification Section Co5, "Colleges and Universities."

Basis of Accounting

The financial statements of Public Community College have been prepared on the accrual basis ofaccounting except depreciation expenses related to plant fund assets is not recorded. The Statement ofCurrent Fund Revenues, Expenditures and Other Changes is a statement of financial activities of currentfunds related to the reporting period. It does not purport to present the results of operations or the netincome or loss for the period as would a statement of income or a statement of revenues and expenses.

Encumbrance Accounting, under which purchase orders, contracts, and other commitments for theexpenditures of funds are recorded in order to reserve that portion of the applicable appropriation, isemployed as an extension of formal budgetary integration in the Current Funds. Under Texas law,appropriations lapse at August 31, and encumbrances outstanding at that time are to be either canceled orappropriately provided for in the subsequent year's budget. Encumbrances outstanding at year end thatwere provided for in the subsequent year's budget are reported as reservations of fund balance since theydo not constitute expenditures or liabilities.

Inventories, consisting of consumable office supplies, physical plant supplies, book store stock, and foodservice supplies, are valued at the lower of: cost under the `first-in, first-our method. or market.

To the extent that current funds are used to finance plant assets, the amounts so provided are accountedfor as (1) expenditures, in the case of normal replacement of equipment, library holdings, and livestock; (2)mandatory transfers in the case of required provisions for debt amortization and interest and equipmentrenewal and replacement and (3) transfers of a non-mandatory nature for all other cases.

fund Accounting

To ensure observance of limitations and restrictions placed on the use of the resources available to thecollege, accounts are maintained in accordance with the principles of "fund accounting." Resources forvarious purposes are classified for accounting and reporting purposes into funds that are in accordance withspecified activities or objectives. Separate accounts are maintained for each fund; however, in the


51 BEST COPY AVAILABLE

Notes to the Financial Statements Chapter 9 Page 2

accompanying financial statements, funds that have similar characteristics have been combined into fundgroups. Accordingly, all financial transactions have been recorded and reported by fund group.

Within each fund group, fund balances restricted by outside sources are distinguished from unrestrictedfunds allocated to specific purposes by action of the governing board. Externally restricted funds may onlybe utilized in accordance with the purposes established by the source of such funds and are in contrast withunrestricted funds over which the governing board retains full control to use in achieving any of its institutionalpurposes.

Endowment and Similar Funds are subject to the restrictions of gift instruments requiring in perpetuity thatthe principal be invested and only the income be utilized. Term endowment funds are similar to otherendowment funds, except that all or part of the principal may be utilized after a stated period of time or uponthe occurrence of a certain event. Funds functioning as endowments are funds that the governing boardhas approved to be used as endowments.

All gains and losses arising from the sale, collection, or other disposition of investments and other noncashassets are accounted for in the fund which owned the assets. Ordinary income derived from investments,receivables, and other sources is accounted for in the fund owning such assets, except for income derivedfrom investment of Endowment and Similar Funds. That income is accounted for in the fund to which it isrestricted or, if unrestricted, as revenues in unrestricted current funds.

All other unrestricted revenue is accounted for in the appropriate unrestricted fund. Restricted gifts, grants,appropriation, endowment income, and other restricted resources are accounted for in the appropriaterestricted funds. Restricted Current Fonds are reported as revenues and expenditures when expended forcurrent operating purposes. Contract and grant awards for the current reporting period are shown asadditions to fund balances in Restricted Current Funds.

If the college is depreciating their capital assets, the depreciation method should be disclosed and thestatement regarding depreciation under the Basis of Accounting should be changed.

The different fund groups used at Public Community College are as follows:

Current Funds

Funds available for current operating and maintenance purposes as well as those restricted by donors andother outside agencies for specific operating purposes. Current funds are segregated into separatebalanced fund groups:

Unrestricted Current Funds - Funds received by an institution that have no limitations or stipulationsplaced on them by external agencies or donors. The funds are used for carrying out the primarypurpose of an institution, i.e. educational, research, extension and administration.

Auxiliary Enterprises - Funds for activities that serve students, faculty, or staff for charges that aredirectly related to, although not necessarily equal to, the cost of the service. Examples are residencehalls, food services and book stores.

Restricted Current Funds - Funds available for current purposes, but with restrictions from outsideagencies or persons. Revenues are reported only to the extent of expenditures for the current year.

Loan Funds

Funds available for loans to students, faculty and staff.


524 -

1


Endowment and Similar Funds

Funds subject to restrictions of endowment and trust instruments requiring that principal be maintained andthat only the income be spent.

Annuity and Life Income Funds

The Annuity Funds group consists of funds donated to an institution on the condition that the institution paya stipulated amount of the funds to the donor or designated individual for a specified time or until the timeof death of the annuitant. The Life Income funds group consists of funds contributed to an institution subjectto the requirement that the institution periodically pay the income earned on the assets (less managementexpenses) to designated beneficiaries.

Plant Funds

Plant funds are divided into these separate balanced fund groups:

Unexpended - Funds for the construction, rehabilitation, and acquisition of physical properties forinstitutional purposes.

Renewals and Replacements - Funds accumulated for the renewal and replacement of physicalplant properties.

Retirement of Indebtedness - Funds accumulated to meet debt service charges and the retirementof indebtedness.

Investment in Plant - Funds already expended for plant properties. Physical properties are statedat cost at date of acquisition or fair market value at date of donation for gifts and fair market valueat August 31, 19XX for livestock. Depreciation on physical plant and equipment is not recorded.

Agency Funds

Funds held by the college as custodial or fiscal agent for students, faculty members, and/or others.

Memorandum Totals

The Balance Sheet in columnar form, the Statement of Changes in Fund Balances, and the Statement ofCurrent Funds Revenues, Expenditures and Other Changes are shown with memorandum totals for thecurrent and prior years. Interfund borrowing has not been eliminated, but has been off-set in the assets andliability sections. The memorandum totals are presented only to facilitate financial analysis and do notpurport to present financial position, in conformity with generally accepted accounting principles. Neitheris such data comparable to a consolidation.

3. Authorized Investments

The Board of Trustees of Pubic Community College has adopted a written investment policy regarding theinvestment of its funds as defined in the Public Funds Investment Act of 1995 (Chapter 2256, TexasGovernment Code). The investments of the college are in compliance with the Trustees' investmentpolicies.



4. Deposits and Investments

At August 31, 19XX, the carrying amount of Public Community College's deposits was ($ XXX,XXX), and totalbank balances equaled ($ XXX,XXX). Bank balances of ($ XXX,XXX) are covered by federal depositoryinsurance and ($ XXX,XXX) was covered by collateral pledged in Public Community College's name. Thecollateral was held by Public Community College or by its agent (Category 1). Bank balances totaling($XXX,XXX) were collateralized with securities held by the pledging financial institution's trust departmentor agent in Public Community College's name (Category 2). Bank balances in the amount of ($ XXX,XXX)were uncollateralized at fiscal year end (Category 3). (This includes any bank balance that wascollateralized with securities held by the pledging financial institution's department or agent but not in PublicCommunity College's name).

Note: the above descriptions are examples of acceptable narrative format for describing categories of riskfor deposits. Not all institutions will have deposits included in all three categories and each should adapt itsdisclosure accordingly. However, the narrative should explicitly identify the category or categories of thedeposits being described as indicated above. Cash and Deposits include as reported on Exhibit A, BalanceSheet, consist of the items reported below.

Cash and Deposits

Bank DepositsDemand Deposits $)oopoorTime Deposits /MUMS

mx,xxx

Cash and Cash EquivalentsPetty Cash on Hand tooc,morReimbursements in Transit xxx.

AO=Total Cash and Deposits /MUM

To comply with the reporting requirements of GASB Statement No. 3, Investments (including RepurchaseAgreements), and Reverse Repurchase Agreements, Public Community Colleges's investments arecategorized under "Investment Categories" to give an indication of credit risk assumed by Public JuniorCollege at year end. Credit risk is the risk that another party to a deposit or investment transaction will notfulfill its obligations. This is not to be confused with market risk, which is the risk that the market value ofan investment, collateral protecting a deposit, or securities underlying a repurchase agreement will decline.Market risk is not depicted in this note.

The following categories of credit risk are included:

Category 1: Investments that are insured or registered or for which the securities are held by theinstitution or its agent in the institution's name.

Category 2: Uninsured and unregistered investments for which the securities are held by the broker'sor dealer's trust department or agent in the institution's name.

Category 3: Uninsured and unregistered investments for which the securities are held by the brokeror dealer, or by its trust department or agent but not in the institution's name.

The categories above may not apply to all types of investments. In general, investments in pools managedby other governments or in mutual funds or investments in real estate should be disclosed but notcategorized because they are not evidenced by securities that exist in physical or book entry form.



Securities underlying reverse repurchase agreements should also be disclosed but not categorizedbecause they are held by the buyer-lender.

Investment Categories

CategoryType of Carrying MarketSecurity 1 3 Amount Value

US Government securities $xxx,xxx $ $xxx,xxx $xxx,xxxReal Estate Mortgagesand Other Notes )00C,X0( )00000( )0(X,XXX moc,xxx =pax

Corporate Bonds Xa,)00C lOCXXICX )00Q00C xxx,)00( 0:X,)00(

Repurchase Agreements MUM 2201.2= SaanTOTALS Imo= }mum

.22912;01

lx2ruaz 12M22a TIMM

Investments held by broker-dealers

U.S. Government SecuritiesU.S. Instrumentality SecuritiesReal Estate Investments

Total InvestmentsConsisting of the following:

Temporary InvestmentsLong Term Investments (Exh. A)Total, as above

5. Derivatives

under reverse repurchase agreements:

saxim Esi

toocxxxSCUMham

Interest in derivative products has increased in recent years. Derivatives are investment products which maybe a security or contract which derives its value from another security, currency, commodity or index,regardless of the source of funds used. The following information must be provided if the community collegehas made investments in derivatives:

Provide a description of the product and report the carrying value, the market amount, source offunds, net gain or loss from the investment, if the entire investment has a potential to be lost and amaximum amount that could be lost (can it exceed the carrying amount ?)

Example of footnote:

The community college has invested in a real estate derivative that matures on 09/01/1997. This hasa moderate amount of risk.

Book Market Source MaximumValue Value of Funds Gain/Loss Can CarrvinaAmount be Lost ? loss

$70,000 $71,000 General $1,000 Yes $70,000


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6. Bonds and Variable Rate Notes Payable

General information related to bonds payable is summarized below:

Bond Issue Name, Series 19XX.

To construct a student demonstration building.

Issued (month-day-year).

($X,XXX,XXX); all authorized bonds have been issued.

Source of revenue for debt service general fees, Department of Education annual interest grant.

Outstanding Balance by Bond Issue.

COMMENT

This is the prescribed format that each institution should use for each bond issue or variable rate note. Avoidparagraphs that are too brief or too lengthy. Each bond issue should continue to have the same issuedescription annually until, and including, the year in which it is extinguished or retired.

Bonds and variable rate notes payable are due in annual installments varying from ($ XXX,XXX) to ($XXX,XXX) withinterest rates from X.X percent to X.X percent with the final installment due in 20XX. The principal and interestexpense requirements for the next five years and beyond is summarized below for bonds and variable rate notesissued.

Fiscal Year Princicat Interest Igtal

1992 fooctocc fooe,xxx footrace1993 coc,xxx ioccxce wrap(1994 =crag( ioopoot coc,xxx1995 ica,xxx )001)00( )001)00C

1996 mo(0100( XXX,XCX )001)001

Beyond Five Years mio ,221X MIME

Total 2$5i 12MM fanEgc

7. Advance Refunding Bonds

Refunded ($X,XXX,XXX) of Student Fee Revenue Bonds, Series 1987:

Issued refunding bonds on (month-day-year).($XX,XXX,XXX), all authorized bond have been issued.General Obligation Bonds Refunding Series 19XX.Average interest rate of bonds refunded (X.X %).Net proceeds from Refunding Series ($ XXX,XXX); after payment of ($X,XXX,XXX) in underwritingfees, insurance, and other issuance costs.



Additional ($XXX,XXX) of 19XX Series sinking fund monies was used to purchase U.S. Governmentsecurities which were deposited in an irrevocable trust with an escrow agent to provide for all futuredebt payments on the 19XX Series bonds.The 19XX Series bonds are considered fully defeased and the liability for those bonds has beenremoved from the Investment in Plant fund group.Advance refunding of the 19XX Series bonds reduced the university's debt service payments over thenext 20 years by approximately ($XXX,XXX).Economic Gain ($XXX,XXX) difference between the net present value of the old and new debtservice payments.Accounting Gain ($XXX,XXX) accounting gain was resulted from the advanced refunding.

8. Defeased Bonds OutstandingYear Par Value

Bond Issue Refunclosi OutstandingRevenue bonds Series 19)oc 1985 $xxx,xxxRevenue bonds Series 19ior 1988 $)oogocrRevenue bonds Series 19)oc 1987 ir.XCLM

Total INGIUMS

(Year refunded for defeased bonds should be designated by calendar year).

9. Employees' Retirement Plan

The State of Texas has joint contributory retirement plans for almost all its employees. One of the primaryplans in which the college participates is administered by the Teacher Retirement System of Texas. Thepercentages of participant salaries currently contributed by the state and by each participant are (x.ioi%)and (x.xx%) respectively, of annual compensation.

The Teacher Retirement System does not separately account for each of its component governmentagencies, because it bears sole responsibility for retirement commitments beyond contributions fixed bythe Legislature. According to an independent actuarial evaluation as of August 31, (year), the present valueof the retirement system's actual and projected liabilities, including projected benefits payable to its retireesand active members and their beneficiaries, was in excess of the assets of the retirement system.However, the actuary projected that such assets, augmented by projected future contributions andearnings, would be sufficient to amortize the unfunded difference over a period of 30 years assumingpayroll growth of 6%. Further information regarding actuarial assumptions and conclusions, as well asaudited financial statements, are included in the retirement system's annual financial report.

The state has also established an optional retirement program for institutions of higher education.Participation in the optional retirement program is in lieu of participation in the Teacher Retirement System.The optional retirement program provides for the purchase of annuity contracts. The percentages ofparticipant salaries currently contributed by the state and each participant are (x.ior%) and (x.xx%),respectively. Since these are individual annuity contracts, the state has no additional or unfunded liabilityfor this program.

The retirement expense to the state for the college was ($xx0000r) for the fiscal year ended August 31,19ior. This amount represents the portion of expended appropriations made by the state Legislature onbehalf of the college.

This note may vary by college but should be in accordance with GASB statement No. 5.


57


10. Deferred Compensation Program

College employees may elect to defer a portion of their earnings for income tax and investment purposespursuant to authority granted in Senate Bill No. 872 of the 63rd Legislature. As of August 31, 19)m, thecollege had (number) employees participating in the program. A total of ($xxx,xxx) in payroll deductionshad been invested in approved plans during the fiscal year, bringing the total of deferred salaries of currentemployees to ($xxx,xxx) since the inception of the program.

11. Compensated Absences

Full-time employees earn annual leave from (number) to (number) hours per month depending on the(number) of years employed with the college. The college district's policy is that an employee may carryhis accrued leave forward from one fiscal year to another fiscal year with a maximum number of hours upto (number) for those employees with (number) or more years of service. Employees with at least sixmonths of service who terminate their employment are entitled to payment for all accumulated annualleave up to the maximum alloy/ed. The college recognized the accrued liability for the unpaid annual leavein the Unrestricted Current Fund. Sick leave, which can be accumulated without limit, is earned at the rateof (number) hours per month. It is paid to an employee who misses work because of illness or to the estateof an employee in the event of his/her death. The maximum sick leave that may be paid an employee'sestate is one-half of the employee's accumulated entitlement or (number) hours, whichever is less. Thecollege's policy is to recognize the cost of sick leave when paid. The liability is not shown in the financialstatements since experience indicates the expenditure for sick leave to be minimal.

This note may vary by college.

12. Pending Lawsuits and Claims

On August 31, 19XX, various lawsuits and claims involving Public Community College were pending. Whilethe ultimate liability with respect to litigation and other claims asserted against the college cannot bereasonably estimated at this time, this liability, to the extent not provided for by insurance or otherwise, isnot likely to have a material effect on the college.

This footnote does not assume that every lawsuit or claim is immaterial. Each audit firm should test eachcase and in the event it is material, this footnote would be revised.

13. Capital Lease Obligations

Certain leases to finance the purchase of equipment are capitalized at the present value of future minimumlease payments. The original capitalized cost of all such property (use a table format if more than onecategory of property is under capital lease) under capital lease as of August 31, 19XX is as follows:

Class of Property

Table A

Amount

Land tooc,moiBuilding moo=Furniture and Equipment )00C,XXX

Vehicles, Boats and Aircraft MUMS

km=

Revised as of Apri1,30,8

1996


The following is a schedule of the future minimum lease payments for leased property and the presentvalue of the net minimum lease payments at August 31, 19XX.

Minimum Lease Payments for:

1992 tocxxoc1993 xxxxa1994 xxx,xxx1995 xxx,xxx1996 ssx,xxx1997 and beyond MUNI

Less: Interest (ooc,moc)

Present Value of NetMinimum Lease Payments UMW

14. Operating Lease Commitments and Rental Agreement

Included in current expenditures are the following amounts of rent paid or due under operating leases.

Year Ended August 31,Fund Group 1.991 1919

Unrestricted Current Funds Smix,xa tooc,xxxRestricted Current Funds (continue as needed) jgzjgg _22XXXX

Totals SALM UM=For those operating leases having initial or remaining noncancellable lease terms in excess of oneyear, the disclosure should include the future minimum payments required as of the balance sheetdate, both in the aggregate and for each of the five succeeding years.

Future, minimum lease rental payments under noncancellable operating leases having an initial term inexcess of one year as of August 19XX are as follows: (Future minimum lease payments for 5 yearsand beyond should be disclosed.)

Table B

Year Ended Minimum Future Lease Payments

1993 $xx,xxx1994 woo(1995 xx,xxx1996 mc,)oo(

1997 xx,xxx1998 and beyond $xx,xxx



15. Funds Held in Trust by Others

The balances, or transactions, of funds held in trust by others on behalf of Public Community Collegeare not reflected in the financial statements. At August 31, (year) there were six such funds for thebenefit of the college. Based upon the most recent available information, the assets of these funds arereported by the trustees/regents at values totaling (dollar amount).

16. Contract and Grant Awards

Contract and grant awards are accounted for in accordance with the requirements of the AICPAIndustry Audit Guide, Audits of Colleges and Universities. Funds received, but not expended during thereporting period, are shown as additions to fund balance on Exhibit B. Revenues are recognized onExhibit C as funds are actually expended. For federal contract and grant awards, funds expended, butnot collected, are reported as Federal Receivables on Exhibit A. Non-federal contract and grantawards for which funds are expended, but not collected, are reported as Accounts Receivable onExhibit A. Contract and grant awards that are not yet funded and for which the institution has not yetperformed services are not included in the financial statements. Contract and grant awards fundsalready committed, e.g. multi-year awards, or funds awarded during fiscal year 19XX for which monieshave not been received nor funds expended totalled ($xx,xxx). Of this amount, ($ioc,iooc) was fromFederal Contract and Grant Awards, ($xx,xxx) was from State Contract and Grant Awards, (Su)*from Local Contract and Grant Awards and ($xx,xxx) from Private Contract and Grant Awards.

17. Self-Insured Plans

The college has various self-insured arrangements for coverage in the areas of employee healthinsurance, workers' compensation, unemployment compensation, and medical malpractice. Employeehealth and medical malpractice plans are funded. (Detail may be provided on how they are funded.).Workers' compensation and unemployment compensation plans are on a pay-as-you-go basis, inwhich no assets are set aside. Accrued liabilities are generally based on actuarial valuation andrepresent the present value of unpaid expected claims. Estimated future payments for incurred claimsare charged to current funds expenditures.

18. Post Retirement Health Care and Life Insurance Benefits

In addition to providing pension benefits, the state provides certain health care and life insurancebenefits for retired employees. Almost all of the employees may become eligible for those benefits ifthey reach normal retirement age while working for the state. Those and similar benefits for activeemployees are provided through an insurance company whose premiums are based on benefits paidduring the previous year. The state recognizes the cost of providing these benefits by expending theannual insurance premiums. The state's contribution per full-time employee was ($ica.xx) per monthfor the year ended August 31, 19XX and totaled ($xxxxo0 for the year. The cost of providing thosebenefits for (xxx) retirees was (Wow() and for (xxx) active employees was ($xioc,mo().

Note: If the number of retirees and active employees and the cost for each group cannot be separatedthen the last sentence would be:

"The cost of providing those benefits for retirees is not separable from the cost of providing benefits forthe active employees."

This note should be in accordance with GASB statement No. 13.


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19. Related Parties

The Public Junior College Foundation is a nonprofit organization with the sole purpose of supportingthe educational and other activities of the college. The foundation solicits donations and acts ascoordinator of gifts made by other parties. It remitted restricted gifts of ($xxx,xxx) and unrestricted giftsof ($xxx,xxx) to the college during the year ended August 31, 19XX. During the fiscal year the collegefurnished certain services, such as office space, utilities and some staff assistance, to the foundation forwhich the foundation reimbursed the college at cost for these services which totaled ($xx,xxx).Accounts Receivable of ($xx,xxx) from the foundation at August 31, 19XX are due and payable within30 days from billing interest fee.

The Ex-Students Association provided services on behalf of the college for which the college paid($xx,xxx) during the 19XX fiscal year. These services included maintaining records on the students whohad graduated from the college. Office space and utilities were also provided to the association by thecollege.

If a college has a related party not listed, an appropriate footnote should be included describing thepar*

20. Interfund Borrowing

All interfund borrowing has been made from unrestricted funds and is payable within one year withoutinterest.

Interfund borrowing by fund and amount should be included in this footnote.

21. Property Tax

The District's ad valorem property tax is levied each October 1 on the assessed value listed as of theprior January 1 for all real and business personal property located in the District. Taxes are due onreceipt of the tax bill and are delinquent if not paid before February 1 of the year following the year inwhich imposed.

The use of tax proceeds is restricted to either maintenance and operations or interest and sinkingexpenditures. Tax collections for the year ended August 31, 19XX were XX% of the current tax levy.Allowances for uncollectible taxes are based upon historical experience in collecting property taxes.

22. Deferred Revenues

Revenues, primarily consisting of tuition, fees, and housing charges, related to academic terms in thenext fiscal year are recorded on the balance sheet as deferred revenue in the current fiscal year.

23. Budgetary Data

Each community college district in Texas is required by law to prepare an annual operating budget ofanticipated revenues and expenditures for current operating funds for the fiscal year beginningSeptember 1. The budget, which is prepared on the accrual basis of accounting, is adopted by theCollege's Board of Trustees. A copy of the approved budget must be filed with the Texas HigherEducation Coordinating Board, Legislative Budget Board, and Legislative Reference Library.



24. Income Taxes

The College is exempt from income taxes under Internal Revenue Code Section 115 Income of States,Municipalities, Etc., although unrelated business income may be subject to income taxes under InternalRevenue Code Section 511 (a)(2)(B), jmoosition of Tax on Unrelated Business Income of Charitable,Etc. Oraanizations. The college had no unrelated business income tax liability for the year endedAugust 31, 19XX.

25. Subsequent Events (as needed)

26. Prior Period Adjustments (as needed)


132

CHAPTER 10

STATEMENTS AND SCHEDULES

CHAPTER 10

STATEMENTS AND SCHEDULES

Table of Contents

Names and Terms of the Board of Trustees/RegentsPrincipal Administrative Officers and the Business and Financial Staff

Independent Auditor's Opinion on the General-Purpose Financial Statements

ExhibitsA Balance SheetB Statement of Changes in Fund BalancesC Statement of Current Funds Revenues, Expenditures and Other Changes

Notes to the General Purpose Financial Statements

Compliance Report - Based on an Audit of General-Purpose or Basic Financial Statements Performedin Accordance with Government Auditing Standards.

Report on the Internal Control Structure Based on an Audit of the General Purpose FinancialStatements Performed in Accordance with Government Auditing Standards.

SchedulesA-1 Schedule of Cash, Cash Equivalents, and InvestmentsC-1 Schedule of Current Funds RevenuesC-2 Schedule of Current Funds Expenditures by Object ClassificationC-3 Schedule of Educational and General Expenditures Summarized by Elements of Institutional CostsC-4 Schedule of Changes in Taxes ReceivableD-1 Schedule of Bonds Payable and Debt Service RequirementsD-2 Schedule of Pledged Revenues and Fund Balances for Revenue Bonds

Independent Auditor's report on Schedule of Federal Financial Assistance

D-3 Schedule of Federal Financial Assistance

Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs.

Single Audit Report on Compliance with the General Requirements Applicable to Federal Financial AssistancePrograms.

Single Audit Opinion on Compliance with Specific Requirements Applicable to Major Federal FinancialAssistance Programs.

Single Audit Report on Compliance with Requirements Applicable to Nonmajor Federal Financial AssistanceProgram Transactions

Report on Fraud, Abuse, or Illegal Acts (Only when observed).

Schedule of Findings and Questioned Costs


Chapter 10 - Statements and Schedules

PUBLIC JUNIOR COLLEGE DISTRICT

ORGANIZATIONAL DATAFor the Fiscal Year 19XX

Board of Trustees/Regents

Full NameFull Name

Officer

members

Board TitleBoard Title

Term ExpiresAugust 31

Full Name City, State 19XXFull Name City, State 19XXFull Name City, State 19XXFull Name City, State 19XXFull Name City, State 19XXFull Name City, State 19XXFull Name City, State 19)0(

Principal Administrative Officers

Full Name PresidentFull Name Vice President of Academic AffairsFull Name Vice President of Business AffairsFull Name Vice President of DevelopmentFull Name Vice President of Student ServicesFull Name Dean of Academic InstructionFull Name Dean of Vocational EducationFull Name Controller


Independent Auditor's Report on General-Purposeor Basic Financial Statements

The independent auditors report should precede the financial statements and the auditor should follow thepronouncements of the American Institute of Certified Public Accounts. (Statement of Position 92-7 or subsequentpronouncements).


PUBLIC COMMUNITY COLLEGEEXHIBIT ABALANCE SHEETAugust 31, 1993With Memorandum Totals at August 31, 1992

CURRENT FUNDS

Auxiliary LoanASSETS Unrestricted Enterprises Restricted Total Funds

(1) Cash and Cash Equivalents (WI A-1) $ 211,390 $ 37,305 $ 142,568 $ 391 ,283 15,783(2) Short-Term Investments (Sch A-1) 1,388,812 0 82,384 1,449,198 0(3) Balance in State Appropriations 0(4) Accounts Receivable (net of allowance for(5) doubtful accounts of $109,000 both years) 809,819 575,095 75,414 1,460,128(8) Taxes Receivable (net of allowance for doubtful(7) accounts of $458,335 both years) (WI C-4) 154,622 154,822(8) Due From Other Funds 423,087 423.087(9) Investments (Sch. A-1) 2,200,000 900,000 0 3,100,000 0

(10) Accrued Interest Receivable 0(11) Prepaid Expenses 30,000 30,000(12) Deferred Charges 123,785 52,538 176,323(13) Federal Receivables 243,496 243,498(14) Deposits 0(15) Notes Receivable (net of allowance for(18) doubtful accounts of $190,318) 0 135,555(17) Bond Proceeds Receivable 0(18) Consumable Inventories 22,358 22,368(19) Inventories for Resale 33,285 33,285(20) Land 0(21) Buildings 0(22) Improvements Other Than Buildings 0(23) Equipment 0(24) Library Books 0(25) Museums and Art Collections 0(28) Construction in Progress 0

Total Assets 5,331,873 $ 1,628,223 $ 523,862 $ 7,483,758 $ 151,338

LIABILITIES AND FUND BALANCESLiabilities:

(27) Accounts Payable $ 377,747 $ 214,268 5,733 $ 597,748 $(28) Accrued Liabilities 356,908 1,180 2,080 380,168(29) Deposits Payable 15,238 72,600 87,838(30) Due To Other Funds 8,551 115,587 122,118 132,399(31) Deferred Revenues 2,420,349 816,608 3,036,957(32) Accrued Compensable Absences Payable 212,745 212,745(33) Bonds Payable (net a unamortized premium/(34) discount of $XXX as of 8/31/XX) (Sch 0-1) 0(35) Notes and Loans Payable 0(36) Lease - Purchase Agreements Payable 0(37) Funds Held in Custody for Others 0

Total Liabilities 3,382,967 911,207 123,380 4,417 574 132,399

Fund Balance:Unrestricted

Reserved(38) Encumbrances $ 101,383 $ 4,094 $ $ 105,477(39) Accounts Receivable 809,619 575,096 1,384,714(40) Invader/ 22,358 33,285 55,643(41) Prepaid Expenses 30,000 30,000(42) Unreserved(43) Designated(44) Future Operating Budget(s) 1,000,000 49,542 1,049,542(45) Capital Prolate 25,000 25,000(48) Other (detail as needed) 0(47) Undeeignated 15,328 15,328(48) Restricted(49) U.S. Government Grants Refundable 0 44,764(50) Institutional Matching Funds 0 4,373(51) Other 400,482 400,482 (30,198)(52) Net Investment in Plant 0

Total Fund Balances (Exh. B) 1,948,886 717,018 400,482 3,068,184 18,939Total Liabilities and Fund Balances $ 5.331,873 $ 1,628,223 $ 523,882 $ 7,483,758 $ 151,338

See accompanying Notes to the Financial Statements,

Revised as of AprN 30, 1998

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Endowmentand

Similar Funds

Annuity andLife Income

Funds

PLANT FUNDS

AgencyFunds

TOTALSMEMORANDUM ONLY

Unexpended

Renewalsand

Replacements

Retirementof

Indebtedness

Investmentin

PlantCurrent

YearPflOrYear

$ 0 $ $ 82,251 $ $ 0 $ $ 13,183 $ 502,460 $ 800,670:i (1)0 47,245 1,579,559 0 3,076,000 .5,486,5501:. (2)

0 (3)(4)

1,458,105 1,054 2,919,287 1,013,940: (5)(6)

154,622 1132,845 (7)618,737 1,041,824 1,058,449 (8)

0 0 100,000 0 0 0 3,200,000 (9)0 (10)

30,000 105,273 (11)141,126 317,449 455,687 (12)

243,498 328,988 (13)0 (14)

(15)135,555 137,415 (16)

0 (17)22,358 (18)33,285 (19)

1,265,651 1,285,851 1,285,664 (20)49,148,424 49.148,424 40,139,131 (21)

2,189,291 2,189,291 2,037,911 (22)10,748,704 10,746,704 9.024.322 (23)

544,488 544,488 544,485 (24)0 (25)

1,358,020 1,358,020 5029.123 (26)0 $ 0 $ 3,664,358 $ 0 $ 1,720,685 $ 63.892,558 $ 14,217 $ 76,926,914 $ 70028,29r1

$ $ 484,063 $ $ 1,061,811 $ 1,584,051 (27)158,560 518,728 506,997 (28)

87,838 92,859 (29)787,307 1,041,824 1,056,449 (30)

3,036,957 2,621,948 (31)212,745 187,984 (32)

(33)3,000,000 18,015,000 21,015,000 18,980,000 (34)

144,350 144,350 168,891 (35)69,918 69,918 289,120 (36)

14,217 14,217 12,092 (37)0 0 3,608,413 0 945,887 18,084,918 14,217 27 203,386 25;459,989

$ $ $ 0 $ $ 0 $ $ $ 105,477 $ (38)1,384,714 (39)

55,843 (40)30,000 (41)

(42)(43)

1,049,542 (44)25,000 i (45)

015,328 318.732: ((446))

(48)44,784 : (49)

55,945 771,047774,818 1,204,373 :: (50)

4,607.107, (51)45,807,842 45,807,842 30,582,463 (52)

0 0 55,945 0 774,818 45,807,842 0 49,723,528 : 44;568,30Z$ 0 S 0 $ 3,664,358 $ 0 $ 1,720,685 $ 63A92,558 $ 14,217 $ 76,928,914, $::::.70,028.111t,


68

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PUBLIC COMMUNITY COLLEGEEXHIBIT BSTATEMENT OF CHANGES IN FUND BALANCESFor the Year Ended August 31, 1993With Memorandum Totals at August 31, 1992

CURRENT FUNDS

REVENUES AND OTHER ADDITIONSUnrestricted

AuxiliaryEnterprises Restricted Total

Loan

Funds

(1) Unrestricted Current Funds Revenue (Exh. C) $ 22,536,389 S 2,075,805 24,612,194(2) State Appropriations - Restricted 1,822,215 1,822,215(3) Federal Grants and Contracts 3,755,746 3,755,746(4) State Grants and Contracts 216,518 216,518(5) Local Gifts, Grants, and Contracts 455,992 455,992(6) Private Gifts, Grants and Contracts 0(7) Investment/Endowment Income 10,642 10,642(8) Realized Gains on Investments 0(9) Interest on Loans Receivable 0 27,681

(10) U.S. Government Advances 0(11) Net Change in Bonds Payable 0(12) Net Change in Notes Payable 0(13) Expended for Plant Facilities (Includes Sx,xor,mor 0(14) Charged to Current Funds Expenditures)(15) Other Additions 0 2,369

Total Revenues and Other Additions 22,536,389 2,075,805 6,261,113 30,873,307 30,050

EXPENDITURES AND OTHER DEDUCTIONS(16) Expenditures (Exh. C) 21,347,618 1,811,940 6,487,704 29,647,262(17) Expended for Plant Facilities 0(18) Lapsed Appropriations 0(19) Indirect Costs Recovered 18,518 18,518(20) Refunded to Grantors 0(21) Loan Cancellations and Write Offs 0(22) Administrative and Collection Costs 0 8,677(23) Retirement of Indebtedness - Bonds 0(24) Interest on Indebtedness 0(25) Net Realized Losses on Investments 0(26) Disposal of Plant Facilities 0(27) Other Deductions 0

Total Expenditures and Other Deductions 21,347,618 1,811,940 6,506,222 29,665,780 8,677

TRANSFERS - ADDITIONS / (DEDUCTIONS)Mandatory Transfers

(28) Retirement of Indebtedness . (2,236,850) (2,236,850)(29) Building Use Fees 0(30) Tuition 0(31) TPEG (129,669) 116,702 (12,967) 12,967(32) SEOG Matching (323,564) 323,564 0(33) CWS Matching (84,201) 84,201 0(34) Other 0(35) Non-Mandatory Transfers 0

Total Transfers - Additions / (Deductions) (2,774,284) 0 524,467 (2,249,817) 12,967NET INCREASE/(DECREASE) FOR THE

FISCAL YEAR (1,585,513) 263,865 279,358 (1,042,290) 34,340

FUND BALANCES, September 1, 19XX $ 3,081,389 453,151 163,004 3,697,544 (60,165)Restatements (Prior Period Adjustments) 452,810 0 (41,880) 410,930 44,764

FUND BALANCES September 1, 19XX-Restated 3,534,199 453,151 121,124 4,108,474 (15,401)

FUND BALANCES, August 31, 19XY (Exh. A) $ 1,948,686 $ 717,016 $ 400,482A 3,066,184 $ 18,939


EST COPY AVARIABLE,

Endowment Annuity andand Life Income

Similar Funds Funds

$

0 0

0 $ 0

0 0

0 0

0 $0 0

0 0

0 $ 0

PLANT FUNDSTOTAL

MEMORANDUM ONLY

Unexpended

Renewalsand

Replacements

Retirementof

Indebtedness

Investmentin

PlantCurrent

Year Year

24,612,1941,822,2153,755,746

216,518

23,681:,848 (1)1,804,647 (2)3,255,438 (3)

175,660 (4)162,500 618,492 518710 (5)

0 (6)77,638 669,497 757,777 159,418i (7)

0 (8)27,681 (9)

0 (10)2,055,000 2,055,000 949,308: (11)

0 (12)(13)

4,170,179 4,170,179 1,069,181 (14)577,585 579,954 380,386 (15)817,723 0 669,497 6,225,179 38,615,756 31,994,598

29,647,262 27,541298 (16)3,734,367 3,734,367 331,746 (17)

0 (18)18,518 (19)

0 (20)0 120,028 (21)

8,677 8,606 (22)2,055,000 2,055,000 949,309 (23)

16,884 1,039,836 1,056,720 804,839 (24)0 (25)0 (26)

37,724 17,405 55,129 211,216 (27)

3,788,975 0 3,112,241 0 36,575,673 29,967.041

2,236,850 0 0 (28)0 0 (29) .

0 0 (30)0 0 (31)0 0 (32)0 0(33)0 0(34)0 0 (35)

0 0 2,236,850 0 0 0

(2,971,252) 0 (205,894) 6,225,179 2,040,083 2,027,557

3,027,197 $ 1,460,203 39,582,463 47,707,242 42,732,6930 0 (479,491) 0 (23,797) (19L9491

3,027,197 0 980,712 39,582,463 47,683,446 42,540,744.

$ 55,945 $ 0 774,818 $ 45,807.842 $ 49,723,528$- 44,5611,301

BEST COPY MAILABLE


70

PUBLIC COMMUNITY COLLEGEEXHIBIT CSTATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES AND OTHER CHANGESFor the Year Ended August 31, 1993With Memorandum Totals for the Year Ended August 31, 1992

TOTALSMEMORANDUM ONLY

Auxiliary CurrentREVENUES Unrestricted Enterprises Restricted Year Year

State Appropriations - General Revenue s 12,522,917 0$ 1,822,215 S 14,345,132 $::: ... ::14;129,639:Tuition and Fees 4,475,658 480,134 0 4,955,792 4;526,98t:.Taxes for Current Operation 5,037,814 0 0 5,037,814 4,823.015::Federal Grants and Contracts 18,518 0 3,726,708 3,745,226State Grants and Contracts 0 0 96,528 96,528 175;660Local Grants and Contracts 27,677 0 307,144 334,821 410,391i:Private Gifts, Grants and Contracts 0 0 0 0Investment/Endowment Income 0 0 0 0Sales & Service of Educational Activities 123,782 0 0 123,782 111;742:Sales & Services of Auxiliary Enterprises 0 1,595,671 0 1,595,671 ,389,252:Other Sources

Interest Income 27,819 0 10,642 38,461 ......... .72;42TGains/Losses on Investments 0 0 0 0 0Misc. Income 302,204 0 0 302,204 397275:

Total Current Funds Revenues 22,536,389 2,075,805 5,963,237 $ 30,575,431 $ 29,307,511$

(Exh. B) (Exh. B)

EXPENDITURES AND MANDATORY TRANSFERS:Educational and General

Instruction 9,767,241 $ 5 1,857,292 11,624,533 5 9,962,094Research 0 58,998 56,998Public Service 868,983 257,963 1,126,946 962.859Academic Support 1,991,457 200,780 2,192,237 1,935,352Student Services 1,934,484 268,866 2,203,350 2,447209Institutional Support 3,404,703 182,714 3,587,417 5,063,557Operation and Maintenance of Plant 3,280,200 162,954 3,443,154 3,155,914Scholarships and Fellowships 100,550 3,500,137 3,600,687 3,086.1342

Total Educational & General Expenditures$

21,347,618 $ 0 $ 6,487,704 27,835,322 $ 26;01VV:(Exh. B) (Exh. B)

Auxiliary Enterprise Expenditures 1,811,940 1,811,940 927,571(Exh. B)

Mandatory Transfers forTPEG to Restricted & Loan Funds (129,669) 116,702 (12,967) (111,252)SEOG Matching to Restricted (323,564) 323,564 0 (298,556}

CWS Matching to Restricted (84,201) 84,201 0 (86,546Principal and interest (2,236,850) (2,236,850) (1,576,135}Renewals and replacements 0 0.

Total expenditures and mandatory transfers 24,121,902 1,811,940 $ 5,963,237 $ 31,897,079 29,613.787

Other transfers and additions/(deductions):Non-mandatory transfers 0Excess of restricted receipts over

transfer to revenues 297,876 297,876 258,634:'Excess of TPEG Transfer over Grant AwardedIndirect Cost Recovered (18,518) (18,518) 13,587:Refunded to grantors 0

Net increase in fund balances (1,585,513)5 263,865 279,358 5 (1,042,290)$ (34.055)`.

BEST COPY AVAILABLE,


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73

PUBLIC COMMUNITY COLLEGESCHEDULE C-1STATEMENT OF CURRENT FUNDS REVENUESFor the Year Ended August 31, 1993

State Appropriations:Unrestricted

AuxiliaryEnterprises Restricted Total

Education and General State Support 12,139,726 $ 1 12,139,726Non-Course-Based Remedial Education 52,134 52,134State Group Insurance 1,178,674 1,178,674State Retirement Matching 503,753 503,753State Retirement Adjustment 87,654 87,654Other 383,191 383,191

Total State Appropriations 12,522,917 0 1,822,215 14,345,132

Tuition and FeesTuition 2,853,432 2,853,432Building Use Fee 860,908 860,908General Fees 421,853 421,653Student Service Fee 480,134 480,134Laboratory Fee 239,115 239,115Remissions and Exemptions 100,550 100,550Other (detail as needed) 0

Total Tuition and Fees 4,475,658 480,134 0 4,955,792

Taxes for Current Operations 5,037,814 5,037,814

Federal Grants and ContractsPrograms (detail as necessary) 3,726,708 3,728,708Recovery of Indirect Costs 18,518 18,518

Total Federal Grants and Contracts 18,518 0 3,726,708 3,745,226

State Grants and ContractsPrograms (detail as necessary) 96,528 96,528Recovery of Indirect Costs 0

Total State Grants and Contracts 0 0 96,528 96,528

Local Grants and ContractsPrograms (detail as necessary) 27,677 307,144 334,821

Recovery of Indirect Costs 0

Total State Grants and Contracts 27,677 0 307,144 334,821

Private, Gifts, Grants, and ContractsPrograms (detail as necessary) 0

Recovery of Indirect Costs 0

Total Private Gifts, Grants, and Contracts 0 0 0 0

Endowment Income 0

Sales & Services of Educational Activities 123,782 123,782

Sales & Services of Auxiliary Activities 1,595,671 1,595,671

Other SourcesGains/Losses on Investments 0 0

Interest Income 27,819 10,642 38,461

Other Misc. Income (detail as needed) 302,204 302,204

Total Other Sources 330,023 0 10,642 340,665

Total Current Funds Revenues (Exh. C) 22'536

'389 2,075,805 $ 5,963,237 $ 30,575,431

EST COPY AV IALILE


7 4

PUBLIC COMMUNITY COLLEGESCHEDULE C-2STATEMENT OF CURRENT FUNDS EXPENDITURES BY OBJECTFor the Year Ended August 31, 1993

Unrestricted - Educational and General

SALARIESAND WAGES

OTHEREXPENSES

CAPITALOUTLAY TOTAL

Instruction $ 8,721,919 $ 857,838 $ 187,484 $ 9,767,241

Research 0

Public Service 568,968 261,505 38,510 868,983Academic Support 1,200,368 677,416 113,673 1,991,457

Student Services 1,263,607 601,897 68,980 1,934,484

Institutional Support 1,347,593 1,789,192 267,918 3,404,703Operation and Maintenance of Plant 1,297,280 1,701,196 281,724 3,280,200

Scholarships and Fellowships 100,550 100,550

Total Unrestricted 14,399,735 5,989,594 958,289 21,347,618(Exh. C)

Restricted - Education and GeneralInstruction 365,140 1,317,243 174,909 1,857,292

Research 56,998 56,998

Public Service 102,016 148,281 7,666 257,963

Academic Support 200,780 200,780

Student Services 84,065 184,801 268,866

Institutional Support 182,714 182,714

Operation and Maintenance of Plant 162,954 162,954

Scholarships and Fellowships 3,500,137 3,500,137

Total Restricted 608,219 5,696,910 182,575 6,487,704(Exh. C)

Total Educational and General 15,007,954 11,686,504 1,140,864 27,835,322

Auxiliary Enterprises 162,727 1,623,316 25,897 1,811,940(Exh. C)

Total Current Fund Expenditures15,170,681 $ 13,309,820 $ 1,166,761 $ 29,647,262


PUBLIC COMMUNITY COLLEGESCHEDULE C-3SCHEDULE OF UNRESTRICTED CURRENT FUNDSEDUCATIONAL AND GENERAL EXPENDITURESSUMMARIZED BY ELEMENTS OF INSTITUTIONAL COSTSFor the Year Ended August 31, 19x3

InstructionAcademic Programs

Faculty Salaries 5,283,097Departmental Operating Expenses 477,335Organized Activities Related to Instructional Departments 5,760,432

Vocational Technical ProgramsFaculty Salaries 3,426,974Departmental Operating Expenses 496,279Organized Activities Related to Instructional Departments 3,923,253

Total Instruction 9,683,685

Extension and Public Service 868,983

Academic SupportLibrary 1,035,797Instructional Administration 702,432 1,738,229

Student Services 1,788,463

Institutional Support 3,437,956

Operation and Maintenance of PlantPlant Support Services 414,146Building Maintenance 402,334Custodial Services 609,403Grounds Maintenance 333,972Utilities 1,205,387 2,965,242

Staff BenefitsGroup Insurance Premiums -354,0080. A. S. I.Workers Compensation Insurance 89,856State Retirement Adjustment 87,654Other 132,225 663,743

Special ItemsMajor Repairs and Rehabilitation of Facilities and Buildings 163,660

Total Expenditures by Elements of Institutional Costs $ 21,309,961[a]

[a] ReconciliationTotal Expenditures by Function (Exh. C) $ 21,347,618

Plus: Unexpended Plant Fund ExpendituresDecrease in Accrued Compensable AbsencesState Retirement Adjustment 87,654

Less: Increase in Accrued Compensable Absences (24,761)Remissions and Exemptions (100,550)

Total Expenditures by Elements of Institutional CostA/6

$ 21,309,961


PUBLIC COMMUNITY COLLEGESCHEDULE C-4SCHEDULE OF CHANGES IN TAXES RECEIVABLEFor the Year Ended August 31, 19X3

Assessed valuation of District $ 4,217,481,842

DebtService Total

CurrentOperations

Tax rate authorized per $100 valuation 0.1172 $ $ 0.1172

Tax rate assessed per $100 valuation 0.1172 $ $ 0.1172

Taxes Receivable, August 31, 19X2 162,643 $ 0 $ 162,643

Taxes Assessed 4,942,889 0 4,942,889

Penalty & Interest Assessed 160,508 0 160,508

Subtotal Assessment 5,103,397 0 5,103,397

Taxes collectedCurrent 4,693,401 4,693,401

Delinqent 143,547 143,547

Penalties and interest 120,008 120,008

Subtotal Collections 4,956,956 0 4,956,956

AdjustmentsFees for Assessment and Collecting 12,357 12,357

Taxes Written-off 33,105 33,105

Allowance for Doubtful Accounts 109,000 109,000

Subtotal Adjustments 154,462 0 154,462

Taxes Receivable, August 31, 19X3 154,622 $ 0 $ 154,622


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4


Independent Auditor's Report onSchedule of Federal Financial Assistance

The independent auditor's report should precede the Schedule of Federal Financial Assistance and the auditorshould follow the pronouncements of the American Institute of Certified Public Accountants. (Statement of Position92-7 or subsequent pronouncements).

Revised as of May 22. 1995

PUBLIC COMMUNITY COLLEGESCHEDULE D-3SCHEDULE OF FEDERAL FINANCIAL ASSISTANCEFor the Year Ended August 31, 1993

Federal Grantor/Pass Through Grantor/Program Title

FederalCFDA

Number

Pass-ThroughGrantor'sNumber

Pass ThroughDisbursements

andExpenditures

U.S. Department of EducationDirect Programs:

SEOG 84.007 104,494Federal College Workstudy Program 84.033 270,567

Pass-Through From:Texas Education Agency

Adult Basic Ed. 90-91 84.002 * 447,635Adult Basic Ed. 91-92 84.002 * 478,654Adult Basic Ed. Amnesty 89-90 84.002 * 208,231Adult Basic Ed. Amnesty 90-91 84.002 * 489,621

Subtotal ABE 1,624,141Texas Higher Education Coordinating Board

Carl Perkins Voc. Ed. 84.048 * 869,567Total U.S. Department of Education 2,868,769

Other Federal AssistanceDirect Programs:

U.S. Department of EducationADFC 84.000 226,226

U.S. Department of DefenseMilitary Construction, Army National Guard 12.000 * 650,231

Total Other Federal Assistance 876,457

Total Federal Financial Assistance $ 3,745,226

* Denotes major federal financial assistance programs as defined bythe Single Audit Act of 1984 and OMB Circular A-128.


83

SCHEDULE D-3 (Continued)

Note 1: Federal Assistance Reconciliation

Federal Revenues - per Exhibit C:Federal Grants and Contracts S 3,726,708Indirect/Administrative Costs Recoveries 18,518

Total Federal Revenues per Exhibit C 3,745,226

Reconciling Items:ADD:

Expenditures Not Subject to an A-128 Audit 0Total Pass-Through & Expenditures Per Federal Schedule S 3,745,226

Note 2: Student Loans Processed and Administrative Costs Recovered - Not Included in Schedule

Federal GrantorCFDA Number /Program Name

Department of Education84.032 Federal Family Education Loan Program84.038 Federal Perkins Loan Program

Total Department of Education

Administrative Total LoansNew Loans Cost Processed & AdminProcessed Recovered Cost Recovered

S 687,576 S

502,828S 1,190,404 S

Changes to Schedule of Federal Financial Assistance

0 S

0

0 S

687,576502,828

1,190,404

Federal loan programs to students should NOT be included in the Schedule. These programs should bein a footnote to the Schedule. The footnote should include the CFDA number as well as the total amount of theloans. The total amount of the loans should also be included in the computation of major federal programs and betested as if they were part of the Schedule. They would NOT be included in the percentage figure shown as expendedfrom major programs in the Report on Internal Controls - Federal Financial Assistance.

84


The Texas Higher EducationCoordinating Board does notdiscriminate on the basis ofrace, color, national origin,

gender, religion, age ordisability in employment orthe provision of services.

For more information please contact:

Sharon Cox, MBA, CPAProgram Director

Division of Research, Planning and FinanceTexas Higher Education Coordinating Board

P. 0. Box 12788Austin, TX 78711

512/483-6130: FAX 512/483-6169

(9/92)

U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and improvement (OERO

Educational Resources information Center (ERIC)

NOTICE

REPRODUCTION BASIS

ERIC'fLo 66q-

This document is covered by a signed "Reproduction Release(Blanket)" form (on file within the ERIC system), encompassing allor classes of documents from its source organization and, therefore,does not require a "Specific Document" Release form.

This document is Federally-funded, or carries its own permission toreproduce, or is otherwise in the public domain and, therefore, maybe reproduced by ERIC without a signed Reproduction Releaseform (either "Specific Document" or "Blanket").

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