Complete Financial Resources Review Guidelines in Microsoft Word format, size 152K: Download
 

Guidelines for Standard III.D Financial Resources Review

The Commission is establishing a protocol for accreditation visiting teams to follow when evaluating an institution’s financial stability. The evaluation will include analysis of its financial resources and determine if support for student learning programs and services to improve institutional effectiveness are sufficient. To ensure consistency during site visits, the Commission expects that the CBO or team members examining college and district/system finances for Standard III.D will look for the following, either before or during the visit:

1. Audits, last several years, how they have responded to the audits. What changes have occurred as they responded.

2. Budgets last few years and adopted budget for current year.

3. Actuarial studies that reflect long term liabilities. (GASB will ask for review of actuarials every three years) such as retiree benefits, accrued vacation, on workers comp if available.

4. In what areas is the college/district self-insured? Does the college/district have a risk management fund? What is the reserve in it? What do their actuarial studies show?

5. Cash Flow Statements (privates).

6. Current Bargaining Agreements. Any expired labor agreements are a signal for a closer look at college financial resources and stability.

7. Debt Obligations: Lease agreements, bonds or notes payable, and other debt agreements.

8. Policies related to finance, how they charge fees. (Fees for Private Institutions)

9. Most recent variance statement/quarterly reports. (Information showing current relationship between income and expenditures). (Variance between projected income (budget) and actual income, and between projected expenditures (budget) and actual expenditures.)

10. Projected ending balance for the current fiscal year?

11. What mechanisms do they have in place for monitoring the ending balance?

12. What mechanisms do they have for monitoring fiscal stability?

13. Foundation(s) audits. Examine where the foundation is housed, how it is staffed (own employees or reimbursed use of college employee time?), the effective support of the foundation, articles of incorporation. Ask all questions that we ask when we review the annual audit. Under GASB, foundation audits are public documents.

14. Bonds: If institution has bonds in California, they will be included in the financial statements of the district. If it is a proposition 39 bond, it must have a compliance audit annually. Should look at a bond budget – list of expenditures to date, documents that describe the bond “promise.” Look at whether the district planned the “total cost of ownership.”

15. Procurements: Examine the district’s financial management practices, integrity issues – Policies on procurement, bidding, etc.

16. Business plan for new acquisitions, for expansion of programs. Education and financial plans to accompany it.

17. Risk Management: If self-insured, does the district have the finances to cover all costs? Are there actuarial studies showing the costs; sufficient funds to cover the “retention” or deductible.

18. Examine documents that show the institution has made payments to Social Security, IRS, etc.

Document dated 9/21/2006

Complete Financial Resources Review Guidelines in Microsoft Word format, size 152K: Download