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2.11.1 Financial Resources PDF Print E-mail
Thursday, 03 September 2009 14:01

2.11.1 Financial Resources

The institution has a sound financial base and demonstrated financial stability to support the mission of the institution and the scope of its programs and services.The member institution provides the following financial statements: (1) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a system wide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (2) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and, (3) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board. Audit requirements for applicant institutions may be found in the Commission policy entitled "Accreditation Procedures for Applicant Institutions."

Responsible Unit: Division of Business and Finance

Compliance Judgment

Compliance

Narrative

North Carolina Agricultural and Technical State University (A&T) has a sound financial base and demonstrated financial stability to support the mission of the institution and the scope of its programs. [1]

The financial functions of the university are managed by the Division of Business & Finance. [2] Reporting to the chancellor, the vice chancellor for business and finance is the chief financial officer of the university and a member of the chancellor's executive cabinet. The overarching goal of the division, as encompassed in its mission statement [3], is to ensure fiscal integrity, internal controls, and accountability necessary to comply with state and federal laws, sound business practices, and the policies of the Board of Trustees and the Board of Governors of the University of North Carolina.

The departments within the Division of Business & Finance that share responsibility for monitoring controls are headed by three assistant vice chancellors and a director [4]: the assistant vice chancellor (AVC) for finance and university comptroller (University Accounting, Capital Projects & Improvements Accounting, Contract and Grant Accounting, Bursar/Treasurer, Accounts Payable, Payroll, Systems Development, and Travel) [5], the AVC for budget and planning [6], the AVC for facilities (University Engineer, Physical Plant, Property Management, Purchasing and Contracts, Receiving, and Environmental Health and Safety) [7], and the Auxiliary Services director (Athletics and Student Affairs Accounting, Bookstore, Mail Services, One Card, and Ticket Office). [8]

A&T is a constituent institution of the seventeen-campus University of North Carolina System [9]], which is a component unit of the state of North Carolina and an integral part of the state's Comprehensive Annual Financial Report (CAFR). [10] The North Carolina A&T University Foundation, Inc., is a legally separate not-for-profit corporation and is reported as a discretely presented component unit in separate financial statements based upon the nature and significance of its relationship to the university. [11]

The financial statements are prepared in compliance with accounting principles generally accepted in the United States as prescribed by the Governmental Accounting Standards Board (GASB) and are audited by the North Carolina Office of the State Auditor (OSA). The financial statement consists of the statement of net assets, the statement of revenue, expenses and changes in net assets, and the statement of cash flows.

Institutional Audit: The annual fiscal year-end audit requirement is fulfilled by the NC Office of the State Auditor (OSA). [12] The OSA provides audit services to North Carolina state agencies, including annual audits of state financial statements, and as a state agency, A&T is included in those statewide audits. The fiscal year 2009 Audit Report is anticipated to be completed by January 2010.

The university received unqualified audit opinions on its audited financial statements for fiscal years ending June 30, 2004, through June 30, 2008, which demonstrates the financial statements fairly present the financial condition of the organization. [13] [14] [15] [16] [17] However, audit findings were noted in each of these fiscal years. The university works diligently to address audit findings as soon as they become apparent, and an independent review procedure is in place that involves the university's internal audit staff, a representative from the UNC General Administration (UNC-GA), and the state audit team to assure that findings are addressed in a timely manner.

The Office of Internal Auditing (OIA) reports directly to the chancellor and to the Board of Trustees Audit Committee to ensure independence in carrying out its responsibility of promoting and supporting a culture of compliance and control consciousness. [18] [19] To continually improve its services and professional abilities, OIA staff members receive professional development annually. The OIA conducts regular audits of cash receipting, property inventory, and key operating areas. The OSA, as well as the OIA, performs financial and program audits at the university on an annual basis. The OIA maintains a hotline, which provides university employees with a confidential way to report suspected fraud, waste, and abuse at the university.

The OIA develops an annual audit plan and includes audits of areas of high risk and/or where management has expressed concern. [20] The OIA performs a risk assessment that aids in the development of the audit plan. The OIA seeks input on high risks and possible exposures and their likelihood or importance. The results of the assessment are used to prepare the audit plan. The audit plan is approved by the chancellor and the Board of Trustees Audit Committee. The approved plan is provided to the University of North Carolina General Administration (UNC-GA) for presentation to the Board of Governors Audit Committee.

The OIA provides copies of all audit reports, as they are issued, to the Board of Trustees Audit Committee and to UNC-GA. In addition, the OIA provides annually to UNC-GA a summary of audit work completed during the fiscal year. Throughout each fiscal year, the OIA performs internal control assessments, performs surprise cash counts at university receipting locations, performs audits of university programs and departments and investigates complaints received via the university hotline, referrals from the Office of the State Auditor, and complaints received via e-mail or phone.

Additionally, the university Athletics Department is required by the NCAA to have an annual procedures review performed. The department contracts with an independent accounting firm, RSM McGladrey, to conduct the annual review. No exceptions were noted in this review. [21][22]

Net Assets: As reflected in the table below, the university's net assets have increased by 68 % over the five-year period from 2004 to 2008. The strong growth in net assets is the result of several factors:

  • On November 7, 2000, the voters of North Carolina made a significant investment in their university system by passing a $3.1 billion bond package to improve the facilities and infrastructure on the seventeen campuses. As of June 30, 2009, North Carolina Agricultural and Technical State University had received over $163 million in state bond funds that have been used to build four new classroom/laboratory facilities and a four new residence halls, purchase land, and renovate existing residence halls, laboratories, classroom buildings, and infrastructure.
  • Expendable assets for capital improvements have fluctuated significantly over the five-year period based on the amount of cash and grant receivable balances for large construction projects. Other expendable assets, made up of contracts, grants, gifts, and endowment income, have grown steadily, from $7.3 million in 2004 to $9.5 million in 2008.
  • Unrestricted assets have increased 128 % from 2004 to 2008. The increase is due largely to increases in tuition and fees, overhead reimbursement collected from contracts and grants, and effective management of state appropriations.

Schedule of Changes in Net Assets

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

Total operating revenues

97,194,768

106,854,245

114,768,072

117,083,610

115,707,270

 

 

Total operating expenses

172,172,112

192,384,219

204,614,716

218,521,894

226,205,041

 

 

 

 

 

 

 

 

 

 

Income before nonoperating revenues

(74,977,344)

(85,529,974)

(89,846,644)

(101,438,284)

(110,497,771)

 

 

 

 

 

 

 

 

 

 

Nonoperating revenues

76,105,043

82,062,984

95,507,582

101,382,448

109,035,685

 

 

Capital appropriations, gifts, and grants

17,166,641

57,880,740

8,181,347

60,359,052

13,878,706

 

 

Permenant additions to endowments

782,602

1,845,500

646,960

1,057,721

2,303,828

 

 

 

 

 

 

 

 

 

 

Total change in net assets

19,076,942

56,259,250

14,489,245

61,360,937

14,720,448

 

 

Net assets, beginning

197,695,609

216,772,551

273,031,801

287,521,046

348,881,983

 

 

 

 

 

 

 

 

 

 

Net assets, ending

216,772,551

273,031,801

287,521,046

348,881,983

363,602,431

 

 

 

 

 

 

 

 

 

 

Invested in capital assets, net of debt

184,033,714

221,827,474

233,184,950

247,124,681

333266,819,275

 

 

Nonexpendable

7,282,221

9,145,958

9,797,967

10,845,326

13,135,953

 

 

Expendable - Capital Assets

521,916

15,096,867

7,419,059

45,800,687

34,071,962

 

 

Expendable - Other

7,309,327

6,562,300

6,992,096

9,148,491

9,509,134

 

 

Unrestricted

17,625,373

20,399,202

30,126,974

35,962,798

40,066,107

 

 

 

 

 

 

 

 

 

 

Total net assets

216,772,551

273,031,801

287,521,046

348,881,983

363,602,431

 

 

 

 

 

 

 

 

 

Budget: The State Executive Budget Act is the legal foundation for the state budget system. The Office of State Budget and Management (OSBM) [23] submits instruction to the University of North Carolina General Administration (UNC-GA) and its Board of Governors (BOG) to direct the preparation and submission of budgets as may be required by the General Assembly on a biennium or annual basis. The BOG presents to the legislature the request for continuation funds for each of the seventeen constituent institutions of the university system, including A&T. Constituent institutions share acommon budget process that is administered by the UNC-GA.

The state of North Carolina has a biennium (two-year) budget cycle. The process for the current biennium, from July 1, 2009, through June 30, 2011, began during the fall of 2008 and ended with the completion of the legislative session when the budget was approved (July 2009) by the General Assembly and the governor. Budget submissions during the second year of the biennium occur primarily due to adjustments in state revenue forecasts with either budget reductions or expansions as necessary. [24]

Appropriations, awarded in response to the budget requests, are made directly to the individual institutions in the university system by the OSBM. The university received the following state support over the past five years:

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncapital Appropriations

66,237,795

75,997,662

80,441,591

89,056,885

99,373,082

 

 

Capital Appropriations

247,900

1,482,500

2,916,100

7,880,700

13,338,800

 

 

 

 

 

 

 

 

 

 

Total Appropriations

66,485,695

77,480,162

83,357,691

96,937,585

112,711,882

 

 

 

 

 

 

 

 

 

The university's internal budget allocation process is designed to provide an open, inclusive, and objective process by which to allocate A&T's resources. [25] The university prepares its budget based on a strategic plan [26] which is based on the university's mission [1] and strategic directives from the UNC-GA (governing body), the chancellor, and the university Board of Trustees.

Impacts on the budget development process include:

  • changes in tuition and fees,
  • enrollment projections,
  • levels of state appropriations,
  • institutional financial condition,
  • UNC-General Administration Board of Governors requirements,
  • authorizing tuition and fee statutes, and
  • priorities defined through the A&T Strategic Plan.

The budget process is key to ensuring effective management and efficient response to unforeseen, contingency, or emergency events such as statewide decreased revenue collections, reductions in appropriations, or natural disasters. At the outset of the internal budget process, the University Budget Office will reserve a percentage (generally 3 %) of the state-appropriated funds with approval of the chancellor. If additional funding is needed, the University Budget Office conducts analyses and recommends the most efficient remedy, which may include not filling vacant positions, restriction of travel, or other expenditures review.

Tuition and Fees: North Carolina Agricultural and Technical State University has established a committee for tuition and fees comprised of key administrators of the Division of Business & Finance, Division of Student Affairs, and Division of Academic Affairs. Lead by the associate vice chancellor for budget and planning, the committee also includes three to four student members with at least two representatives from the Student Government Association (SGA) and the general student body. [27] As fee proposals are introduced, the university community is afforded an opportunity to join the fee meeting and explain/justify the need for a particular increase.

Required fees for the university include education & technology, athletics, student activities, health services, and debt service. On-campus fees include room (housing) and board (food services). Miscellaneous fees include several different categories, a selected few include: shuttle service fee, One Card fee, chemistry lab breakage fee, parking fee, cooperative, (COOP), extension fee.

Revenues from tuition and fees grew steadily from 2004 through 2007 due to increases in charges and enrollment. There was a slight decline in tuition and fees in 2008 caused by a decline in enrollment. The decline in enrollment is expected to level out in 2009 and return to a period of growth starting in 2010.

2.11.1_image1

Sponsored Programs, Contracts, and Grants: North Carolina Agricultural and Technical State University has ranked third in sponsored research funding in the UNC System for the last five years behind UNC-Chapel Hill and North Carolina State University. Major projects include the National Oceanic Atmospheric Administration Interdisciplinary Scientific Environmental Technology laboratory cooperative for $12.2 million from the Department of Commerce and several multi-year million dollar awards from the National Science Foundation (NSF) and from the Office of Naval Research. A&T also has received over $1 million a year in funding from private companies. In September 2008, A&T announced that the NSF has awarded the university an Engineering Research Center (ERC). The ERC is considered the "crown jewel" among NSF awards. In the past twenty-five years, approximately thirty ERCs have been awarded by the NSF.

Revenues for contracts, grants, and gifts from all sources increased during the five-year period from 2004 through 2008 as illustrated below:

2.11.1_image2

Capital Campaign: A&T made an important stride on December 31, 2007, by completing the largest and most successful capital campaign in the institution's history. The university's Division of Development and University Relations was responsible for administering the activities of the campaign.

"From Generation to Generation: The Campaign for North Carolina A&T" raised a total of $85.3 million over a seven-year period. Under the leadership of former Chancellor James C. Renick, the fund-raising effort began July 1, 1999. The campaign was publicly launched during the 2001 Aggie Homecoming and continued under Interim Chancellor Lloyd V. Hackley. The capital campaign was completed under former Chancellor Stanley F. Battle in December 2007. [28]

Supporting Documents

[1] University Mission Statement

[2] Division of Business & Finance Website

[3] Division of Business & Finance Mission Statement

[4] Division of Business & Finance Organization Chart

[5] University Comptroller Website

[6] Budget and Planning Website

[7] Facilities Website

[8] Auxiliary Services Website

[9] UNC Board General Administration Website

[10] State of NC Comprehensive Annual Financial Report (CAFR)

[11] NC A&T University Foundation, Inc. Website

[12] NC Office of the State Auditor Website

[13] Audited Financial Statements, Fiscal Year 2004,

[14] Audited Financial Statements, Fiscal Year 2005

[15] Audited Financial Statements, Fiscal Year 2006,

[16] Audited Financial Statements, Fiscal Year 2007

[17] Audited Financial Statements, Fiscal Year 2008

[18] Internal Audit Website

[19] Internal Audit Organization Chart

[20] Internal Audit Annual Audit Plan for 2008-09

[21] McGladrey & Pullen, LLC "NCAA Agreed Upon Procedures Review" of Athletics

[22] McGladrey & Pullen, LLC "NCAA Agreed Upon Procedures Review" of Athletics

[23] NC Office of State Budget and Management (OSBM) Web site

[24] State Budget Process

[25] NC A&T Internal Budget Allocation Process

[26] Strategic Plan

[27] Tuition and Fee Process

[28] Campus Master Plan

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Last Updated ( Friday, 22 January 2010 14:52 )
 

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