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> NASC Accreditation  > NASC Standards
Standard Seven
Finance

Standard 7.A Financial Planning

Financial planning and budgeting are ongoing, realistic, and based upon the mission and goals of the institution.

7.A.1 Governing boards and, where applicable, state agencies have given the institution appropriate autonomy in financial planning and budgeting matters within overall mandates and priorities.

7.A.2 The institution demonstrates that financial planning for the future is a strategically guided process. This planning includes a minimum of a three-year projection of major categories of income, specific plans for major categories of expenditures, and plans for the management of capital revenue and expenditures. Short and long-range capital budgets reflect the institution's goals and objectives and relate to the plans for physical facilities and acquisition of equipment.

7.A.3 The institution publishes an annual budget distributed to appropriate constituencies, and the policies, guidelines, and processes for developing the budget are clearly defined and followed. Budget revisions are made promptly, and, when necessary, a revised budget or schedule of budget changes is developed and distributed to appropriate constituencies.

7.A.4 Debt for capital outlay purposes is periodically reviewed, carefully controlled, and justified, so as not to create an unreasonable drain on resources available for educational purposes. The institution has a governing board policy guiding the use and limit of debt.

Standard 7.B Adequacy of Financial Resources

The adequacy of financial resources is judged in relation to the mission and goals of the institution, the scope and diversity of its programs and services, and the number and kind of its students.

7.B.1 The institution provides evidence that it seeks and utilizes different sources of funds adequate to support its programs and services. The commitment of those resources among programs and services reflects appropriately the mission and goals and priorities of the institution.

7.B.2 Adequate resources are available to meet debt service requirements of short-term and long-term indebtedness without adversely affecting the quality of educational programs. A minimum of three years' history of the amount borrowed (whether internally or externally) for capital outlay and for operating funds is maintained. A five-year projection of future debt repayments is maintained.

7.B.3 Financial statements indicate a history of financial stability for the past five years. If an accumulated deficit has been recorded, a realistic plan to eliminate the deficit is approved by the governing board.

7.B.4 Transfers among the major funds and interfund borrowing are legal and guided by clearly stated policies in accordance with prudent financial planning and control.

7.B.5 The institution demonstrates the adequacy of financial resources for the support of all of its offerings including specialized occupational, technical, and professional programs.

7.B.6 The institution identifies the sources of its student financial aid for current enrollments and provides evidence of planning for future financial aid in light of projected enrollments. It monitors and controls the relationship between unfunded student financial aid and tuition revenues.

7.B.7 The institution maintains adequate financial reserves to meet fluctuations in operating revenue, expenses, and debt service.

7.B.8 Income is measured per full-time equivalent student and in terms of gross amounts of income. Income is also measured by type with the source collectively reflecting adequacy and stability.

7.B.9 The institution demonstrates an understanding of the financial relationship between its education and general operations and its auxiliary enterprises and their respective contributions to the overall operations of the institution. This includes the institution's recognition of whether it is dependent on auxiliary enterprise income to balance education and general operations or whether the institution has to use education and general operations income to balance auxiliary enterprises.

Standard 7.C. Financial Management

The financial organization and management, as well as the system of reporting, ensure the integrity of institutional finances, create appropriate control mechanisms, and provide a basis for sound financial decision-making.

7.C.1 The president reports regularly to the governing board about the financial adequacy and stability of the institution.

7.C.2 Financial functions are centralized and are under a single qualified financial officer responsible to the president. Institutional business functions are under one or more qualified officers, are well organized, and function effectively. The complexity of the business organization reflects the size of the institution and the significance of its transactions.

7.C.3 All expenditures and income from whatever source, and the administration of scholarships, grants in aid, loans, and student employment, are fully controlled by the institution and are included in its regular planning, budgeting, accounting, and auditing procedures.

7.C.4 The institution has clearly defined and implemented policies regarding cash management and investments which have been approved by the governing board.

7.C.5 The institution's accounting system follows generally accepted principles of accounting.

7.C.6 For independent institutions, the governing board is responsible for the selection of an auditing firm and receives the annual audit report.

7.C.7 Independent institutions are audited annually by an independent certified public accountant and the audit is conducted in accordance with generally accepted auditing standards. The audit includes a management letter. A summary of the latest audited financial statement is made available to the public.

7.C.8 A proprietary institution makes available annually a financial summary which includes, as a minimum, a list of company officers, a statement of profit and loss, expenditures, indebtedness, and companies which have a controlling interest in the institution.

7.C.9 If public institutions are, by law, audited by a state agency, an independent audit is not required except for any funds not subject to governmental audit.

7.C.10 All funds for financial aid and other specific programs not subject to governmental audit are audited annually by an independent certified public accountant and include a management letter.

7.C.11 The institution demonstrates a well-organized program of internal audit (where appropriate) and control that complements the accounting system and the external audit.

7.C.12 The institution demonstrates that recommendations in the auditor's management letter accompanying the audit report have been adequately considered.

7.C.13 Federal, state, external, and internal audit reports are made available for examination as part of any evaluation conducted by the Commission on Colleges.

7.D Fundraising and Development

Any organized development program to seek financial support from outside sources is closely coordinated with academic planning and reflects the mission and goals of the institution.

7.D.1 All college/university fundraising activities are governed by institutional policies, comply with governmental requirements, and are conducted in a professional and ethical manner.

7.D.2 Endowment and life income funds and their investments are administered by an appropriate institutional officer, foundation, or committee designated by the governing board. The organization maintains complete records concerning these funds and complies with applicable legal requirements.

7.D.3 The institution has a clearly defined relationship with any foundation bearing its name or which has as its major purpose the raising of funds for the institution.

Standard Seven - Finance Table #1 Current Funds Revenues

Standard Seven - Finance Table #2 Current Funds Expenditures and Mandatory Transfers

Standard Seven - Finance Table #3 Summary Report of Revenues and Expenditures

Standard Seven - Finance Table #4 Sources of Financial Aid

Standard Seven - Finance Table #5 Enrollment, Tuition, and Unfunded Financial Aid

Standard Seven - Finance Table #6 Direct Cost By Department or Instructional Area

Standard Seven - Finance Table #7 Operating Gifts and Endowments

Standard Seven - Finance Table #7 Operating Gifts and Endowments

Supporting Documentation for Standard Seven

Required:

1. Completed Table #1, Current Funds Revenues, reporting sources of operating revenue according to IPEDS definitions for the past three fiscal years and estimated operating revenue for the fiscal year during which the institution will be evaluated.

2. Completed Table #2, Current Funds Expenditures and Transfers, reporting operating expenses according to IPEDS definitions and estimates operating expenses for the fiscal year during which the institution will be evaluated.

3. Completed Table #3, Summary Report of Revenues and Expenditures, reporting the operating surplus or deficit for education and general, auxiliary enterprises, and the institution as a whole for the past three fiscal years and for the fiscal year during which the institution will be evaluated.

4. Completed Table #4, Sources of Financial Aid, showing the sources of financial aid for the past three fiscal years and the evaluation year.

5. Completed Table #5, Enrollment, Tuition, and Unfunded Financial Aid. This table is to be completed by private institutions only.

6. Completed Table #6, Direct Cost by Department or Instructional Area, showing student-credit-hour costs by departments or designated instructional areas for the past three academic years, excluding summer sessions. Standard definitions applicable to the state or type of institutions should be used. If not applicable, include the total compensation for department or instructional area heads, faculty members, secretaries, technicians, laboratory and other assistants; departmental travel and expense; and non-plant fund expenditures for equipment. A full-time student is usually computed as 15 credits for undergraduate and 10 to 12 credits for graduate students.

7. Completed Table #7, Operating Gifts and Endowments, showing a summary of annual contributions and endowment fund balances.

8. Completed Table #8, Capital Investments, showing your actual and projected Capital Investments.

9. If a proprietary institution, indicate the amount and percentage of income distributed to stockholders for the past three fiscal years. Estimate the amount for the fiscal year during which the institution will be evaluated.

10. A debt service schedule for the past three years and a projection for the next three years.

11. An endowment and life income fund report for the past three years showing fund balances and income distributions for each year.

12. A list and description of financial and management reports regularly provided to the governing board.

Required Exhibits:

1. Copies of the financial section of the IPEDS report for the past three years.

2. Summary of the latest audited financial statement, a copy of the auditor's management letter, and have available the latest complete audited financial report. Audits should include those for corporations or foundations under institutional control. 

3. Detailed current operating budget, including budget for off-campus programs, summer sessions, and other special programs.

4. Current operating budgets for auxiliary organizations including foundations, business investments, or satellite corporations under institutional control, with supplemental documentation including annual reports and audits.

5. Default rate for the two most recent years as provided by the U. S. Department of Education.



View Text-only Version Text-only Updated: 08/09/2002
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