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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
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
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
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
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
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
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
Standard Seven - Finance Table #4 Sources of Financial
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
Standard Seven - Finance Table #7 Operating Gifts and
Supporting Documentation for Standard Seven
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
5. Completed Table #5, Enrollment, Tuition, and Unfunded
Financial Aid. This table is to be completed by private institutions
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.
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.