Requirement Number 2.11: The institution has a sound financial base and demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services. The institution provides the following financial statements:

 
  1. An institutional audit (distinct from a system-wide or state-wide audit) and management letter for the most recent fiscal year prepared by an independent certified public accountant or an appropriate governing auditing agency employing the appropriate audit guide,
  2. An annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board, and
  3. A schedule of net surplus/deficit from operations, exclusive of plant assets and plant related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year.

Full Compliance

Narrative: Georgia Southern University has a sound financial base and demonstrated financial stability as indicated in our response to the Financial SACS Comprehensive Standard Requirements #1 [http://sacs.georgiasouthern.edu/finance/narratives/Fin-CompStdReqr1.doc] and #2 [http://sacs.georgiasouthern.edu/finance/narratives/Fin-CompStdReqr2.doc]. The institution’s financial resources are sufficient in relation to its purpose and mission, the scope of its programs and its services, and the number of students. It has the physical resources to offer quality educational and cultural experiences and the financial resources to maintain its facilities, grounds, and environmental systems. The institution’s balanced budgets, diverse funding sources, and state support indicate that it has sufficient resources to support all of its goals and programs. The financial history of the past five years further indicates that the institution has the stability to continue its successful operation.

Institutional Audit

The institution is audited annually by the Georgia Department of Audits and Accounts [www.audits.state.ga.us/internet/nalgad/resource]. The adoption of an accounting system that follows generally accepted accounting principles of institutional accounting is required by the Board of Regents for all units of the University System of Georgia. Compliance with this statement is monitored in connection with the audit of the financial statements performed by the state auditors. The institution is one of 32 institutions using the PeopleSoft financial software in the GeorgiaFIRST Model [http://www.usg.edu/gafirst/project.html], which was selected by the Board of Regents to provide comparative information for revenue and expenditure reports consistent with NACUBOP/AICPA publications and guidelines, to be included either in the independently certified audit report or included as supplemental data in the audit report. As a component of the University System of Georgia the institution is considered an organizational unit reporting entity for financial reporting purposes because of its legal, operational, and financial relationship with the Board of Regents as defined in Government Accounting Standards Board Codification of Government Accounting and Financial Reporting Standards. An annual fiscal year audit must be made by independent certified public accountants, or an appropriate governmental auditing agency, employing as a guide for institutions under jurisdiction of the Financial Accounting Standards Board, Audits of Not-For-Profit Organizations, published by the American Institute of Certified Public Accountants, or, for institutions under the jurisdiction of the Governmental Accounting Standards Board, Audits of Colleges and Universities, also published by the American Institute of Certified Public Accountants.

The institution has all of the required documentation of aninstitutional audit (distinct from a system-wide or state-wide audit) and management letter for the most recent fiscal year prepared by an independent certified public accountant or an appropriate governing auditing agency employing the appropriate audit guide. We have presented five years of audited financial statements [http://sacs.georgiasouthern.edu/finance/sacs.htm] through the fiscal year ending June 30, 2002. The current audited financial statement for 2003 has not been completed, but should be available and presented prior to finalization of the reaffirmation process. We have included the management letter for the audit engagement for the year 2003 [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/EngagmentLtr2003.pdf].

Annual Budget

The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia, of which Georgia Southern University is a unit. This authority includes but is not limited to the power to control the institution’s budget and to determine allotments of State funds. State funds are allocated to the institution on the basis of a Funding Formula [http://www.usg.edu/pubs/info_digest/2001/financial/5.phtml]. An array of workload variables is applied to a set of constants to determine funding needs. Each institution determines its needs through an extensive process of budget meetings scheduled well in advance of the Board of Regents’ planning and budgeting process. Business and Finance develops a budget calendar for review and approval by the institution’s administration. Enrollment figures for Fall Semester, along with projections, are used for a submission to the Board of Regents’ planning and budgeting process. These figures have a direct impact on the funding for the institution. The budget package is developed through department faculty/staff input allowing each department/unit to address new positions, additional operating funds, reallocations, technology and equipment needs. The departments convey the concerns, priorities, and funding requests to the appropriate Dean, Provost, or Vice President. They meet with the President for reviewing and making recommendations about the annual budget. In times of budget reductions, an equitable plan to reduce expenditures is reviewed and addressed. The budget is prioritized based on the institutional planning initiatives in order to link the budget to the Strategic Plan [http://services.georgiasouthern.edu/ir/councils/guidance.htm] and the institution’s Mission [http://www.georgiasouthern.edu/about/mission.html]. Planning is underway for electronic budget worksheets, which will allow for limited on-line changes to assignment of personal-services and to non-personal-services budgets in the original budget preparation process and provide current budget adjustment information online to department managers, furnishing departments with invaluable information related to the budgeting process. Once the institution receives the Final Allocation of State Appropriations [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/FinalAllocStateApprop2004.pdf] and guidelines from the Board of Regents, it is reviewed and approved by the President and Vice Presidents. The Budget Department assembles a final detailed budget conforming to the Final Allocation of State Appropriations and guidelines. The following 2003 documents are: USG Educational and General Expenditures for FY 2003 [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/USG-EdGenExpFY2003.pdf]; USG FY 2003 Allocations [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/USG-FY2003Allocations.pdf]; and GSU Budget Year 2004 Personal Service Totals [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/BudgetYear2004PersServTotals.pdf].

Upon final preparation of the detailed budget (available in the Controller’s Department), a summary of the detailed budget [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/Budgets2004.pdf] is forwarded to the Board of Regents. The Board of Regents’ Fiscal Affairs reviews the budget documents for compliance with guidelines and policy. Formal approval occurs in May or June and is documented in the Minutes of the Meetings of the Board of Regents. Approval minutes for 2003 are furnished as an example [http://www.usg.edu/admin/regents/minutes/2003/may03.html].

The institution has all of the required documentation of an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board and the institution controls and accounts for these state appropriations along with other resources by using budget controls within its accounting system in accordance with the Policies of the Board of Regents [www.usg.edu/admin/policy].

Schedule of Net Surplus/Deficit

Annual Audited Financial Statements [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/Budgets2004.pdf] and the Annual Financial Report [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/Budgets2004.pdf] are prepared in conformity with generally accepted accounting principles. Surplus or Deficits from operations for the fiscal year are included in the “Statement of Net Assets”, “Statement of Revenues, Expenses and Changes in Net Assets” and in the “Statement of Cash Flows.” The purpose of the “Statement of Net Assets” is to present the financial statements in a snapshot of the institution. The Statement of Net Assets is presented separately [http://sacs.georgiasouthern.edu/finance/gsu/vp-bus/ctroller/misc/StmtNetAssets2003.pdf]. From the data presented, users are able to determine the assets available to continue the operations of the institution and determine how much the institution owes vendors, investors and lending institutions. It also provides a picture of the net assets and their availability for expenditure by the institution.

Net Assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution’s equity in property, plant and equipment owned by the institution. The next category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted assets are available to the institution for any lawful purpose of the institution.

The institution has all of the required documentation of a schedule of net surplus/deficit from operations (Schedule of 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.