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Annual Report of the Comptroller, 1999
Volume 362, Page 47   View pdf image (33K)
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D. Component Units—Higher Education Fund:
Basis of Accounting:

The financial statements of the Higher Education Component Unit have been prepared in accordance with
Governmental Accounting Standards which allow colleges and universities to follow the American Institute of
Certified Public Accountants' reporting model.

The accounts of the higher education institutions are maintained and reported on the accrual basis of accounting
except for tuition and fees revenue and depreciation expense as explained in the following paragraphs.

Fund Accounting:

The financial activities of the higher education institutions are recorded in funds which classify the various
transactions by specified activities or objectives. Fund balances of current restricted, loan and endowment funds
are reported as reserved for higher education programs and higher education general endowment funds.

Unrestricted revenue is accounted for in the current unrestricted fund. Restricted gifts, grants, endowment income
and other restricted resources are accounted for in the current restricted fund, loan funds, endowment and plant
funds. Revenue and expenditures are reported in the current restricted fund when financial resources are used for
the current operating purposes for which they have been provided. Transactions related to the various student loan
programs are accounted for in loan funds. Resources dedicated to the acquisition of and investment in property,
plant and equipment are accounted for in the plant funds. To the extent current funds are used to finance plant
assets, these amounts provided are accounted for as (1) expenditures, in the case of normal replacement of movable
equipment and library books; (2) mandatory transfers, in the case of required provisions for debt repayment and
interest, and equipment renewals and replacements; and (3) transfers of a nonmandatory nature in all other cases.
General endowment resources are subject to the restrictions of gift instruments requiring that the principal be invested
in perpetuity and that only the income be utilized.

Grant Revenues:

Revenues from federal reimbursement type grants are recorded when the related expenditures are incurred in
the restricted and unrestricted current funds. A portion of the fund balance of the restricted current fund represents
cash received in excess of grant expenditures and is subject to refund to the Federal government if not expended
for its intended purpose.

Student Revenues:

Student tuition and fees are fully recognized as revenues in the fiscal year in which the related courses or
activities are principally conducted. Student tuition and fees applicable to future courses and activities, collected
as of the end of the fiscal year, are recorded as deferred revenue.

Accounts and Notes Receivable:

An allowance for doubtful receivables is provided for estimated losses expected to be incurred in collection. The
estimated losses are based on historical collection experience and a review of the status of year-end receivables.

Inventories:

Inventories are stated at the lower of cost or market, using the first-in, first-out method.

Property, Plant and Equipment:

Property, plant and equipment are stated principally at cost as of the date of acquisition or fair value as of the
date of donation in the case of gifts. Consistent with generally accepted accounting principles for governmental colleges
and universities, depreciation expense related to property, plant and equipment is not recorded.

Operating Transfers from the State:

A substantial portion of the higher education fund's current unrestricted and plant fund expenditures are
funded through appropriations from the State's general fund and capital projects fund, respectively.

47

 

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Annual Report of the Comptroller, 1999
Volume 362, Page 47   View pdf image (33K)
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