This financial statement will provide information on the institution’s total assets, total liabilities, and total net assets (net worth). Statement of Financial Position (Balance Sheet) Each statement has its own set of key strategic questions, which are included at the end of this article.
iv There are three required basic financial statements: The Statement of Financial Position (Balance Sheet), the Statement of Activities (Income Statement), and the Statement of Cash Flows. The information below is adapted from that booklet. McCarthy and Robert Turner point out the key strategic issues and related questions for each of the primary financial statements. In the Association of Governing Boards of Universities and Colleges’ Board Basics Booklet on financial statements, authors John H. So how do board members sort out the important issues and get answers to key questions as they execute their duties? Delving Into the Key Questions: What Questions Should I Be Asking? But the second and equally important rule is “no money, no mission.” iii Therefore, while financial reports do not answer all of the key questions important to a college or university trustee, accounting and reporting for such institutions is, indeed, unique. Rule one is mission, mission, and more mission.
While this is true, other nonprofit management authors have pointed out two rules for successful nonprofit organization management. The effectiveness of the CEO was judged significantly by the extent to which the institution had a “strong mission orientation.”ii.Improvement strategies were primarily oriented toward “making mission central.”.A specific strategy to carry out that mission.A clear sense of mission, accompanied by.The majority surveyed thought that the main characteristics of an effective nonprofit organization included:.Seider say, “In nonprofits, financial results no longer have primacy, because shareholder wealth or profit maximizing no longer serve as the overarching objectives.” i A large national survey of nonprofit officers and board chairs found the following in regard to an organizational effectiveness assessment: In their work on financial management for nonprofit organizations, John Zeitlow, Jo Ann Hankin, and Alan G. Nonprofit organizations generally, and colleges specifically, have much more complex measurements to consider when deciding on the level of success the institution is experiencing. Success is thus a function of the bottom line. What Makes the Accounting and Reporting for Colleges and Universities Unique?īusiness success is found in the value of the company stock and the strength and direction of profit margins being generated (which tend to strongly influence the stock value). Care for the people, systems, and processes that produce the timely and accurate reporting needed is as important as the reports and results themselves.The financial statements and budget reports alone are not enough to communicate the whole story.Financial reporting processes MUST deliver enough information in a highly summarized form to enable the board member to answer key questions about the institution’s financial health.Maintaining financial health removes one barrier to the successful completion of mission.
The true measure of success lies in the accomplishment of key tasks that further the mission of the institution. For a Christian college, true success is NOT found in the size of its net income, its student body, its physical plant, or its endowment.Solid understanding of these key principles will help guide the college board member to the right information and illuminate answers to the most pressing questions faced at the institution. Background PrinciplesĬore principles of good financial reporting are presented here. The dramatic economic booms and busts of the last 20 to 30 years underscore how important it is for board members of Christ-centered colleges and universities to be presented with high-quality financial reports in order to skillfully direct the course of their institutions. Print The Unique Aspects of College and University Financial ReportingĪccurate, timely reporting that informs good financial management is vital in today’s volatile economy.