UNIVERSITY OF VIRGINIA
           FINANCIAL AND ADMINISTRATIVE POLICIES MANUAL



TITLE:  FINANCIAL ACCOUNTING POLICY-                 POLICY: II.A.2x
        UNIVERSITY                                                 
                                                                   

The significant accounting policies of the University are as
follows:

     Basis of Accounting

     The University has adopted the accrual basis of accounting in
     accordance with the American Institute of Certified Public
     Accountants'audit guide for colleges and universities. 
     Accruals for interest on student loans and bond interest
     payable, except for bond interest related to the replacement
     hospital, are not recorded and are not considered by
     management to be material.  The University records pooled
     endowment interest income on an accrual basis.  The University
     follows the practice of recording gifts and pledges when
     collected.  No value is assigned to art and other collections
     received as gifts.

     Non-faculty salaried employees' attendance and leave
     regulations make provision for the granting of a specified
     number of days of leave with pay each year.  The amount of
     leave earned but not taken is recorded on the balance sheet. 
     The amount reflects, as of June 30, all earned vacation leave
     not taken and the amount payable under the Commonwealth of
     Virginia's sick leave payout policy upon termination which is
     the lesser of 25% of sick leave not taken or $2,500 per
     employee with five or more years of service.

     Fund Accounting

     In order to ensure observance of limitations and restrictions
     placed on the use of resources available to the University,
     the accounts of the University are maintained in accordance
     with principles of fund accounting.  The accounts relating to
     specified activities or objectives are classified into
     separate funds.  Similar funds are combined for financial
     reporting purposes.

     Within each fund group, fund balances restricted by outside 
     sources are so indicated and are distinguished from
     unrestricted funds allocated to specified purposes by action
     of the Board of Visitors.  Restricted resources may only be
     used for purposes established by the source of such funds.

     Restricted gifts, appropriations, endowment income and other 
     restricted sources are accounted for in the appropriate
     restricted funds.  Restricted funds are reported as revenues
     and expenditures when the restriction has been satisfied.

     All gains and losses arising from the sale, collection, or
     other disposition of investments and other noncash assets are
     accounted for in the fund which owned such assets.  Ordinary
     income derived from investments, receivables, and the like is
     accounted for in the fund owning such assets, except for
     income derived from investments of endowment and similar
     funds, which income is accounted for in the fund to which it
     is restricted or, if unrestricted, as revenues in unrestricted
     current funds.

     Inventories

     Inventories are valued at the lower of cost (generally
     determined on the weighted average method) or market.

     Investments

     Temporary investments and endowment fund investments in
     corporate stocks and marketable bonds are recorded at market
     value.  Mortgages held for investment by the endowment fund
     are recorded at book value representing principal amounts due. 
     Investments in real estate are recorded at book value.

     Net Investment in Plant

     Plant assets are stated at actual or estimated cost at date of
     acquisition.  Construction is capitalized as expended and
     reflected in net investment in plant.  Current fund
     expenditures of $10,000 or greater for renewals and
     replacements are capitalized only to the extent that such
     expenditures represent long-term improvements to properties or
     significantly enhance the usefulness of the properties.

     Current fund expenditures for equipment are capitalized when 
     the unit acquisition cost is $500 or more and the estimated
     useful life is two years or longer.

     No provision for depreciation of plant assets is made in the 
     University's financial statements.

     Due To/From Other Funds

     Interfund advances represent the temporary use of funds
     pending the receipt of monies from grants, loan agreements or
     the collection of pledged gifts from various donors.


Funds Held in Trust by Others

Assets of funds held by trustees for the benefit of the University
are not reflected in the balance sheet.  The University has
irrevocable rights to all or a portion of the income of these
funds.  However, assets of the funds are not under the management
discretion of the University according to the trust agreements.


Affiliated Foundations

Assets of affiliated foundations which are separately incorporated
and managed by their own boards are not included in the
University's financial statements. These foundations are organized
for special purposes which either support the University or benefit
specific schools.  Income received from such foundations is
recorded as a gift when received.

                                                                   
ISSUED BY:                                                 07/17/89

University Comptroller         2.1.2.1