Issued: July 17, 1989
Owner: University Comptroller
Latest Revision: January 25, 2000
FINANCIAL ACCOUNTING POLICY - UNIVERSITY
This policy describes the significant accounting policies of the University Academic Division.
2.0 Policy [Top]
2.1 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 pay-out policy upon termination which is the lesser of 25% of sick leave not taken or $5,000 per employee with five or more years of service.
2.2 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 non-cash 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 are valued at the lower of cost (generally determined on the weighted average method) or market.
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.
2.5 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 $250,000 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 $5,000 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.
2.6 Due To/From Other Funds
Inter-fund 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.
2.7 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.
2.8 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.
3.0 Definitions [Top]
4.0 References [Top]
5.0 Approvals and Revisions [Top]
Previous version in effect from 7/17/89 to 1/25/00 available in policy archive.