|
The Financial Report,1993-94 |
|---|
NOTES TO FINANCIAL STATEMENTS
As of June 30, 1994
Organization and Purpose
The University of Virginia is an agency of the Commonwealth of Virginia and is
governed by the University's Board of Visitors. A separate report is prepared
for the Commonwealth of Virginia which includes all agencies, boards,
commissions, and authorities over which the Commonwealth exercises or has the
ability to exercise oversight authority. The University is a component unit of
the Commonwealth of Virginia and is included in the general purpose financial
statements of the Commonwealth. The University consists of three divisions .
The Academic Division and Clinch Valley College Division generate and
disseminate knowledge in the humanities, arts, scientific, and professional
disciplines through instruction, research, and public service. The Medical
Center Division provides routine and ancillary patient services through a full
service hospital and clinics.
Summary of Significant Accounting Policies
The financial statements of the University have been prepared in accordance
with the accounting guidance and reporting practices applicable to colleges
and universities, as outlined in the American Institute of Certified Public
Accountants' Industry Audit Guide, Audits of Colleges and
Universities. In compliance with the aforementioned literature, the
statement of current funds revenues, expenditures, and other changes is a
statement of financial activities of current funds related to the respective
reporting period. It does not purport to represent the results of
operations or net income or loss for the period as would a statement of income
or a statement of revenues and expenses. The significant accounting policies
followed by the University are summarized below to enhance the usefulness of
the financial statements.
Reporting Entity
The financial statements and the accompanying notes of the University
include all funds and organizations for which the Board of Visitors has
oversight responsibility. The board has recognized as affiliated foundations
thirteen organizations created and operated in support of the interests of the
University. Affiliated foundations are not-for-profit corporations controlled
by separate boards of directors and are not included in the basic financial
statement of the University.
Condensed financial statements for the following three foundations, whose
boards include officers of the University, are disclosed in Note 5.
University of Virginia Health Services Foundation, an educational,
scientific, and charitable organization established to assist the
University in providing hospital and medical care services, medical
education programs, medical research, and programs of public charity at the
University.
University of Virginia Real Estate Foundation, established to promote,
support, and aid the University in matters pertaining to real estate.
University of Virginia Auxiliary Services Foundation, established to
promote, support, and aid the University in itsoperation and support of
enterprises such as athletics, recreation, student health, and
fellowship.
Accrual Basis
The financial statements have been prepared on the accrual basis of accounting
except for depreciation. The University records gifts and pledges when
collected. No value is assigned to art, rare books, and other collections
received as gifts.
Fund Accounting
In order to ensure observance of limitations and restrictions placed on the
use of resources, the accounts of the University are maintained in accordance
with the principles of fund accounting. The accounts relating to specified
activities or objectives have been classified into separate funds. Similar
funds have been combined into fund groups for financial reporting purposes.
Within each fund group, fund balances restricted by outside
sources are so indicated and are distinguished from designated funds allocated
to specific purposes by action of the Board of Visitors. Externally restricted
funds may only be utilized in accordance with the purposes established by
the source of such funds and are in contrast with unrestricted funds over which
the board retains full control to use in achieving its institutional purposes.
Restricted gifts, grants, contracts, appropriations, endowment
income, and other restricted resources are accounted for in the appropriate
restricted funds. Revenues from current restricted funds are
recognized when expenditures are incurred for current operating
purposes. The excess of restricted receipts over amounts expended for
restricted purposes is recognized as a fund balance addition to current
restricted funds.
Endowment funds are subject to
the restrictions of gift instruments requiring that the principal be invested
in perpetuity and that only the resulting income may be utilized. Term
endowment funds are similar to endowment funds, except that, upon passage of a
stated period of time or the occurrence of a particular event, all or part
of the principal may be expended. Quasi-endowment funds have been
established by the board for the same purposes as endowment funds, except
that any portion of quasi-endowment funds may be expended at the board's
discretion.
Medical Center Sales and Services
A significant portion of the medical center services is rendered to
patients covered by Medicare, Medicaid, or Blue Cross. The medical center
has entered into contractual agreements with these third parties to accept
payment for services in amounts less than scheduled charges. In accordance with
these agreements, the difference between the contractual payments due and the
medical center scheduled billing rates results in contractual adjustments.
Contractual adjustments are recorded as deductions from medical center revenues
in the period in which the related services are rendered. Certain annual
settlements of amounts due for medical center services covered by third parties
are determined through cost reports which are subject to audit and retroactive
adjustment by the third parties. Provisions for possible adjustments of cost
reports have been estimated and reflected in the accompanying financial
statements. Since the determination of settlements in prior years has been
based on reasonable estimation, the difference in any year between the
originally estimated amount and the final determination is reported in the year
of determination as an adjustment to medical center revenues.
Investments
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. University-held real estate
investments are recorded at cost.
Inventories
Inventories are valued at the lower of cost (generally determined on the
weighted average method) or market value.
Plant
Property, plant, equipment, and books (other than rare books) and materials
which are part of a catalogued library, are stated principally at cost at the
date of acquisition, or fair market value at the date of donation in the case
of gifts. Consistent with current generally accepted accounting principles
for public colleges and universities, depreciation on plant assets is not
recorded. During the year, the academic division purged from its records the
cost of all equipment with an original cost of less than $2,000. Since February
1, 1991, the academic division has capitalized only that equipment with an
original cost of $2,000 or more, and with a useful life of at least two years.
The original cost of the purged assets was $23.7 million.
Reclassifications
Certain 1993 revenues and fund additions were reclassified to conform to
classifications currently in use.
Office of University Publications Home Page
University of Virginia Home Page