As
of June 30, 2001
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
that 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 University of Virginia's
College at Wise 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. There are currently nineteen affiliated
foundations 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 statements of the University.
Condensed financial statements for the following foundations,
whose boards include officers of the University, are disclosed
in Note 6.
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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 Foundation and Subsidiaries, which
includes the University of Virginia Real Estate Foundation,
established to promote, support, and aid the University in
matters pertaining to real estate, as well as to use and administer
gifts, grants, and bequests for the benefit of the University. |
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 except as indicated in Note 11.
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 Trigon Blue Cross
Blue Shield of Virginia. 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 that
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. Certain less marketable investments, principally
real estate and private equity investments, are generally carried
at estimated values as determined by management. Because of the
inherent uncertainty in the use of estimates, values that are
based on estimates may differ from the values that would have
been used had a ready market existed for the investments. Mortgages
held for investment by the endowment fund are recorded at book
value representing principal amounts due.
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 that 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. Maintenance
or renovation expenditures of $50,000 or more are capitalized
only to the extent that such expenditures prolong the life of
the asset or otherwise enhance its capacity to render service.
Consistent with current generally accepted accounting principles
for public colleges and universities, depreciation on plant assets
is not recorded. The Academic Division capitalizes all equipment
with an original cost of $2,000 or more and with a useful life
of at least one year. The Medical Center Division capitalizes
all equipment with an original cost of $1,000 or more and with
a useful life of at least two years. Prior to fiscal year 2001,
the Medical Center Division's capitalization threshold was $500
or more and having a useful life of at least two years.
In accordance with newly adopted AICPA Statement of Position 98-1,
the University capitalizes computer software developed or obtained
for internal use. Capitalization begins at the application development
stage, which consists of the design, coding, installation, and
testing of the software and interfaces.
Deferred Revenue
Deferred revenue represents revenues collected but not earned
as of June 30. This is primarily composed of revenue for student
tuition accrued in advance of the semester. If a program is conducted
over a fiscal year end, deferred revenue is recorded for all revenue
related to programs predominately conducted in the next fiscal
year.
Accrued Compensated Absences
The amount of leave earned but not taken by non-faculty salaried
employees is recorded as a liability on the balance sheet. The
amount reflects, as of June 30, all unused vacation leave, sabbatical
leave, and the amount payable upon termination under the Commonwealth
of Virginia's sick leave payout policy. The applicable share of
employer-related taxes payable on the eventual termination payments
is also included.
Reclassifications
Certain 2000 activities and balances were reclassified to conform
to classifications currently in use.
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