Financial Statement Preparation Procedures

• The University’s management is responsible for establishing and maintaining a system of internal control designed to ensure that all transactions related to the University's operations are properly initiated, approved, and reported and to ensure that adequate accounting data are compiled to allow for the preparation of annual financial statements in conformity with general accepted accounting principles and applicable laws, rules, and regulations.
• The University maintains budgetary controls that promote compliance with legal provisions embodied in the annual appropriated budget approved by the Board of Trustees.
• The University compiles its financial data using accounts that are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for through the use of separate sets of self-balancing accounts which comprise assets, liabilities, Net Assets balances, revenues, and expenditures.
• The Division of Colleges & University has issued various instructions for use by the universities in the preparation of the individual university financial statements in accordance with generally accepted accounting principles. Under the guidelines established by (ICOFA), a functional expenditure classification code is assigned to a department based on the nature of the activity (e.g. instruction, research, academic support, etc.) which represents the material portion of the activity attributable to that department. In Banner, the program code dictates the functional classification of the expenses.
• The Annual Financial Report (AFR) for the University is prepared in accordance with the instructions in the ICOFA Financial Statement Manual. Accrual entries are posted in Banner and the ending balances from the operating and the general ledgers are extracted from Banner and forwarded to ICOFA to be reported as beginning trial balance figures in the Automated Financial Statements (AFS) system. A crosswalk was created to bring account code balances into general ledger(GL) code balances in AFS; these balances are reported on the financial statement at a higher hierarchy level than the detail Banner account codes. Year end balances from the general and operating ledgers were reconciled against the beginning trial balance figures on AFS to determine correctness of these amounts. The errors (balances not brought over to the financial statements) due to account codes mapping to invalid GL code are manually entered as adjustments in AFS.
• Audit adjustments posted on Banner and AFS in order for both systems to reflect the same financial statement balances.