Financial Requirements Changes to Standard 8.
The commission did a great job with this, and it finally makes financial sense for educational institutions looking to achieve authorization to operate in the state of Georgia.
Standard Eight: Financial Resources
The following criteria are used by professional staff members and evaluation committees as indicators of compliance for the standard.
- The institution provides the appropriate fees and surety bonding.
- The institution adheres to generally accepted accounting principles (GAAP) in the maintenance of its financial records and provides an income/expense statement and a balance sheet annually using the financial form provided by NPEC.
The institution provides a formal independent financial audit prepared by a certified public accountant. If the institution’s Georgia operation is a branch or subsidiary of a larger corporation, an audited financial statement for the previous fiscal year prepared and certified by an independent, certified public accountant for the corporation is provided.
- Institutions reporting gross tuition between $500,000 and $1,000,000 are required to submit a Certified Public Accountant (CPA) financial review of the most recently completed fiscal year.
- Institutions reporting gross tuition over $1,000,000 are required to submit a CPA prepared independent financial audit of the most recently completed fiscal year.
- The authorized institution:
- has unrestricted cash on hand available in the amount of one year’s projected 30 days expenses as indicated in the most recent NPEC Financial Statement;
- is not totally dependent on an increase in tuition or fees or enrollment in order to remain solvent in the current year and the immediately ensuing year;
- has funds to operate which are not limited to current tuition or accounts receivable.
The institution which is seeking initial authorization has:
- filed a financial statement prepared prior to application for authorization by an independent, certified public accountant showing the assets and liabilities of the institution;
- provided an estimate of income which exceeds expenses for the first year of operation, using reporting forms provided by NPEC;
- has unrestricted cash on hand in the amount of one year’s 90 days projected expenses available.
- provides a projected income/expense statement and a balance sheet for the 12-month fiscal year using the financial form provided by NPEC;
- The institution keeps financial records that separately identify all income and expenditures including but not limited to tuition, fees, and income from ancillary sources.
- The institution that is a component of a business which also maintains non-instructional enterprises or functions ensures that income and expense records are maintained separately for the various functions.
- The institution whose fiscal information indicates that it is not financially sound has submitted a plan for financial recovery provides supplemental documentation requested as part of the Financial Viability Assessment (ex. Financial Improvement Plan, Teach-Out Plan, CPA review and/or CPA audit).
The Georgia NonPostSecondary Educational Commission has done everyone involved with education at this level a measure of perfect sanity! Great job and kudo’s to the GNPEC!
Below are the spreadsheet and instructions for the new financial reporting system: