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2.11.1 Financial Resources

The institution has a sound financial base and demonstrated financial stability to support the mission of the institution and the scope of its programs and services.

The member institution provides the following financial statements: (1) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a system wide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (2) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and (3) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board.

Link to Original Submission

http://sacs.pvamu.edu/pages/core_requirements/2.11.1.html

Off Site Committee Review Findings

A separate independent audit report is not issued on Prairie View A&M University or the Texas A&M University System; however, both PVAMU and the TAMUS prepare unaudited financial statements. The annual independent audit is conducted by the State Auditor’s Office as part of the State-wide audit. An audit for the fiscal year ending August 31, 2009 was not provided. PVAMU commits to provide a copy of the audit report prior to the on-site visit.

PVAMU also did not provide a statement of financial position of unrestricted net assets exclusive of plant assets and plant related debt for the fiscal year ending August 31, 2009. PVAMU did not acknowledge in its self-assessment whether a copy of this required statement will be provided prior to the on-site visit.

As part of its self-assessment, PVAMU provided evidence of detailed budget instructions that the institution provides to campus departments as part of the budget development process. The institution did not provide evidence of the roles of senior officers, the President, the Chancellor and the Board of Regents (BOR) in the strategic development of the budget. While PVAMU’s self-assessment does not include BOR minutes signifying approval of the budget, evidence of such approval exists in the form of a link to the final PVAMU budget on TAMUS’s website which incorporates a cover page denoting “Board Approved Operating Budget Fiscal Year Ending August 31, 2009.”

Due to the lack of evidence cited above, determination of a sound institutional financial base and financial stability was not possible. PVAMU should provide the following information: (1) a copy of the state-wide audit for the fiscal year ending August 31, 2009; (2) a statement of financial position of unrestricted net assets exclusive of plant assets and plant related debt for the fiscal year ending August 31, 2009; and (3) additional information explaining the strategic process the institution and system follow when developing the budget.

Prairie View A& M Response to Off Site Review

1) State-wide Audit for Fiscal Year Ending August 31, 2009

Available for review is an official review report, dated January 22, 2010, and prepared by the State Auditor's Office in accordance with Statements on Standards for Accounting and Review Services. With one exception, the review found "no material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles." The exception was a supplementary information section that was not included in Prairie View A&M's independent submission but was included in the consolidated report for the Texas A&M University System [1]. State-wide audits are still in preparation for all Texas colleges and universities.

2) Statement of Financial Position of Unrestricted Net Assets Exclusive of Plant Assets and Plant-related Debt for the Fiscal Year Ending August 31, 2009

Also available for review is a statement of changes in unrestricted net assets, exclusive of plant data, for FY2009 versus FY2008. Overall figures for 2008 were $89,262,098, compared to $86,736,901 for FY2009, with the greatest change a reduction in unreserved funds allocated to future operating budgets [2].

3) Strategic Process for Budget Development

The Office of Budget and Reconciliations reports to the Vice-President for Business Affairs (VPBA), also the Chief Financial Officer, and has as its mission the monitoring of the University’s budget to ensure that funds are used as intended according to applicable laws, policies, rules, and regulations. The Office begins the initial budget preparation process by reviewing funding level for legislative appropriations, course fee projections, designated tuition, athletic fees, student service fees, and various other revenue and expenditure projections. Grant accounts are budgeted only after being carefully analyzed and reviewed by the Office of Sponsored Programs to confirm that sufficient funds exist for the program and/or project. During the year, the Budget Specialists update the Budgetary Data Worksheets for permanent budget changes processed in online Canopy Financial Reporting Module through a Departmental Budget Request (DBR). The President or Vice-Presidents may reallocate budgets within their respective area of responsibility during the current budget year through Canopy routing and approval process via DBRs. DBR changes route to the VPBA with the Director of Budget and Reconciliation as the final point of approval. However, the total budget for each College, Division or Unit must stay within its total allocation.

During the budget process, any budget changes initiated by the President or Vice-Presidents are communicated by the Director of Budget and Reconciliation to the VPBA who discusses each with the President. Final allocation decisions are made by the President, who delegates authority according to PVAMU Rule 27.04.01.P1 [3].

The VPBA and the Director of Budget and Reconciliation meet and/or communicate via e-mail on a continuous basis to discuss levels of spending, any surplus or deficit spending, special requests, reserves for one-time request, justification for one-time spending requests, and account transfers. The VPBA approves specific revenue and expenditure changes for accounts that require additional allocations and/or adjustments.

Budgetary process steps including the following:
  1. Prepare the preliminary FY Budget Calendar.
  2. Review the Texas A&M University System Budget Preparation User’s Manual [4]
  3. Prepare draft of budget preparation guidelines for the VPBA to review and approve.
  4. Distribute the budget preparation packet via e-mail to the President, Vice-Presidents, Deans, Department Heads, and Account Managers with instructions that also are posted online in the Business Affairs Policy Library. [5] [6]
  5. Conduct academic and administrative preparation training workshops.
  6. Hold academic budget hearings run by Provost/Vice President for Academic Affairs and the VPBA. Administrative budget hearings are held by the VPBA. [7]
  7. Review revenue allocations and projections submitted by the departments.
  8. Verify fixed cost worksheets against service department's submission.
  9. Update budgetary data worksheet for changes approved by the VPBA.
  10. President, Vice-Presidents, Deans, Directors, Department Heads, and Account Managers forward the completed budget submission request to the VPBA.
  11. Budget Office receives approved budgets from the VPBA.
  12. Budget Office enters salary changes into the Budget/Payroll/Personnel Module.
  13. Budget Office enters submitted budget worksheets from CFO into the Financial Accounting Management & Information System (FAMIS) budget module.
  14. Budget Office balances the budget.

In order for certain deadlines to be met, the Budget Office operates from an internal calendar of assigned task and allotted time for each task. It formalizes key dates for each task to ensure timely submission of the budget to the Texas A&M University System Office of Budget and Accounting [8]. The Budget Activity Calendar is included in the 2009-2010 Budget Preparation Guidelines with the scheduled times and dates for trainings, budget hearings, and submission of budgets to the VPBA, and forwarding of approved budgets to the Office of Budgets and Reconciliations [9].

Budget Preparation Guidelines introduce the economic conditions, including updates from the Texas Legislature and the TAMUS Board of Regents; forms and cost schedules; explanations of the merit process; and details on local account budgets. The actual Budget Packet includes preparation guidelines, spreadsheets to assist with calculations, and important forms, worksheets, and schedules.

The VPBA and the Provost/Vice-President for Academic Affairs coordinate and schedule budget hearings for academic divisions/units. These hearings focus on underlying budget preparation assumptions, such as accurate adjustments and corrections; line item expenditures aligned with accounts; expenditures based on unit goals, outcomes, and objectives; and expenditures promoting student learning. Hearings also cover the process for calculating and awarded merit pay, confirming that amounts stay within the merit allocation pool and alerting personnel that all proposed increases can be adjusted by the Provost/Vice-President for Academic Affairs. The Director of Budget and Reconciliation addresses any items of concern that may have existed on the submitted budget and/or status of certain accounts with concerns during the current fiscal year, and multiple financial administrator present funding needs. A similar agenda occurs for administrative units, with the VPBA working with Vice Presidents, who also hold individual unit hearings.

Once all budgets are approved, they are forwarded to the Budget Office for entry into the FAMIS system. Office personnel specifically check for realistic requests with appropriate supporting documentation; budgets within guidelines, allocated allocations, and estimated revenue; and the possibility of shifting accounts with insufficient funds to other unit accounts. Approved salary updates and budget data are put into the appropriate FAMIS modules.

At this point, the Budget Office prints a complete budget for a detailed review by the VPBA, the Director of Budget and Reconciliation, and the Budget Supervisor. The purpose of this review is to alert the VPBA to deficit accounts, special requests, one-time carry forward requests, significant changes in revenue projections, and any changes that may affect the operating budget adversely. If the VPBA approves any changes, the Budget Office enters them into the FAMIS system to balance the budget. In similar fashion, if any revisions or changes are needed after the VPBA meets with the Prairie View A&M University President for a final review of the completed budget, the appropriate module is updated.

After the final review, the Budget Office sends a request to the Texas A&M University System Budget Office to lock the budget module. The System Office of Budgets and Accounting prepares an Executive Summary of the proposed budget and presents it to the Chancellor for review. The Chancellor holds a Programmatic Budget Review hearing that is attended by the Prairie View President, Vice-President for Business Affairs (CFO), and the Provost [10]. Subsequently, a programmatic budget review with a similar presentation is held with the Board of Regents. Copies of the Executive Summaries are distributed to the Board of Regents and used as the basis for FY2010 budget approval. Upon approval under Texas A&M University System Policy 27.03: Annual Operating Budget Process [11], the System Office of Budgets and Accounting coordinates the collection and distribution of budgets in accordance with the Texas Education Code, the General Appropriation Act, and any other state requirements and add the FY2010 Executive Summary and the FY2010 Operating Budget Statement of Changes in Fund Balance to the Texas A&M University System Operating Budget web site. Prairie View A&M University’s operating budget is made available through from PVAMU website [12], and copies are available in the John B. Coleman Library on the main campus.

Additional Supporting Documentation and Links

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