Section III: Comprehensive Standards (Resources: Financial and Physical Resources)

3.10.2.  The institution provides financial statements and related documents, including multiple measures for determining financial health as requested by the Commission, that accurately and appropriately represent the total operation of the institution.

JUDGMENT OF COMPLIANCE

Compliance.

NARRATIVE/JUSTIFICATION FOR JUDGMENT OF COMPLIANCE

Northeast Alabama Community College demonstrates compliance in providing financial statements and related documents, including multiple measures for determining financial health as requested by the Commission.  These financial statements and related documents accurately and appropriately represent the total operation of the institution.

Northeast submitted the 2003 Institutional Profile for Financial Information to the Commission on September 11, 2003. The college has provided budgets for the current year and the past three years and auditor’s reports (which contain the financial statements) for the past six years. The accuracy and appropriateness of these documents in representing the total operation of the institution are attested to by the opinions rendered by the auditors, which in every case is “unqualified,” with no material weaknesses identified concerning internal controls, no reportable conditions found, and no material noncompliance found.  For federal awards, including federal financial aid, the opinion was also “unqualified,” with no internal control weaknesses found and no reportable conditions.

The financial statements of Northeast Alabama Community College are prepared in accordance with accounting principles generally accepted in the United States.  The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.  Beginning with the fiscal year ending September 30, 2002, Northeast’s financial statements reflect the implementation of GASB Statement Number 34 (approved June 1999) and Statement Number 35 (November 1999); together these Statements require colleges and universities to follow the guidance of one of three reporting models in the institutions’ issued reports.  Of the three reporting models defined, Northeast has elected to follow the Business Type Activities (BTA) Model.  Multiple measures for determining financial health are indicated by this model, which is demonstrated in the FY 2002 Auditor’s Report: (1) A Management’s Discussion and Analysis (MD&A) section providing an analysis of the College’s overall financial position and results of operations; (2) a single column presentation of the College’s activities with required basic financial statements consisting of Statement of Net Assets; Statement of Revenues, Expenses, and Changes in Net Assets; and Statement of Cash Flows; and (3) Accounting and Reporting of Revenues Net of Discounts and Allowances.  Additionally, each audit assesses internal control over financial reporting and internal control over major programs of Federal awards.

Northeast follows all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARBs).

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