Core Requirement 2.11 The institution has a sound financial base and demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of it programs and services.

The member institution provides the following financial statements: (a) an institutional audit (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; (b) 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 (c) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board.

Audit requirements for applicant institutions may be found in the Commission policy entitled "Accreditation Procedures for Applicant Institutions."

 

Judgment of the Off-Site Review Committee:

Non-Compliance

The institution's 2004-2005 audited financial statements report total net assets of $30.3 million including $208K in Unrestricted Net Assets and $6.2 million in expendable restricted assets. Craven Community College has no long term debt and an effective current ratio of 3.26: the latter metric indicating that the institution has $3.26 of current assets for every $1.00 of current liabilities.

The committee reviewed audit and review reports for FYE 2005, 2004, 2003, and 2002. Over that period, state appropriations (excluding capital appropriations) represented 43% of the institution's total non-capital revenue (47.1% for the most recently completed year), while county aid amounted to 12.3%. The relative strength of the institution's balance sheet and the fact that state and county appropriations fund a majority of the institution's operations (nearly 60% for FYE 2005) is demonstrative of the institution's financial stability and sound financial base.

The institution submitted a building/campus characteristic report from fall 2004 which documents facilities with approximately 170,000 square feet of assignable area. The institution's financial statements document an increase in net capital assets of nearly $9 million since FYE 2002; this increase demonstrates robust growth in facilities related assets that would appropriately serve the institution's mission. Additionally, the institution reported that the median class size for AYE 2005 was 12 students, with a maximum class size of 39 (see C.R. 2.8).

According to Board minutes, CCC Trustees approved the institution's FYE 2006 budget on April 19, 2005. Approval by the full board was preceded by comprehensive review by the Trustees' Finance Committee. The institution's planning cycle identifies planning goals, biennially, by October 31 to allow ample time for cost implications to be folded into the budget for the following year. The President and area administrators assess the appropriateness of goals in the context of institution-wide goals, and the President, Executive Vice President/Chief Academic Officer, and the Vice President for Finance and Administrative Services review budget submissions prior to consideration by the College trustees. The Committee also observed comprehensive, interim financial reports that measured revenue and expense accumulations against budgeted amounts. Review of minutes from Board of Trustees meetings demonstrate that budget progress is reviewed by the Board on a quarterly basis. (Review by the full board is preceded by a review from the institution's Finance Committee.) The institution's annual operating budget is preceded by sound planning, subjected to sound fiscal procedures, and approved by its governing body. Craven Community College did submit an audit and management statement for the most recent year; however, the institution did not present "a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt", as mandated by the Commission. The On-Site Committee Review Committee should examine this statement of unrestricted net assets.

 

The Office of State Auditor performs an audit or review of the college's financial statements each year. For the Fiscal Year Ending June 30, 2005 the Office of State Auditor performed an audit of the financial statements. In the audit report for June 30, 2005, the Statement of Net Assets for Craven Community College reflects a Total Net Assets of $30,308,816.24. The Net Assets are broken down between Invested in Capital Assets of $22,645,061.21, Restricted Net Assets of $7,455,251.81 and Unrestricted Net Assets of $208,503.22.  For a three-year comparison, see attached table.  Also for comparison purposes, 2004 and 2003 statements are also attached.