2_11

Section 2: Core Requirements

2.11 The institution has a sound financial base, demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services. The institution provides the following financial statements: (a) an institutional audit (as distinct from a system wide or statewide audit) and management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governing auditing agency employing the appropriate audit guide; (b) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board and (c) an audited 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.

Judgment of Compliance:
Compliance

Narrative/Justification for Judgment of Compliance:
Christopher Newport University is in compliance with this standard. The Christopher Newport University Board of Visitors reviews period-ending financial reports at each meeting to include a full accounting of all operating and capital accounts. The narrative below responds to each part of the core requirement in turn.

(a) Christopher Newport University has a sound financial base, a history of demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services, as demonstrated by the University's audited financial statements for the fiscal years ending June 30, 2002, through June 30, 2004, which show a consistent pattern of growth in revenue, expenditures, and net assets. The FY 2005 audit will be completed by June 2006.

The most recent audit completed for FY 2003-04 was performed by the Commonwealth of Virginia 's State Auditor of Public Accounts. It resulted in an unqualified opinion with no material weaknesses and no instances of noncompliance. This was the University's first year to comply with GASB 39 in which the financial statements of the University were combined with its related foundations. Total net assets of $102.2 million were reported. The change in net assets was $18.7 million. The management letter, included at the end of the audit, reflects appropriate auditing and accounting standards.

The University continues to meet all of the Management Standards for the Institutions of Higher Education in Virginia for 2004-05. These Management Standards include:

An unqualified audit opinion from the Auditor of Public Accounts upon the audit of the annual financial statements;
No significant audit deficiencies as attested to by the Auditor of Public Accounts;
Compliance with financial reporting standards endorsed by the State Comptroller;
Attainment of accounts receivable standards; and
Attainment of the accounts payable standards.

(b) The University's annual budget development process involves a comprehensive and deliberate approach that supports the mission of the University. The CNU Budget Advisory Committee —consisting of the President, the Provost, the Dean of the College of Liberal Arts and Sciences, the Dean of the School of Business, the Chief of Staff, the Executive Vice President, the Director of Planning and Budget and six faculty members (nominated by the Faculty Senate and appointed by the President)—advises the President on matters pertaining to the operating budget of the university. The Budget Advisory Committee solicits input from all constituencies of the university to ensure that the budget process is relevant and adequate, and each senior officer of the University presents his or her budget recommendations. Then, working closely with the Budget Office, the committee develops recommendations for the President, who recommends the budget to the Board of Visitors for approval at its June meeting.

(c) The most recent audited statement is for FY 2003-04. Total net assets of $102.2 million were reported. The change in net assets was $18.7 million.

Support Documentation:
FY 2002 Audit
FY 2003 Audit
FY 2004 Audit
FY 2003 through 2005 Management Standards Letter
FY 2004, FY 2005 and FY2006 Budget Resolutions
Board of Visitors Approval of FY 2006 Budget: BOV Minutes June 2005
Finance Committee Meeting Materials
2005-06 Budget Priorities
CNU Budget Advisory Committee

Additional Live Web Resources:
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