Budget Requirements and Annual Financial Reporting Requirements for Texas Public Community Colleges FY 2014 Due Annually by January 1st Planning and Accountability Texas Higher Education Coordinating Board Harold Hahn, CHAIR El Paso Robert “Bobby” Jenkins Jr., VICE CHAIR Austin David Teuscher, M.D., SECRETARY OF THE BOARD Beaumont Gerald T. Korty, STUDENT MEMBER OF THE BOARD Fort Worth Dora G. Alcala Del Rio Ambassador Sada Cumber Sugarland Christopher M. Huckabee Fort Worth Jacob M. Monty Houston Janelle Shepard Weatherford John T. Steen, Jr. San Antonio Raymund A. Paredes, COMMISSIONER OF HIGHER EDUCATION Mission of the Coordinating Board The Texas Higher Education Coordinating Board’s mission is to work with the Legislature, Governor, governing boards, higher education institutions, and other entities to help Texas meet the goals of the state’s higher education plan, Closing the Gaps by 2015, and thereby provide the people of Texas the widest access to higher education of the highest quality in the most efficient manner. Philosophy of the Coordinating Board The Texas Higher Education Coordinating Board will promote access to quality higher education across the state with the conviction that access without quality is mediocrity and that quality without access is unacceptable. The Board will be open, ethical, responsive, and committed to public service. The Board will approach its work with a sense of purpose and responsibility to the people of Texas and is committed to the best use of public monies. The Coordinating Board will engage in actions that add value to Texas and to higher education. The agency will avoid efforts that do not add value or that are duplicated by other entities. The Texas Higher Education Coordinating Board does not discriminate on the basis of race, color, national origin, gender, religion, age, or disability in employment or the provision of services. INTRODUCTION AND HIGHLIGHTS TABLE OF CONTENTS INTRODUCTION AND HIGHLIGHTS ............................................................................. 1 CHANGES AND UPDATES ........................................................................................................... 3 SECTION 1: BUDGET AND INVESTMENT ACT REPORTING REQUIREMENTS .............. 7 BUDGET FILING REQUIREMENTS ............................................................................................... 8 INVESTMENT ACT REQUIREMENTS ............................................................................................ 9 SECTION 2: ANNUAL FINANCIAL REPORT (AFR) REQUIREMENTS .......................... 12 FILING REQUIREMENTS .......................................................................................................... 13 TECHNICAL SPECIFICATIONS .................................................................................................. 17 SAMPLE TABLE OF CONTENTS ................................................................................................. 18 SAMPLE ORGANIZATIONAL DATA ............................................................................................ 19 FREQUENTLY ASKED QUESTIONS ............................................................................................ 20 CHECKLIST ............................................................................................................................ 21 SECTION 3: MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) ....................... 23 INTRODUCTION ..................................................................................................................... 24 OVERVIEW OF MD&A REQUIREMENTS ..................................................................................... 25 ADDITIONAL MD&A GUIDANCE ............................................................................................... 28 CHECKLIST ............................................................................................................................ 30 SECTION 4: STATEMENT OF NET POSITION ............................................................. 31 INTRODUCTION AND DISCUSSION .......................................................................................... 32 REPORT FORMAT – SAMPLE OF EXHIBIT 1 – STATEMENT OF NETS POSITION ............................ 33 REPORT FORMAT – SAMPLE OF AFFILIATED ORGANIZATIONS – STATEMENT OF FINANCIAL POSITION ......................................................................................................................... 34 CURRENT ASSETS ................................................................................................................... 35 NONCURRENT ASSETS ............................................................................................................ 37 CAPITAL ASSETS CLASSIFICATIONS ......................................................................................... 38 DEFERRED OUTFLOWS OF RESOURCES .................................................................................... 41 CURRENT LIABILITIES ............................................................................................................ 42 NONCURRENT LIABILITIES ...................................................................................................... 43 NET POSITION ....................................................................................................................... 44 FREQUENTLY ASKED QUESTIONS ............................................................................................ 45 CHECKLIST ............................................................................................................................ 46 SECTION 5: STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION (SRECNP) .............................................................................................. 47 INTRODUCTION ..................................................................................................................... 48 REPORT FORMAT – SAMPLE OF EXHIBIT 2 – SRECNP ................................................................ 49 REPORT FORMAT – SAMPLE OF AFFILIATED ORGANIZATIONS – STATEMENT OF ACTIVITIES ...... 50 REVENUES ............................................................................................................................. 51 EXPENSES .............................................................................................................................. 54 OTHER REPORTING ISSUE – COMPONENT UNITS ..................................................................... 56 FREQUENTLY ASKED QUESTIONS ............................................................................................ 57 CHECKLIST ............................................................................................................................ 58 SECTION 6: STATEMENT OF CASH FLOWS ................................................................ 59 DESCRIPTION OF STATEMENT OF CASH FLOWS ....................................................................... 60 OPERATING ACTIVITIES ......................................................................................................... 61 NON-CAPITAL FINANCING ACTIVITIES ..................................................................................... 64 CAPITAL AND RELATED FINANCING ACTIVITIES ....................................................................... 66 Page i THECB August 2014 INTRODUCTION AND HIGHLIGHTS INVESTING ACTIVITIES .......................................................................................................... 67 RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ..................................................................................................... 68 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................................ 70 SAMPLE OF CASH FLOWS WORKSHEET .................................................................................... 72 SAMPLE OF EXHIBIT 3 ............................................................................................................ 79 FREQUENTLY ASKED QUESTIONS ............................................................................................ 80 CHECKLIST ............................................................................................................................ 84 SECTION 7: NOTES TO THE FINANCIAL STATEMENTS ............................................. 85 REPORTING ENTITY ............................................................................................................... 86 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ................................................................. 87 AUTHORIZED INVESTMENTS ................................................................................................... 90 DEPOSITS AND INVESTMENTS ................................................................................................ 91 DERIVATIVES ......................................................................................................................... 95 CAPITAL ASSETS .................................................................................................................... 96 NON-CURRENT LIABILITIES .................................................................................................... 98 DEBT AND LEASE OBLIGATIONS .............................................................................................. 99 BONDS PAYABLE ..................................................................................................................