What Is Financial Analysis?

FISCAL AND STRATEGIC TECHNICAL ASSISTANCE program SURVEY

Survey URL:

Suggested Sources for Data: Financial Services Director, Chief Financial Officer, Accounting Director, Alumni Director, VP of Finance, Fiscal Services Director, or University Controller, or University President

Total Number of Questions: 17

ICB FASTAP Initiative Highlight
UNCF’s Fiscal And Strategic Technical Assistance Program (FASTAP) was created in 1994 to deliver services and technical assistance to strengthen the academic, fiscal and administrative management systems and personnel of UNCF member institutions. Through FASTAP, participating institutions have access to “best practices” in fiscal management and information on strengthening fiscal stability, meeting new accreditation standards and improving financial aid operations.
An expanded FASTAP that is more proactive, compelling and inclusive is needed and requested by UNCF member presidents and administrators. UNCF will therefore place FASTAP under the umbrella of the Institute and invest more resources into its operation. Ensuring that member institutions are fiscally responsible will be a core component of any major UNCF capacity-building effort.
The purpose of the program is to provide institutions with fiscal management and strategic planning assistance. The goal of the program is to serve as a resource to improve financial management and strategic planning among member institutions.

What is Financial Analysis?

Financial analysis refers to the assessment of an institution’s accounting, budgeting, and business practices. It typically involves analyzing profitability, solvency, liquidity, and stability. It is necessary for the viability of any college or university. Analyzing financial data assists in identifying and prioritizing fiscal and strategic planning needs as well as in determining the financial health of the university.

Noteworthy Source
Measuring overall financial health is an essential first step when assessing the impact of transformation on the institution and serves as a gateway to the four other high-level questions. The measurement of financial health in an institution logically leads to an interest in measuring comparability between institutions. When completing measures of comparability between institutions, consideration of the type of institution, as well as the measures used, are important (Bearing Point, 2005, p. 3).

Financial analysis is critical to the overall success of an institution; as noted in the inset to the right. HBCUs will benefit in both strategic and financial ways by allowing data to be compiled and shared within their network. For example, there might be some excellent practices and/or grants at certain HBCUs that others are unaware of and do not currently participate in yet.

How the Results will be Used

Presently there are no instruments available designed to measure both the needs and strengths in the Fiscal and Strategic Technical Assistance Program (FASTAP), at Historically Black Colleges and Universities, (HBCUs). This survey was developed by CAPA and the Institute for Capacity Building, ICB. The Center for Assessment, Planning and Accountability, (CAPA), is part of the United Negro College Fund Special Programs Corporation, (UNCFSP). The survey was designed to inform ICB on what policies and programs need to be developed to make the HBCUs more successful in their FASTAP initiative area. It will be distributed to all HBCUs. The FASTAP survey is a product of ICB, in collaboration with UNCFSP. The instrument was developed with the advice and assistance of UNCF directors, researchers as well as consultants with expertise in the various fields.

The FASTAP Survey is designed for use by the Institutional Research Officers. The instructional guide was created to assist the respondents in areas that they may not have expertise. The instrument measures five areas related to FASTAP: Financial Management, Endowment, Accreditation, Funding, and the Composite Financial Index, (CFI). The Composite Financial Index, or CFI is a single measure of financial health used as an indicator of the institution based on four core ratios. The four indicators of financial vulnerability: Primary Reserve, Net Operating Revenues, Return on Net Assets, Viability. This index is an ordinal measure that will allow ranking of all HBCUs according to the extent of their financial vulnerability. This rank is not an indicator of the absolute magnitude of the university’s financial vulnerability.

Research officers may need to obtain assistance from professionals in the five previously mentioned FASTAP areas in completing this survey. Most of the information needed to answer the questions in the CFI section of the FASTAP survey can be obtained from the institution’s IPEDs, audits, and IRS 990 reports. The survey results are designed to provide ICB with the following information regarding the HBCUs:

•Quantifying the status, sources and uses of resources

•Assess ability to repay debt

•Gauge performance

•Provide insight on relative liquidity, financial viability and leverage

•Measure against specific objectives

The primary purpose of the FASTAP survey is to provide feedback to ICB for continuous improvement and evaluation purposes.

FASTAP Survey Instructional Guide with Embedded Survey Questions

FINANCIAL MANAGEMENT

Instructions for completing Items 1-5

1.Please select if the institution has any of the following:(Select all that Apply)
Please select all types of committees that apply to the institution.
2.Please select the type of financial accounting software systems the institution utilizes:
Please select the type of accounting software utilized by the institution.
3.Please select whether there has a financial external audit performed within the past 12 months:
Select either yes, no, or unknown.
4.Please select whether the institution has been impacted by any form of internal financial fraud within the past five years:
Select either yes, no, or unknown.
5.Please select whether the institution has been impacted by any form of external financial fraud within the past five years:
Select either yes, no, or unknown.

FINANCIAL MANAGEMENT

Please select if the institution has any of the following:(Select all that Apply)

finance committee
audit committee
combined finance/audit committee
external company
none at all

Please select the type of financial accounting software systems the institution utilizes:

commercial/general accounting software
fund-based accounting software
The institution does not utilize financial accounting software

3.Please select whether there has been a financial external audit performed within the past 12 months:

Yes
No
Unknown

4.Please select whether the institution has been impacted by any form of internal financial fraud within the past five years:

Yes
No
Unknown

5.Please select whether the institution has been impacted by any form of external financial fraud within the past five years:

Yes
No
Unknown

ENDOWMENT

Instructions for completing Items 6-9

6.Please enter the estimated total value of the institution’s endowment:
Enter the estimated dollar amount of the institution’s endowment.
7.Please select whether the institution has a formal Investment Policy:
Select either yes, no, or unknown.
8.Please enter the investment balance of the institution’s endowment by percentage:(Total should add to 100%)
Please enter approximate percentages for each category listed.
9.Please select whether the institution has an annual Endowment Report:
Select either yes, no, or unknown.

ENDOWMENT

6.Please enter the estimated total value of the institution’s endowment:

7.Please select whether the institution has a formal Investment Policy:

Yes
No
Unknown

8.Please enter the investment balance of the institution’s endowment by percentage. (Total should add to 100%)

Area / Percent
Percent of endowment from Listed Equity
Percent of endowment from Fixed Income
Percent of endowment from Real Estate
Percent of endowment from Commodities
Percent of endowment from Hedge Funds
Percent of endowment from Private Equity
Percent of endowment from Cash
Percent of endowment from other sources

9.Please select whether the institution has an annual Endowment Report:

Yes
No
Unknown

ACCREDITATION

Instructions for completing Items 10 & 11

10.Please select the institution’s accrediting body:
Please select the appropriate accrediting body or if a category is not represented in the list, select “other”.
11.Please select the institution’s current accreditation status
Please select the appropriate response as to the status of the institution’s accreditation.

ACCREDITATION

10.Please select the institution’s accrediting body:

Southern Association of Colleges and Schools (SACS)
Middle States Association of Colleges and Schools (MSA)
New England Association of Schools and Colleges Commission on Institutions of Higher Education
New England Association of Schools and Colleges Commission on Technical and Career Institutions
North Central Association of Colleges and Schools
Northwest Commission on Colleges and Universities
Western Association of Schools and Colleges Accrediting Commission for Community and Junior Colleges
Western Association of Schools and Colleges Accrediting Commission for Senior Colleges and Universities
Other

11.Please select the institution’s current accreditation status:

Currently Accredited
Currently in Reaffirmation Process
Currently Under Warning
Currently on Probation
Unknown

FUNDING

Instructions for completing Items 12-16

12.Please select whether the institution has a line of credit:
Select either yes, no, or unknown.
13.Please select whether the institution has a board-approved budget for each fiscal year:
Select either yes, no, or unknown.
14.Please enter the following information related to finances for the institution for academic or fiscal year 2008: (Total should add to 100%)
Please enter approximate percentages for each category listed.
15.Please enter the institution’s overall surplus or deficit at the end of the prior fiscal year. Enter the amount and then enter if the amount represents a surplus or deficit:
Enter amount from annual financial report, income statement or other financial documents such as balance sheet summary, net assets summary, or income statement summary. Indicate whether the amount represents a surplus or deficit.
16.Please select the number of months of operating expenses the institution has available as unrestricted, liquid funds:
Select number from options given. Information might be located in annual financial report, income statement or other financial documents such as balance sheet summary, net assets summary, or income statement summary or select unknown if unsure.

FUNDING

12.Please select whether the institution has a line of credit:

Yes
No
Unknown

13.Please select whether the institution has a board-approved budget for each fiscal year:

Yes
No
Unknown

14.Please enter the following information related to finances for the institution for academic or fiscal year 2008:(Total should add to 100%)

Area / Percent
Percent of income from tuition
Percent of income from UNCF
Percent of income from institutional advancement activities
Percent of income from federal government appropriations
Percent of income from grants and contracts
Percent of income from other sources

15.Please enter the institution’s overall surplus or deficit at the end of the prior fiscal year. Enter the amount and then enter if the amount represents a surplus or deficit:

Amount / Surplus/Deficit

16.Please select the number of months of operating expenses the institution has available as unrestricted, liquid funds:

< 6 months
6-12 months
> 12 months
Unknown

COMPOSITE FINANCIAL INDEX (CFI)

Instructions for completing Item 17

Most of the information needed to answer the questions can be obtained from the institution’s IPEDs, audits, and IRS 990 reports.

17.(Enter number only. Do not enter “$”, “,” or “.”)
Total Available Unrestricted Net Assets
Enter dollar amount of unrestricted net assets. Net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Resources designated for operating and capital uses. Includes student tuition and fees, state appropriations, sales, services, unrestricted gifts, and other unrestricted funds.
Total Temporarily Restricted Net Assets
Enter dollar amount of funds whose use is restricted by outside parties until some event occurs.
Total property, plant, equipment (net of depreciation)
Enter dollar amount of all property, plant, and equipment, less depreciation.
Total long-term debt
Enter dollar amount of total long-term debt. Debt that has a maturity of more than one year. Examples include: multi-year term loans, mortgage loans, and capitalized long-term leases.
Total Unrestricted Operating Revenues
Enter dollar amount of unrestricted operating revenues. (Total gross university sponsored overhead, unrestricted endowment income, tuition, fees, contributions, grants, contracts, auxiliary services, net assets released from restrictions, private sources including businesses, individuals, foundations and other revenues not required by law to be used for another purpose.)
Total Unrestricted Operating Expenses
Enter total dollar amount of unrestricted operating expenses. Expenses such as instruction, research, institutional support, auxiliary enterprises, and any other unrestricted expenses the institution incurs.
Total Unrestricted Revenues & Gains
Enter dollar amount of total operating revenues and gain. Such as tuition, fees, contributions, grants, contracts,investment income, auxiliary services, and net assets released from restrictions.
Total Net Assets released from Restriction
Enter dollar amount of total net assets released from restriction. Transfer of funds from restricted to unrestricted due to satisfaction of donor-imposed stipulations (or, in rare cases, due to permission of a donor of permanently restricted funds).

COMPOSITE FINANCIAL INDEX (CFI)

17.Please enter the requested information that will be used to determine the institution's CFI. Enter the information from the end of the institution's most recent fiscal year.(Enter number only. Do not enter “$”, “,” or “.”)

Area / Amount
Total Unrestricted Net Assets:
Total Temporarily Restricted Net Assets:
Total property, plant, equipment (net of depreciation):
Total long-term debt:
Total Unrestricted Operating Revenues:
Total Unrestricted Operating Expenses:
Total Unrestricted Revenues & Gains:
Total Net Assets released from Restriction: