UVU Foundation Audit RFP Questions and Answers
Question 1: Page 3 of the RFP states Entity management will prepare the financial statements comprising MD&A, Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows, Notes to the Financial Statements, and optional supplemental schedules. Based on this language, the RFP is stating that the Foundation (under GASB) will report its activities as a proprietary fund. Could you clarify why this would be the case?
The Foundation’s operations are not funded by external users for goods or services (enterprise fund) not is it for allocating shared costs (internal service fund). The Foundation’s sources of revenues are cash and in-kind donations (voluntary exchange revenues) and investment earnings.
Shouldn’t the stand-alone financial statements of the Foundation report their operations as a governmental fund? If so, management would prepare a Statement of Net Position, Statement of Activities, Balance Sheet, Statement of Revenues, Expenditures, and Changes in Fund Balance, and reconciliations between the Governmental and Government-wide financial statements.
Primary differences between the Governmental and Government-wide financial statements would relate to the reporting of pledges receivable, CRUTs [charitable remainder unitrust], notes receivable, deferred annuity payments, etc. With one individual being the only real UVU employee serving the Foundation (likely a Tier 2 employee under URS) there probably isn’t any net pension liability allocation to be made to the Foundation for the employee’s share of the URS pension, if any.
Answer 1: The UVU Foundation (Foundation) is a legally separate organization that is included in the financial statement of Utah Valley University (University) as a blended component unit in accordance with requirements outlined in GASB Codification section 2100, Defining the Financial Reporting Entity. Furthermore, the Foundation is considered a special-purpose government engaged only in fiduciary activities as outlined in GASB Codification, section Sp20. As such, the Foundation should present only the financial statements required for fiduciary funds, basic financial statements and RSI consisting of (see Sp20.115):
- MD&A (Section 2200, paragraphs .106- .109, as appropriate)
- Statement of fiduciary net position (Section 2200, paragraph .197)
- Statement of changes in fiduciary net position (Section 2200, paragraph .198)
- Notes to financial statements (Section 2300)
- RSI other than MD&A, if applicable (Section 2200, paragraph .205)
[GASBS 34, ¶129; GASBS 34, ¶139, as amended by GASBS 63, ¶8].
Therefore, the listing of financial statements contained in the RFP would need to be modified accordingly (i.e. Statement of fiduciary net position rather than Statement of Net Position, Statement of changes in fiduciary net position rather than Statement of Revenues, Expenses, and Changes in Net Position, and no Statement of Cash Flows).