The Stephen F. Austin State University Board of Regents met Sunday and acknowledged receipt of 2020-2021 Annual Financial Report and an audit services report that showed the university is in solid financial health.

The university recently participated in an external audit services review of its annual financial statements by the independent accounting firm of Belt Harris Pechacek at the request of the Board of Regents. Robert Belt, BHP managing partner, presented the independent accountant’s review report, which showed that SFA ended the year with a $17 million increase in net position and concluded that the accountants were not aware of any material modifications needed for the financial statements to be in accordance with accounting principles.

Judith Kruwell, interim vice president of finance and administration, presented the annual financial report, which was submitted, as required, to the Texas State Comptroller’s Office on Nov. 20.

“SFA’s financial information is combined into the State of Texas annual comprehensive financial report,” Kruwell said. “We typically present this report during the January meeting, but wanted to present it in conjunction with the report from external audit services review.”

Kruwell stated that a version of the AFR for the fiscal year 2021 was prepared in the same manner as fiscal year 2020 and 2019 financial statements required in the accreditation process by the Southern Association of Colleges and Schools Commission on Colleges.

“These Annual Financial Statements reflect SFA’s information independent from the State of Texas’ annual comprehensive financial report,” Kruwell said.

During the Audit Services report, Gina Oglesbee, SFA’s chief audit executive, presented a special project report on the university’s budget.

“An analysis of net position adjusts the unrestricted net position for non-cash governmental accounting accruals for items such as future pension and health benefits,” Oglesbee said. “With this analysis, SFA’s adjusted unrestricted net position was $116 million, which is an increase of $30 million from the end of the previous fiscal year.”

Belt said that for government entities and universities, the availability of funds representing 25% of operating expenses, or 90 days of reserves, is an indicator of good financial health, and the Southern Association of Colleges and Schools Commission on Colleges uses these measures in their analysis for accreditation of all universities.

“As of Aug. 31, 2021, SFA’s adjusted unrestricted net position represents 45.4% of operating expenses, which is well above the 25% benchmark,” he said. “For the 90-day benchmark, SFA had 164 days in reserves, which is an excess of 74 days over the benchmark.”

Belt said SFA’s benchmarks are equal to or more favorable than other State of Texas agencies and peer institutions.

Oglesbee explained that questions regarding university expenses sometimes arise based on the source used to obtain financial information.

“The university’s annual financial report, or AFR, is prepared on the accrual basis of accounting,” she said. “However, the university’s budget is prepared on a cash basis of accounting and does not include all the expenses that are reported on an accrual basis in the AFR. For example, the AFR includes expenses reported in the National Association of College and University Business Officers’ functional classifications for instruction, research, public service and academic support, and using this data, the percentage of SFA’s actual expenses for academics is 60.3%. In our university budget, it appears that 30.8% percent is budgeted for academics.”

Oglesbee said accrual-basis accounting gives the most complete picture of expenditures.

Additional analysis of the annual financial report will be presented to regents at the board’s January meeting.

“The efforts of our auditors and our new financial leadership are bringing greater clarity and transparency to the university’s finances,” SFA President Scott Gordon said. “It is vital that we make budgets and financial reports more accessible for everyone to understand the positive outlook SFA has ahead.”

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