Understanding University College Financial （理解金融大学）.pdf

Understanding College and University Financial Statements By Rudy Fichtenbaum Professor of Economics Department of Economics Wright State University Dayton, OH 45435 (937) 775-3085 rfichtenbaum@ Introduction Most businesses have a goal of earning profit for stockholders. Thus, the financial statements of most businesses are designed to allow stockholders and others concerned with profitability a means to monitor the performance of the business in question. Universities, colleges and other non-profit organizations ostensibly have an entirely different purpose. Universities and colleges, in particular, are institutions of higher learning established primarily to create and disseminate knowledge. Universities and colleges receive a significant portion of their funding from donors and governmental entities. These funds are often given with certain restrictions and conditions. Consequently universities use a system of fund accounting. The primary purpose of fund accounting is to provide trustees, who are legally responsible for running universities, the information to monitor the funds that come into the institution and make sure that they are expended for their intended purpose. Since the primary purpose of fund accounting systems is to ensure that funds provided by donors and government are expended in the manner they were intended, it has been difficult for faculty to look at a university or college’s financial statements and get a true picture of the university’s financial health. In the past, financial statements for universities were broken down into various fund groups. In effect, each fund group had its own financial statements and universities could move mon