Glossary of Terms
Account -- a record of financial transactions; usually refers to a specific category or type, such as travel expense account or purchase account.
Accountant -- a person who trained to prepare and maintain financial records.
Accounting -- a system for keeping score in business, using dollars.
Accounting change – a change in (1) an accounting principle; (2) an accounting estimate; or (3) the reporting entity that necessitates disclosure and explanation in published financial reports.
Accounting period -- the period of time over which profits are calculated. Normal accounting periods are months, quarters, and years (fiscal or calendar).
Accounts payable -- amounts owed by the company for the goods or services it has purchased from outside suppliers.
Accounts receivable -- amounts owed to the company by its customers.
Accrual basis accounting -- a system of accounting based on the accrual principal, under which revenue is recognized when earned, and expenses are recognized when incurred.
Accrued expenses, accruals -- an expense which has been incurred but not yet paid for. Salaries are a good example. Employees earn or accrue salaries each hour they work. The salaries continue to accrue until payday when the accrued expense of the salaries is eliminated.
Activity --that portion of the work of an organizational unit relating to a specific function or class of functions, a project or program, a subproject or subprogram, or any convenient division of these [ORS 294.311(2)].
Ad valorem tax -- a property tax computed as a percentage of the value of taxable property.
Adjusting journal entry -- an accounting entry made into a subsidiary ledger called the General journal to account for a periods changes, omissions or other financial data required to be reported "in the books" but not usually posted to the sub-ledgers used for typical period transactions (the cash receipts ledger, cash disbursements ledger, the payroll ledger, sales ledger and so on) the entry is posted to the general ledger accounts directly and usually will be numbered itself, dated and have an explanation.
Adopted budget -- the financial plan adopted by the College.
Aging -- a process where accounts receivable are sorted out by age (typically current, 30 to 60 days old, 60 to 120 days old, and so on.) Aging permits collection efforts to focus on accounts that are long overdue.
Amortize -- to charge a regular portion of an expenditure over a fixed period of time. For example if something cost $100 and is to be amortized over ten years, the financial reports will show an expense of $10 per year for ten years. If the cost were not amortized, the entire $100 would show up on the financial report as an expense in the year the expenditure was made.
Analytical procedures -- substantive tests of financial information which examine relationships among data as a means of obtaining evidence. Such procedures include: (1) comparison of financial information with information of comparable prior periods; (2) comparison of financial information with anticipated results (e.g., forecasts); (3) study of relationships between elements of financial information that should conform to predictable patterns based on the entity's experience; (4) comparison of financial information with industry norms.
Appreciation -- an increase in value. If a machine cost $1,000 last year and is now worth $1,200, it has appreciated in value by $200. (The opposite of depreciation.)
Appropriation -- (1) A legal authorization granted by a legislative body to make expenditures and to incur obligations for specific purpose, usually with specific limitations as to amount, purpose and time limits. (2) An account used to record the budgetary appropriation for the period.
Approved budget -- the budget that has been approved by the Budget Committee and sent to the Board of Education for adoption.
Assessed value -- valuation set on real estate or personal property by the Property Appraiser as a basis for levying taxes.
Assessment date -- The date on which the real market value of property is set = January 1.
Assets -- things of value owned by a business. An asset may be a physical property such as a building, or an object such as a stock certificate, or it may be a right, such as the right to use a patented process.
Current Assets are those assets that can be expected to turn into cash within a year or less. Current assets include cash, marketable securities, accounts receivable, and inventory.
Fixed Assets cannot be quickly turned into cash without interfering with business operations. Fixed assets include land, buildings, machinery, equipment, furniture, and long-term investments.
Intangible Assets are items such as patents, copyrights, trademarks, licenses, franchises, and other kinds of rights or things of value to a company, which are not physical objects. These assets may be the most important ones a company owns. Often they do not appear on financial reports.
Audit -- a careful review of financial records to verify their accuracy.
Audit documentation -- the written record of the basis for the auditor's conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report or otherwise. (May be referred to as work papers or working papers).
Audit report -- a report in a form prescribed by the Secretary of State made by an auditor expressing an opinion about the propriety of a local government’s financial statements, and compliance with requirements, orders and regulations.
Bad debts -- amounts owed to a company that are not going to be paid. An account receivable becomes a bad debt when it is recognized that it won't be paid. Sometimes, bad debts are written off when recognized. This is an expense. Sometimes, a reserve is set up to provide for possible bad debts. Creating or adding to a reserve is also an expense.
Balance sheet -- a statement of the financial position of a company at a single specific time (often at the close of business on the last day of the month, quarter, or year.) The balance sheet normally lists all assets on the left side or top while liabilities and capital are listed on the right side or bottom. The total of all numbers on the left side or top must equal or balance the total of all numbers on the right side or bottom. A balance sheet balances according to this equation: Assets = Liabilities + Capital.
Balanced Budget -- a budget whereby operating expenditures do not exceed resources.
Beginning fund balance -- the amount of unexpended funds carried forward from one fiscal year to another.
Biennium -- a two-year [budget] period.
Board of Education -- committee of seven elected, unpaid citizens whose primary authority is to establish policies governing the operation of the college and to adopt the college budget.
Bond -- a certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date.
Book value -- total assets minus total liabilities. Book value also means the value of an asset as recorded on the company's books or financial reports. Book value is often different than true value. It may be more or less.
Breakeven point -- the amount of revenue from sales which exactly equals the amount of expense. Breakeven point is often expressed as the number of units that must be sold to produce revenues exactly equal to expenses. Sales above the breakeven point produce a profit; below produces a loss.
Budget -- financial plan that serves as an estimate of future cost, revenues or both. Oregon’s Local Budget Law is set out in Oregon Revised Statutes 294.305 to 294.565.
Budget committee -- the fiscal planning board, consisting of the Board of Education plus an equal number of citizens at large from the College District. RCC utilizes the Board’s advisory committee members as the citizens at large.
Budget message -- an explanation of the budget and financial priorities, presented in writing by the Budget Officer as part of the budget document.
Budget officer -- person appointed by the Board of Education to oversee the budget process. The Chief Financial Officer is the Budget Officer for RCC.
Capital -- money invested in a business by its owners. On the bottom or right side of a balance sheet. Capital also refers to buildings, machinery, and other fixed assets in a business. A capital investment is an investment in a fixed asset with a long-term use.
Capital expenditure -- an expenditure for a single item with cost exceeding $5,000 and an estimated useful life of three or more years.
Capital Improvement Fund Type -- account for the receipt and disbursement of resources for buildings and land, buying or maintaining College facilities, and equipment. The principal revenues include transfers from the College Services Fund, bond levy proceeds and investment earnings.
- Capital Improvement Fund - Maintenance accounts for the cost of maintaining College facilities and equipment. The principal revenue is transfers from the College Services Fund.
- Capital Improvement Fund - COPs & Bonds accounts for the purchase or remodel of buildings and land with COP and bond proceeds. The principal revenue is from the sale of bonds or COPS.
- Capital Improvement Fund – State & Local accounts for state funding, such as the Article XI-G Higher Education Facilities and Community College Bonds, and local funding received for capital projects. The principal revenue is from the sale of bonds financed by the State and local resources.
Capital outlay -- an expenditure category that includes acquisition of land, buildings, improvements, machinery, and equipment.
Capitalize -- to capitalize means to record an expenditure on the balance sheet as an asset, to be amortized over the future. The opposite is to expense. For example, research expenditures can be capitalized or expensed. If expensed, they are charged against income when the expenditure occurs. If capitalized, the expenditure is charged against income over a period of time usually related to the life of the products or services created by the research.
Cash -- money available to spend now. Usually in a checking account.
Cash basis -- method of bookkeeping by which revenues and expenditures are recorded when they are received and paid.
Cash flow -- the amount of actual cash generated by business operations, which usually differs from profits shown.
Category of limitation -- the three categories of taxes on property for the purpose of the constitutional limits – education, general government, excluded from limitation [ORS 310.150].
Chart of accounts -- a listing of all the accounts or categories into which business transactions will be classified and recorded. Each account usually has a number. Transactions are coded by this number for manipulation on computers.
Clean opinion -- audit opinion not qualified for any material scope restrictions nor departures from Generally Accepted Accounting Principles (GAAP). Also known as Unqualified Opinion.
Certificate of participation (COP) -- a long-term financing option (lease-purchase agreement) for capital projects that districts are eligible to participate in under ORS 341.290, ORS 271.390 and an authorizing Resolution of the District. An annual amount with interest is paid over a number of years until the COP is paid off.
College District -- the College's service area, which encompasses a 4,453 square mile area in Jackson and Josephine Counties.
College Support Services -- expense function covering activities that support the ongoing operations of the college, excluding physical plant operations.
Community Services -- expense function covering non-instructional activities provided to external groups.
Compression -- a reduction in taxes required by Measure 5 (1990) property tax limits. It is computed on a property-by-property basis, and is first applied towards local option tax levies, then permanent rate levies. Measure 5 limits school taxes to $5 per $1,000 of ‘real market value’. All other general government taxes are limited to $10 per $1,000 of ‘real market value’.
Consumer Price Index -- a measure estimating the average price of consumer goods and services purchased by households.
Constitutional limits -- the maximum amount of tax on property that can be collected from an individual property for education and for other government activities (Art. XI, sect. 11b, Or Const.)
Contingency -- a budget account to provide for unanticipated occurrences, or funds to be held for future distribution.
Current Budget -- in financial tables, the "Current Budget" is the current year adopted budget plus any additional supplemental budgets or approved budget adjustments between appropriation levels.
Contingent liabilities -- liabilities not recorded on a company's financial reports, but which might become due. If a company is being sued, it has a contingent liability that will become a real liability if the company loses the suit.
Contra account – an account considered to be an offset to another account. Generally established to reduce the other account to amounts that can be realized or collected.
Cost of sales, cost of goods sold -- the expense or cost of all items sold during an accounting period. Each unit sold has a cost of sales or cost of the goods sold. In businesses with a great many items flowing through, the cost of sales or cost of goods sold is often computed by this formula: Cost of Sales = Beginning Inventory + Purchases During the Period -- Ending Inventory.
Credit -- an accounting entry on the right or bottom of a balance sheet. Usually an increase in liabilities or capital, or a reduction in assets. The opposite of credit is debit. Each credit in a balance sheet has a balancing debit. Credit has other usages, as in "You have to pay cash, your credit is no good." Or "we will credit your account with the refund."
Debit -- an accounting entry on the left or top of a balance sheet. Usually an increase in assets or a reduction in liabilities. Every debit has a balancing credit.
Debt Service -- expenditure category for repayment of principle and interest on bonds, interest-bearing warrants, and short-term loans.
Debt Service Fund Type -- account for the accumulation of resources for and payment of principal and interest on the College’s long-term debt obligations.
- Debt Service Fund - Other accounts for the accumulation of resources for and payment of principal and interest on the College’s long-term debt obligations including the Title VII Loan and the Limited Tax Pension Obligation Series 2005. The principal revenues are transfers from the College Services Fund and the PERS Fund.
- Debt Service Fund – General Obligation Bonds accounts for the accumulation of resources for and payment of principal and interest on the College’s General Obligation Bonds. The principal revenue is property taxes approved for bond levies.
Deferred charges -- cost incurred for subsequent periods which are reflected as assets.
Deferred income -- a liability that arises when a company is paid in advance for goods or services that will be provided later. For example, when a magazine subscription is paid in advance, the magazine publisher is liable to provide magazines for the life of the subscription. The amount in deferred income is reduced as the magazines are delivered.
Deferred maintenance -- the practice of postponing maintenance activities such as repairs on both real property (i.e. infrastructure) and personal property (i.e. machinery) in order to save costs, meet budget funding levels, or realign available budget monies.
Depreciation -- an expense that is supposed to reflect the loss in value of a fixed asset. For example, if a machine will completely wear out after ten year's use, the cost of the machine is charged as an expense over the ten-year life rather than all at once, when the machine is purchased. Straight line depreciation charges the same amount to expense each year. Accelerated depreciation charges more to expense in early years, less in later years. Depreciation is an accounting expense. In real life, the fixed asset may grow in value or it may become worthless long before the depreciation period ends.
Disbursement -- payment by cash, check, wire, ACH transfer or credit card.
Discounted cash flow -- a system for evaluating investment opportunities that discounts or reduces the value of future cash flow.
Dividend -- a portion of the after-tax profits paid out to the owners of a business as a return on their investment.
Double-entry bookkeeping -- method of recording financial transactions in which each transaction is entered in two or more accounts and involves two-way, self-balancing posting. Total debits must equal total credits.
Earnings per share -- a company's net profit after taxes for an accounting period, divided by the average number of shares of stock outstanding during the period.
80 -- 20 rule -- a general rule of thumb in business that says that 20% of the items produce 80% of the action -- 20% of the product line produces 80% of the sales, 20% of the customers generate 80% of the complaints, and so on. In evaluating any business situation, look for the small group which produces the major portion of the transactions you are concerned with. This rule is not exactly accurate, but it reflects a general truth, nothing is evenly distributed.
Encumbrance -- the formal accounting recognition of commitments to expend resources in the future.
Ending fund balance -- the beginning fund balance plus current year revenues, less current year expenditures.
Equity -- the owners' share of a business.
Executive Team -- the College's administrative leadership team, comprised of the president, vice presidents, chief finance officer, select directors and deans.
Expenditure -- The actual spending of money; an outlay.
Expense -- Outflow or other depletion of assets or incurrences of liabilities (or a combination of both) during some period as a result of providing goods, rendering services, or carrying out other activities related to an entity’s programs and missions, the benefits from which do not extend beyond the present operating period.
Facilities Acquisition and Construction -- expense function for land, land improvement, buildings, and major remodeling and renovation that is not a part of normal plant operation and maintenance.
Fees (Non-Instructional) -- revenue generated from assessing students for non-instructional expenses.
Financial Aid -- financial assistance received by the college on behalf of students. It includes educational expenses including tuition and fees, room and board, books and supplies, and transportation. There are several types of financial aid, including grants and scholarships, work study and loans.
Fiduciary Fund Type - accounts for assets received and held by the College in a fiduciary capacity or as a trustee for other governments or other funds. Disbursements from this fund are made in accordance with the trust agreement or applicable legislative enactment and by local board resolution.
- Agency Fund is custodial in nature (assets = liabilities) and does not involve measurement of results of operations. Currently the Rogue Community College Foundation is the agency represented in the Agency Fund.
Financial statements -- presentation of financial data including balance sheets, income statements and statements of cash flow, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended.
Fiscal year -- twelve-month financial period used by the college, which begins July 1 and ends June 30.
Fixed cost -- a cost that does not change as sales volume changes (in the short run.) Fixed costs normally include such items as rent, depreciation, interest, and any salaries unaffected by ups and downs in sales.
Full-Time Equivalent (FTE) -- the equivalent of a full-time employee or student. For example, two half-time employees equal one FTE employee.
Fund -- a division in the budget with independent fiscal and accounting requirements with a self-balancing set of accounts for its assets, liabilities, fund balance, revenues and other additions, expenditures and other deductions, and transfers.
Fund accounting -- method of accounting and presentation whereby assets and liabilities are grouped according to the purpose for which they are to be used. Generally used by government entities and not-for-profits.
Fund balance -- the excess of a fund's revenues over expenditures.
Fund type -- one of nine fund types - general, special revenue, debt service, capital projects, special assessment, enterprise, internal service, trust and agency, and reserve.
General Fund – covers general operations of the College and accounts for all financial resources and expenditures of the College, except for those required to be accounted for in another fund. The principal sources of revenue include tuition, property taxes, and state community college support.
Generally Accepted Accounting Principles (GAAP) -- conventions, rules, and procedures necessary to define accepted accounting practice at a particular time.
Goodwill -- in accounting, the difference between what a company pays when it buys the assets of another company and the book value of those assets. Sometimes, real goodwill is involved -- a company's good reputation, the loyalty of its customers, and so on. Sometimes, goodwill is an overpayment.
Government Finance Officers Association (GFOA) -- the professional association of state/provincial and local finance officers in the United States and Canada.
Governmental Accounting Standards Board (GASB) -- group that has authority to establish standards of financial reporting for all units of state and local government.
Governmental funds – account for activities that should not be accounted for as a proprietary or fiduciary fund.
Grant -- a donation or contribution in cash by one governmental unit to another unit which may be made to support a specified purpose or function, or general purpose.
Hope scholarship credit -- a maximum allowable credit of $1,500 per student for each of the first 2 years of post-secondary education. It is allowable after all additional requirements are met.
Income -- inflow of revenue during a period of time.
Installment -- partial payment.
Instruction -- expense function covering all activities related to instructional programs.
Instructional fees -- revenue generated by assessing students for course-related expenses.
Instructional Support -- expense function covering activities that provide integral support services to instructional programs.
Interest -- a charge made for the use of money.
Interest income -- revenue generated from investment of operating capital in excess of daily requirements.
Inter-fund transfer -- an amount to be given as a resource to another fund in the budget.
Intra-fund transfer – a transfer from one existing appropriation category to another within the same fund [ORS 294.463].
Internal control -- process designed to provide reasonable assurance regarding achievement of various management objectives such as the reliability of financial reports.
Internal control over financial reporting -- a process designed by, or under the supervision of the company's principal executive and principal financial officers or persons performing similar functions and effected by the company's board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
- Pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the assets of the company.
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company.
- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Inventory -- the supply or stock of goods and products that a company has for sale. A manufacturer may have three kinds of inventory: raw materials waiting to be converted into goods, work in process, and finished goods ready for sale.
Inventory obsolescence -- inventory no longer salable. Perhaps there is too much on hand, perhaps it is out of fashion. The true value of the inventory is seldom exactly what is shown on the balance sheet. Often, there is unrecognized obsolescence.
Inventory shrinkage -- a reduction in the amount of inventory that is not easily explainable. The most common cause of shrinkage is theft.
Inventory turnover -- a ratio that indicates the amount of inventory a company uses to support a given level of sales. The formula is: Inventory Turnover = Cost of Sales Average Inventory. Different businesses have different general turnover levels. The ratio is significant in comparison with the ratio for previous periods or the ratio for similar businesses.
Invested capital -- the total of a company's long-term debt and equity.
Investment -- expenditure used to purchase goods or services that could produce a return to the investor.
Journal -- a chronological record of business transactions.
Ledger -- a record of business transactions kept by type or account. Journal entries are usually transferred to ledgers.
Levy -- amount of ad valorem tax certified be a local government for the support of governmental activities.
Liabilities -- amounts owed by a company to others. Current liabilities are those amounts due within one year or less and usually include accounts payable, accruals, loans due to be paid within a year, taxes due within a year, and so on. Long-term liabilities normally include the amounts of mortgages, bonds, and long-term loans that are due more than a year in the future.
Lifetime Learning Credit -- allows a credit for 20 percent of qualified tuition and fees paid by the taxpayer with respect to one or more students for any year that the HOPE Scholarship Credit is not claimed.
Liquidity -- describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
Long-term debt – a debt with a maturity of more than one year from the current date.
Management accounting -- reporting designed to assist management in decision-making, planning, and control.
Management Discussion and Analysis (MD&A) -- SEC requirement in financial reporting for an explanation by management of significant changes in operations, assets, and liquidity.
Mandatory adjustments -- adjustments for expenditures that are primarily beyond the control of the college, such as facilities leases, utilities, insurance premiums and maintenance contracts.
Mandatory transfers – result from (1) binding legal agreements related to the financing of plant assets, including amounts for debt retirement, interest, and required provision for renewals and replacement of facilities not financed from other sources: and (2) sponsored program agreements with Federal agencies, donors, and other organizations to match gifts and grants.
Marginal cost, marginal revenue -- marginal cost is the additional cost incurred by adding one more item. Marginal revenue is the revenue from selling one more item. Economic theory says that maximum profit comes at a point where marginal revenue exactly equals marginal cost.
Material weakness -- a significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Materials and services (M&S) -- an expenditure category that includes contractual and other services, materials, supplies, and other charges.
Materiality -- magnitude of an omission or misstatements of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would change or be influenced.
Modified accrual basis -- the basis of accounting under which revenues are recorded when they become measurable and available. Expenditures are recorded when the liability is incurred, except for interest on general long-term obligations, which is recorded when due.
Non-mandatory transfers – made at the discretion of the governing board to serve a variety of objectives, such as additions to loan funds, additions to quasi-endowment funds, general or specific plant additions, voluntary renewals and replacements of facilities, and prepayment on debt principal.
Non-recurring resources -- resources (revenues) that are not part of an annual revenue stream to include -- fund balances, reserves, one-time grants and awards, and special allocations.
Object classification -- a grouping of expenditures, such as personnel services, materials and services, capital outlay, debt services and other types of requirements [ORS294.311(29)].
Opportunity cost -- a useful concept in evaluating alternate opportunities. If you choose alternative A, you cannot choose B, C, or D. What is the cost or loss of profit of not choosing B, C, or D? This cost or loss of profit is the opportunity cost of alternative A.
Oregon Administrative Rules (OAR) -- a compilation of state agency rules and procedures.
Oregon Public Employees Retirement System (PERS) -- retirement system provided by the State of Oregon for all public employees.
Oregon Revised Statutes (ORS) -- the codified laws of the State of Oregon. The ORS is published every two years to incorporate each legislative session's new laws.
Organizational unit -- any administrative subdivision of the local government, especially one charged with carrying on one or more specific functions such as a department, office or division.
Other payroll expenses (OPE) -- an expense classification that includes the costs of payroll taxes, PERS, medical insurance, and other fringe benefits and payroll-related items accruing to an employee.
Other Post-Retirement Employee Benefit (OPEB) -- all post-retirement benefits other than pensions, provided by employers to employees.
Other resources -- revenue generated from various activities such as finance charges, sale of equipment, enforcement fees and other nominal, one-time miscellaneous amounts.
Overhead -- a cost that does not vary with the level of production or sales, and usually a cost not directly involved with production or sales. The chief executive's salary and rent are typically overhead.
Permanent rate limit -- the maximum rate of ad valorem property taxes that a local government can impose. Taxes generated from the permanent rate limit can be used for any purpose. No action of the local government of its voters can increase or decrease a permanent rate limit. A district can levy any rate of amount up to their permanent rate authority each year.
Personnel services -- an expenditure category that includes salaries and wages and other payroll expenses (OPE).
Plant Operations and Maintenance -- expense function covering the operation and maintenance of the physical plant, including grounds, facilities, utilities and property insurance.
Post -- to enter a business transaction into a journal or ledger or other financial record.
Prepaid expenses, deferred charges -- assets already paid for, that are being used up or will expire. Insurance paid for in advance is a common example. The insurance protection is an asset. It is paid for in advance, it lasts for a period of time, and expires on a fixed date.
Present value -- a concept that compares the value of money available in the future with the value of money in hand today.
Price-earnings (p/e) ratio -- the market price of a share of stock divided by the earnings (profit) per share. P/e ratios can vary from sky high to dismally low, but often do not reflect the true value of a company.
Principal -- face amount of a security, exclusive of any premium or interest. The basis for interest computations.
Profit -- the amount left over when expenses are subtracted revenues. Gross profit is the profit left when cost of sales is subtracted from sales, before any operating expenses are subtracted. Operating profit is the profit from the primary operations of a business and is sales minus cost of sales minus operating expenses. Net profit before taxes is operating profit minus non-operating expenses and plus non-operating income. Net profit after taxes is the bottom line, after everything has been subtracted. Also called income, net income, or earnings. Not the same as cash flow and does not represent spendable dollars.
Program -- a group of related activities to accomplish a major service or function for which the local government is responsible [ORS 294.311(33)].
Property taxes -- an ad valorem tax, another other ‘tax on property’, or fees, charges and assessments that are specifically authorized by statues to be certified to the county assessor by a local government unit.
Proposed budget -- financial and operating plan prepared by the Budget Officer, submitted to the public and Budget Committee for review.
Proprietary Fund Type -- account for operations that are financed and operated in a manner similar to those of private business enterprises. The intent is that the cost of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The College has two proprietary funds as follows:
- Auxiliary Services Fund -- accounts for the operation of the College’s bookstore. Principal revenue from this fund is book sales.
- Other Auxiliary Services Fund -- accounts for business type activities of Art, Auto Artist, Diesel Technology, Disability Services, Early Childhood Education Facility, Facility Rental, Friends of the Library, Gallery Projects, Illinois Valley Business Entrepreneurial Center Facility, Manufacturing Engineering Technology, Massage, Math, Music Ensembles, Pay Phones, RogueNet intergovernmental agreements, Science, Testing Center and Welding.
Qualified opinion -- audit opinion that states, except for the effect of a matter to which a qualification relates, the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP). The auditor is required to qualify when there is a scope limitation. Also known as a bad opinion.
Reasonable assurance -- management's assessment of the effectiveness of internal control over financial reporting is expressed at the level of reasonable assurance. It includes the understanding that there is a remote likelihood that material misstatements will not be prevented or detected on a timely basis. It is a high level of assurance.
Reconciliation -- comparison of two numbers to demonstrate the basis for the difference between them.
Requirement – a use of funds or expenditure.
Reserve for future expenditure -- an amount budgeted, but not appropriated, which is not anticipated to be spent in the fiscal year, but rather carried forward into future fiscal years.
Resolution -- an order of the Board of Education.
Resources -- estimated beginning fund balances on hand plus all anticipated revenues and transfers.
Retained earnings -- profits not distributed to shareholders as dividends, the accumulation of a company's profits less any dividends paid out. Retained earnings are not spendable cash.
Return on investment (ROI) -- a measure of the effectiveness and efficiency with which managers use the resources available to them, expressed as a percentage. Return on equity is usually net profit after taxes divided by the shareholders' equity. Return on invested capital is usually net profit after taxes plus interest paid on long-term debt divided by the equity plus the long-term debt. Return on assets used is usually the operating profit divided by the assets used to produce the profit. Typically used to evaluate divisions or subsidiaries. ROI is very useful but can only be used to compare consistent entities -- similar companies in the same industry or the same company over a period of time. Different companies and different industries have different ROIs.
Revenue -- the amounts received by or due a company for goods or services it provides to customers. Receipts are cash revenues. Revenues can also be represented by accounts receivable.
Risk -- the possibility of loss; inherent in all business activities. High risk requires high return. All business decisions must consider the amount of risk involved.
Sales -- amounts received or due for goods or services sold to customers. Gross sales are total sales before any returns or adjustments. Net sales are after accounting for returns and adjustments.
Sarbanes-Oxley (SOX) -- the Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure. It also significantly tightens accountability standards for directors and officers, auditors, securities analysts and legal counsel. The law is named after Senator Paul Sarbanes and Representative Michael G. Oxley.
Significant accounts -- an account is significant if there is more than a remote likelihood that the account could contain misstatements that individually or when aggregated with others, could have a material effect on the financial statements, considering the risks of both overstatement and understatement.
Significant deficiency – a control deficiency or combination of control deficiencies, that adversely affects the company's ability to initiate, authorize, record, process or report external financial data reliably in accordance with GAAP such that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected.
Significant findings or issues -- substantive matters that are important to the procedures performed, evidence obtained, or conclusions reached and include but are not limited to:
- significant matters
- results of auditing procedures indicating a need for significant modification of planned auditing procedures
- audit adjustments
- disagreements among members of the engagement team
- circumstances that cause difficulty in applying auditing procedures
- significant changes in the assessed level of audit risk
- matters that could result in modification of the auditor’s report
Single Audit Act -- the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996 establish requirements for audits of states, local governments, and nonprofit organizations that administer federal financial assistance programs above a certain threshold.
Special Revenue Fund Type - account for revenues and expenditures for specific projects that are legally and/or administratively restricted for a specific purpose.
- College Services Fund accounts for non-technology fees charged to students. These fees include materials fees, the college services fee, testing fees, collection fees and the installment fee. The principal revenue is generated by fees remitted by students. The principal expenditures include facility lease, transportation costs, and transfers out to other funds.
- Contract and Grant Fund accounts for grants and contracts awarded to and for the College from federal, state and local sources.
- Entrepreneurial Fund accounts for the development and growth of innovative activities of the College. The principal revenue is transfers from the General Fund and tuition and fees.
- Financial Aid Fund accounts for student aid in the form of federal grants (Federal Pell Grant, Federal Supplemental Education Opportunity Grant), the Oregon Opportunity Grant (OOG), the Oregon Promise Grant (OPG), institutional scholarships (RCC Foundation), state scholarships administered by the Oregon Student Access Commission, third-party scholarships, federal work-study student employment, federal direct loans to students (subsidized and unsubsidized) and private student loans.
- Higher Education Center Fund accounts for the day-to-day expenditures such as security, utilities, custodial services, copiers, maintenance services and technology support necessary to run the Higher Education Center building. Rogue Community College and Southern Oregon University share these costs.
- Intra-College Fund accounts for activities performed by the College for the benefit of the College. Activities include Associated Student Government of Rogue Community College, Professional Growth, Athletics and other departmental charges. The principal revenue for this fund is the college services fee remitted by students and transfers in from other funds.
- PERS Fund accounts for the reserve held by the College for anticipated, future rate increases and the unfunded actuarial liability. The principal revenue is the PERS expense charged in other funds. Funds are transferred from this fund to the Debt Service Fund - Other to pay the Limited Tax Pension Obligation Series 2005.
- Self-Support Fund accounts for the self-support instructional activities of the College. The principal revenue is tuition and fees.
- Stability Reserve Fund accounts for the funds set aside by the RCC Board of Education to be used to stabilize the College’s funding. The principal revenue is transfers from the General Fund.
- Technology and Equipment Fund is designated for the replacement of the College’s equipment, software maintenance and distance delivery. The principal revenues are the $5 per credit and the $5 per non-credit course technology fee, the distance education fee, and transfers from the General Fund and College Services Fund. The principal expenditures are upgrades/replacements for equipment, software maintenance and distance delivery services.
- Unemployment Fund accounts for the payments to the Oregon Employment Division for unemployment benefits paid to terminated employees. Principal revenues are the unemployment expense charged to other funds and investment earnings.
Statement of cash flows -- a statement of cash flows is one of the basic financial statements that is required as part of a complete set of financial statements prepared in conformity with generally accepted accounting principles. It categorizes net cash provided or used during a period as operating, investing and financing activities, and reconciles beginning and ending cash and cash equivalents.
Student Services -- expense function covering activities to support students' success and development.
Sunk costs -- money already spent and gone, which will not be recovered no matter what course of action is taken.
Tax rate -- the amount of tax stated in terms of a unit of tax for each $1,000 of assessed value of taxable property.
Tax roll -- the official list showing the amount of taxes imposed against each taxable property.
Tax year -- the fiscal year from July 1 through June 30.
Taxpayer Identification Number (TIN) -- any individual or other taxable entity that is required to file a return, statement or any other document with the IRS must indicate his (or its) taxpayer identification number. For an individual, the social security number is used, and if you do not have a social security number, the IRS will assign you a TIN. A federal or employer ID number is assigned to other types of entities and will use that as their TIN.
Total public resources -- revenue received from State funding as appropriated by the legislature and local property taxes as assessed by the counties.
Transfers -- may be made between funds, within a fund group or among two or more fund groups, and may be either mandatory or non-mandatory.
Trial balance -- a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.
Tuition -- revenue generated by assessing students’ per-credit-hour rates.
Unappropriated ending fund balance -- a special amount set aside in a budget for use as a resource in the beginning of the next fiscal year after it was budgeted.
Unfunded Actuarial Liability (UAL) -- amount PERS has determined to be owed by participating governments to fully fund the retirement system.
Unqualified opinion -- audit opinion not qualified for any material scope restrictions nor departures from Generally Accepted Accounting Principles (GAAP). The auditor may issue an unqualified opinion only when there are no identified material weaknesses and when there have been no restrictions on the scope of the auditor's work. Also known as clean opinion.
Working capital -- current assets minus current liabilities. In most businesses the major components of working capital are cash, accounts receivable, and inventory minus accounts payable. As a business grows it will have larger accounts receivable and more inventory. Thus the need for working capital will increase.
Working papers -- (1) Records kept by the auditor of the procedures applied, the tests performed, the information obtained, and the pertinent conclusions reached in the course of the audit. (2) Any records developed by a Certified Public Accountant (CPA) during an audit.
Write-down -- the partial reduction in the value of an asset, recognizing obsolescence or other losses in value.
Write-off -- the total reduction in the value of an asset, recognizing that it no longer has any value. Write-downs and write-offs are non-cash expenses that affect profits.