System Procedures
Chapter 7 - General Finance Provisions
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Procedure 7.3.16 Finance Exception Reporting

Part 1. Purpose.

As stated in Part 1 and Part 3 of 7.3, Financial Administration policy, effective financial administration will facilitate monitoring, improving managerial performance and evaluating the financial effects of management decisions. The Board of Trustees will be periodically updated on the administration and financial management of the system. This procedure is linked to the system level accountability framework as approved by the Board of Trustees in June 2003.

Part 2. Process for Exception Reporting.

The Office of the Chancellor is responsible for reporting to the Board of Trustees the financial well-being of the system. Each institution and Office of the Chancellor's budget will be monitored on a periodic basis in order to insure financial stability throughout the fiscal year.

Specific aspects of college and university finances, as described in Part 3 of the procedure, will be reviewed according to their timeline to determine if a financial problem exists for any part of the system. If a measure raises concern, the Finance Division in the Office of the Chancellor will work with the Chief Financial Officer/Budget Officer/Facilities Officer at an institution to determine if there is a significant financial issue. If there is an issue that cannot be resolved within a reasonable period of time, the Vice Chancellor - Chief Financial Officer will contact the institution's president. If the financial problem continues beyond a reasonable amount of time, it will be brought to the Board of Trustees in an exception report.

Part 3. Measures that help determine financial stability and financial administration

Subpart A: Financial Stability

Short Term

Current year actual compared to current year budget by operating fund expenditures and revenues (general and revenue funds only).
Monitoring Timeline: 3rd Quarter
Trigger: <90% of budgeted revenue receipted or >75% of budgeted expenditures expended
Actual enrollment as compared to projections.
Monitoring Timeline: March
Trigger: -3% from Fall projections
Current receivables compared to current year revenues.
Monitoring Timeline: 3rd and 4th Quarters
Trigger: >=10%

Long Term
Board required reserves – three-year consecutive history.
Monitoring Timeline: Close of fiscal year
Trigger: Failure to adhere to approved plan
Net budgetary operating revenue over a two-year period.
Monitoring Timeline: Close of fiscal year
Trigger: Two consecutive years of negative net revenue for colleges and universities with a budgetary fund balance <20% of revenues
Personnel costs as a percentage of total expenditures – compare to prior three-year average.
Monitoring Timeline: Close of fiscal year
Trigger: +/- %5 over three-year average
Cash and investments compared to number of months of operating expenses.
Monitoring Timeline: 4th Quarter
Trigger: Less than 2 months
Subpart B: Financial Administration Indicators
Capital and HEAPR project execution rate compared to plan (issued by the Facilities Unit on a project-by-project basis).
Monitoring Timeline: Quarterly
Trigger: Material variance from plan
Repair and replacement expenditures (over a three-year period) compared to budget and plan (issued by the Facilities Unit).
Monitoring Timeline: Close of fiscal year
Trigger: Material variance from plan
MnSCU to MAPS reconciliation (including adjustments).
Monitoring Timeline: Monthly (general fund); Quarterly (all other funds)
Trigger: One period behind
Timely and complete bank reconciliation (including adjustments).
Monitoring Timeline: Monthly
Trigger: One month behind
Timely and complete Financial Aid reconciliations.
Monitoring Timeline: Quarterly
Trigger: Not reconciled
Interfund transfers and accruals in balance.
Monitoring Timeline: Quarterly
Trigger: Out of balance
Proper use of chart of accounts (including program, subprogram and other accounting codes).
Monitoring Timeline: Mid fiscal year
Trigger: Material activity not in proper accounts or not following cost accounting principles (i.e., NACUBO, NCES, etc.)
Timely Interim Financial Statements.
Monitoring Timeline: Quarterly
Trigger: One period behind