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ACHENA Revises Its Standards

ACHENA has recently revised its standards regarding the review of a school's financial resources, specifically, the requirement of a formal financial audit (Eligibility Standard Paragraph 5 and Accreditation Standard 12).

An opportunity for public comment on this subject was open in September and October 2017. Submissions were received and considered and the changes outlined below were voted on and passed unanimously during the commissioners meeting in October 2017.

The revisions are below. For a full report of this review process, please visit http://achena.org/PublicComment.htm

 

Eligibility Standards:

The original wording of paragraph 5 of 4.0 (Eligibility Standards) reads:

5. The institution documents a funding base and financial resources adequate to support its mission and goals and to assure financial stability. The institution has performed or will perform an external audit by a certified public accountant or an appropriate public audit agency within one year before or after applying for eligibility.

Rationale: A school’s financial stability is important for assuring students and the general public of its ongoing viability. An audit is not required to establish eligibility but would be required within one year before or after applying for eligibility.

The revised wording:

5. The institution documents a funding base and financial resources adequate to support its mission and goals and to assure financial stability. The institution will submit an external financial Review by an outside independent licensed CPA prior to and included with the Self Study, and with every subsequent accreditation renewal.

Rationale: A school’s financial stability is important for assuring students and the general public of its ongoing viability.

 

Accreditation Standards:

Criterion 12.5 originally said:

Criterion 12.5 -- Management

The financial management system must be set up to allow for a full audit by an outside independent certified public accountant. Each year, a minimum of a Reviewed financial statement must be prepared. An accrual basis of accounting is required.

The revised wording:

Criterion 12.5 -- Management

An accrual basis of accounting is required.  The financial management system must be set up to allow for a full audit by an outside independent licensed CPA if, in ACHENA’s opinion, an audit is deemed necessary. Each year, a financial statement must be prepared by schools and submitted with its Annual Report. This yearly financial report must include:

  • Most recent Tax Return (prepared by a licensed CPA)
  • Current Budget, Balance Sheet, Profit & Loss Statement (may be prepared by bookkeeper or accountant).

These documents must be reviewed for accuracy by the appropriate individuals or responsible groups within the institution. The above documents must be submitted with an affirmation sheet signed by the Director of the institution.

 

Criterion 12.6 originally said:

Criterion 12.6 -- Audit

For the most recent year prior to submitting an Eligibility Report or seeking reaccreditation, a full audit with a management letter, certified by a licensed CPA, must be available to provide a detailed and accurate picture of the financial status of the program since the preceding year's Reviewed financial statement. It must include a balance sheet statement, certified for one year, the statement of revenue and expenditures, and change in fund balance and/or financial position, all certified by an independent auditor with no relation to the institution. This audit must be reviewed by the appropriate individuals or responsible groups within the program.

Guideline: The accountant that conducts the school's audit should be knowledgeable regarding higher education institutions.

 

The revised wording:

Criterion 12.6 – Evaluation of the School’s Finances

To provide a detailed and accurate picture of the financial status of the program, new applicants must provide the following:

  • A current financial Review (prepared by a licensed CPA).
  • Three years most recent tax returns (prepared by a licensed CPA).
  • Current budget and two years projected budgets (may be prepared by bookkeeper or accountant).
  • Current Balance Sheet and two preceding years Balance Sheets (may be prepared by bookkeeper or accountant).
  • Current Profit & Loss Statements and two preceding years Profit & Loss statements (may be prepared by bookkeeper or accountant).

These documents must be reviewed for accuracy by the appropriate individuals or responsible groups within the institution. The above documents must be submitted with an affirmation sheet signed by the Director of the institution.