The institution exercises appropriate control over all its financial resources.

JUDGMENT: Compliant

STATEMENT OF RATIONALE FOR JUDGMENT OF COMPLIANCE

Southwest Texas Junior College exercises appropriate control over all its financial resources.  The Board of Trustees, with the assistance of the College President and Vice President - Finance have ultimate responsibility for control over the College’s financial resources.   The Vice President – Finance (VPF) is the Chief Financial Officer and is responsible for establishing and communicating policies and procedures that ensure appropriate levels of control. Positions reporting directly to the VPF and sharing in the responsibility of monitoring controls include Controller, Director of the Business Office, and Purchasing Coordinator. 

The Southwest Texas Junior College Foundation, Inc. is a component unit with SWTJC and is reported on the Annual Financial Statements as such.  Its Board of Directors are the Board of Trustees of the College and the sole purpose of the Foundation is to aid the College.  The SWTJC Foundation is an entity organized separately from Southwest Texas Junior College and was formed primarily for the purpose of supporting SWTJC and its programs.  Legal authority and operating control of the Foundation are clearly defined in its Memorandum of Understanding agreement with the College.
The SWTJC Foundation was initially founded as an entity to provide facilities outside of the college district taxing area.  State statutes had prohibited the institution from acquiring facilities outside the taxing district.  Though the years the state legislatures changed the law allowing college districts to acquire/build facilities outside the taxing district.  However, the Foundation purchased and built facilities in Del Rio and lease them to the College.

The College provides the following as evidence of control activities that safeguard its financial resources:

• Annual Operating Budget
• Institutional Audit
• Management Letters
• Annual Financial Report
• Monthly Financial Report
• Controller and Director of the Business Office
• Investment Policy and Review
• Purchasing and Property Accounting
• Insurance Policy
• Qualifications and Job Descriptions

Annual Operating Budget

Southwest Texas Junior College uses the Policy Reference Manual for Texas community Colleges as a guide for budget preparation.  Administration prepares and the Board of Trustees approves an itemized budget on or before September 1 of each year following the mandates of policyCC (legal).  The operating budget includes general revenue, local funds, and estimated institutional funds.  It is detailed by department for current and prior year and summarized by functional categories.  It includes a summary of the instructional budget for the current and preceding year.  It is prepared within the limits of revenue available.

The College’s procedures for preparation and execution of the annual budget are preceded by sound educational planning.  The budget is prepared to support the mission and strategic goals of the College.  Division Heads and Department Directors begin the budgeting process in early March; considering Unit Action Plans and available funds.  Distance learning is not segregated from traditional delivery programs during the budgeting cycle. The submitted budgets are then reviewed by the College President and his Cabinet.  When this body is satisfied that the budget reflects the mission and available revenue it is submitted to the Board of Trustees for approval.  The Board of Trustees has the option to schedule a workshop or workshops in order to question administration regarding any feature of the budget.  The Board approves the annual budget on or before September 1st each year.  The Operating Budget for 2014-2015 was approved by the Board of Trustees in June, 2014.  Following is an excerpt from the June 19, 2014 minutes of the meeting relating to adoptions of the 2014-2015 Operating Budget:

“A motion was made by Victor Lopez and seconded by Tony T. Moreno to approve the 2014 – 2015 Operating Budget. Motion carried unanimously.”

Annual Budget documents are included as support for the College’s assertion of appropriate financial control:

• Operating Budget FY 2014-2015
• Operating Budget FY 2013-2014
• Operating Budget FY 2012-2013
• Operating Budget FY 2011-2012
• Operating Budget FY 2010-2011 
  

Southwest Texas Junior College, in accordance with state law, CDC (legal and local) policy , files a copy of the annual operating budget with the Governor, the Legislative Budget Board, the Legislative Reference Library, and the Texas Higher Education Coordinating Board on or before December 1 of each fiscal year.

Institutional Audit

Southwest Texas Junior College engages an external certified public accounting firm to conduct an audit of its books and records as of fiscal year end, August 31.  The audit is conducted in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; the provision of OMB Circular A-133’ Audits of States, Local Governments, and Non-Profit Organizations and of its Compliance Supplement dated March, 2002; the standards applicable to financial audits contained in the State of Texas Single Audit Circular; the Public Funds Investment Act (Chapter 2258, Texas Government Code); and the Texas Higher Education Coordinating Board’s Annual Financial Reporting Requirements for Texas Public Community and Junior Colleges. 

Southwest Texas Junior College has received an unqualified opinion as shown on the Independent Auditor’s Reports for fiscal years ending August 31, 2010 through August 31, 2014:

• Independent Auditor’s Reports

• August 31, 2010
• August 31, 2011
• August 31, 2012
• August 31, 2013
• August 31, 2014

As part of the audit process, external auditors perform procedures to audit financial aid and determine compliance with federal and state awarding agency requirements.  The schedules and related opinion letters may be found in the Annual Financial Report in sections “Supplemental Information and Financial Assistance” and “Overall Compliance and Internal Control.”

Management Letter

During the audit process, external auditors consider the internal control structure of an institution to determine whether material weaknesses exist or if there is an opportunity to strengthen internal controls or gain operating efficiencies.  A material weakness is a defect in an internal control that would prohibit an institution from, in the normal course of business, detecting and correcting a material misstatement.  For fiscal years ending August 31, 2010 through August 31, 2014, Southwest Texas Junior College received no Management Letter comments. 

• Ede & Company LLC Management Letter 2014
• Ede & Company LLC Management Letter 2013
• Ede & Company LLC Management Letter 2012
• Ede & Company LLC Management Letter 2011
• Ede & Company LLC Management Letter 2010

Qualifications and Experience of Financial Officers

The President, the Vice President of Finance, and the Controller manage and sustain the College’s financial stability with the Board of Trustees guidance, as evidenced by the Annual Financial Statements of 2009 through 2014, which are listed below.

• Hector E. Gonzales, PhD, CPA – College President
• Anne H. Tarski, JD – Vice President -  Finance
• Lisa D. Ermis, CPA - Controller 

Annual Financial Statement 2013-2014
Annual Financial Statement 2012-2013
Annual Financial Statement 2011-2012
Annual Financial Statement 2010-2011
Annual Financial Statement 2009-2010 

Evidence

SWTJC Foundation Article of Incorporation
SWTJC Foundation Bylaws
SWTJC Foundation Memorandum of Understanding
SWTJC Ground Lease Agreement (Del Rio)
SWTJC Policy CC-Legal Annual Operating Report
SWTJC Cabinet Members
SWTJC Budget Workshop Schedule
Board of Trustees minutes, June 19, 2014
SWTJC Operating Budget FY 2015
SWTJC Operating Budget FY 2014
SWTJC Operating Budget FY 2013
SWTJC Operating Budget FY 2012
SWTJC Operating Budget FY 2011
SWTJC Policy CDC-Legal Accounting Audits
SWTJC Policy CDC-Local Accounting Audits
EDE & Company Independent Auditors Report, August 31, 2010
EDE & Company Independent Auditors Report, August 31, 2011
EDE & Company Independent Auditors Report, August 31, 2012
EDE & Company Independent Auditors Report, August 31, 2013
EDE & Company Independent Auditors Report, August 31, 2014
EDE & Company Management Letter 2014
EDE & Company Management Letter 2013
EDE & Company Management Letter 2012
EDE & Company Management Letter 2011
EDE & Company Management Letter 2010
SWTJC Hector E. Gonzales, Vita
SWTJC Anne H. Tarski, JD, Vita
SWTJC Lisa D. Ermis, CPA, Vita
SWTJC Annual Financial Statement 2013-2014
SWTJC Annual Financial Statement 2012-2013
SWTJC Annual Financial Statement 2011-2012
SWTJC Annual Financial Statement 2010-2011
SWTJC Annual Financial Statement 2009-2010