REGION V FINANCIAL ISSUES

1
REGION V FINANCIAL ISSUES

• Knutte Associates, P.C.
• Presented By
• David A. Knutte, CPA

2
FINANCIAL RESPONSIBILITY

• Set-up A Budget
• 6-10 Profit
• Convert Your Debt To Equity
• Run Composite Score Quarterly
• Get Letter Of Credit Removed/Avoid Having To
  Secure A Letter Of Credit

3
FINANCIAL RESPONSIBILITY NO-NOS

• Not Meeting 1.5 Composite Score Ratio
• Delinquent on Debt Payments
• Audit Opinion is Adverse, Qualified, or
  Disclaimed
• Audit Opinion is Going Concern

4
COMPOSITE SCORE

• Primary Reserve
• Equity
• Net Income

5
COMPOSITE SCORE RESULTS

• 1.5 to 3.0 OK Responsible
• 1.0 to 1.5 In the Zone
• Under 1.0 Letter of Credit Needed

6
RELATED PARTY ACTIVITY

• Shared Expenses
• Rented Facilities
• Transfers/Loans of Funds
• Guarantees

7
eZ-AUDIT

• Check Out WWW.KNUTTE.COM For Dummies For
  eZ-Audits
• All Audits Must Be Submitted Via eZ-Audit
• Get Registered With The Department Of Education
• Check Your File Monthly

8
CHANGE OF OWNERSHIP

• Submit Application to Department of Education
• They Will Issue a Temporary Provisional Program
  Participation Agreement (TAPPA) Within 45 Days
• Same Day Balance Sheet Audit Will Have to be
  Prepared Due the End of the Following Month
• Acid-Test Ratio of 1 to 1 and Positive Tangible
  Net Worth Test

9
REFUNDS

• Letter Of Credit Requirements Still Remain
• 5 Late Refunds Require 25 Letter Of Credit On
  Refunds Paid
• May Need Special Attestation

10
REVIEW YOUR CORPORATE STRUCTURE

• S-Corporations Have Many Advantages
• Difference Between LLC and S Corps
• Required Year Ends

11
DEVELOP YOUR CURRICULUM

• Clock To Credit Hour Conversions
• Degree Granting Status
• Add Programs

12
TOP 10 PROGRAM REVIEW (CITED) DEFICIENCIES
13
TAX BENEFITS

• Make Sure Your Students Are Aware Of The
  Credit/Deductions That Are Available
• Hope/Lifetime Learning Credit
• Education IRAs
• Section 529 Accounts
• No 10 Penalty on IRAs

14
IMPLEMENT RETIREMENT PLANS

• 401K / Simple
• Coverage Requirements
• Contribution Requirements

15
IMPROVE POLICIES

• Advisory Committee
• Meetings
• Corporate Minutes

16
EXAMINE ADVERTISING

• Direct Mailings
• TV
• Yellow Book
• Telemarketing
• WIA
• High Schools

17
UPGRADE FACILITIES

• Classrooms
• Parking
• Bookstore
• Mess Area

18
FINANCING

• Buy vs. Lease Always Buy
• Term Loans vs. Line of Credit
• Capital Leasing

19
MISCELLANEOUS

• Review Program Participation Agreement
• Visit Another School
• Banking Relations
• Default/Placement Rates
• Start Monthly Classes

20
OTHER REVENUES

• Continuing Education
• User Charges
• Contract Training
• Review Tuition Rates