FY 2005 - University of Missouri System

N otes to Combined Financial StatementsF o r t h e y e a r s e n d e d J u n e 3 0 , 2 0 0 5 a n d 2 0 0 4financial statement purposes. Proceeds from the sale, exchange, or other disposal of any item belonging to a collectionof historical treasures must be applied to the acquisition of additional items for the same collection.Deferred Revenue – Deferred revenues include amounts received for tuition and fees and certain auxiliary activitiesprior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also includeamounts received from grant and contract sponsors that have not yet been earned.Net Assets – The University’s net assets are classified for financial reporting in the following net asset categories:• Invested in capital assets, net of related debt: This component of net assets includes capital assets, net ofaccumulated depreciation and outstanding principal debt balances related to the acquisition, construction orimprovement of those assets.• Restricted:Nonexpendable – Net assets subject to externally imposed stipulations that they be maintained permanently bythe University. Such assets include the University’s permanent endowment funds. The University’s policy permitsany realized and unrealized appreciation on the endowments to remain with the endowment after the 5% spendingdistribution discussed in Note 3.Expendable – Net assets whose use by the University is subject to externally imposed stipulations that can befulfilled by actions of the University pursuant to those stipulations or that expire by the passage of time.• Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets may bedesignated for specific purposes by action of management or the Board of Curators. When an expense is incurredthat can be paid using either restricted or unrestricted resources, the University’s policy is to first apply the expensetowards restricted resources, and then towards unrestricted resources. Unrestricted net assets are used for expensesfor academics and general operation of the University.Scholarship Allowance – Tuition and fees and related housing, dining and other auxiliary enterprises revenues arepresented net of scholarships and fellowships applied to student accounts, while scholarships, fellowships and otherpayments made directly to students are presented as scholarship and fellowship expenses.Patient Medical Services, Net – Patient medical services revenues are reported net of contractual allowances andbad debt. Patient medical services are primarily provided through University of Missouri Hospitals and Clinics,Ellis Fischel Cancer Research Center, Columbia Regional Hospital, Missouri Rehabilitation Center and UniversityPhysicians (collectively, the “University of Missouri Healthcare”).The University of Missouri Healthcare has agreements with third-party payors that provide for payments at amountsdifferent from established rates. Payment arrangements include prospectively determined rates per discharge, reimbursedcosts, discount charges and per diem payments. Patient medical services revenue is reported at the estimated netrealizable amounts from patients, third-party payors, and others for services rendered, including estimated retroactiveadjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on anestimated basis in the period the related services are rendered and adjusted in future periods as estimates are refinedand final settlements are determined. Patient medical services revenue is also shown net of estimated uncollectibleaccounts.Amounts receivable under Medicare and Medicaid reimbursements agreements are subject to examination andcertain retroactive adjustments by the related programs. These adjustments increased net patient services revenues by$5,518,000 and $4,001,000 for the years ended June 30, 2005 and 2004, respectively.2 0 0 5 F i n a n c i a l R e p o r t : U n i v e r s i t y o f M i s s o u r ia c o m p o n e n t u n i t o f t h e S t a t e o f M i s s o u r i 25