Fiscal Year 2010 IHL System A-133 Audit Report - Mississippi Board ...

STATE OF MISSISSIPPI INSTITUTIONS OF HIGHER LEARNINGNotes to Financial StatementsJune 30, 2010 and 2009These losses have been recorded as reductions in unrestricted net assets in accordance withaccounting principles generally accepted in the United States of America. Future gains will beused to restore this deficiency in unrestricted net assets before any net appreciation above thehistorical cost value of such funds increases temporarily restricted net assets.(19) Significant Disclosures for the Discretely Presented Component Unit of the IHL System – Universityof Mississippi Foundation(a)Significant Accounting Policiesi) Organizationii)The University of Mississippi Foundation (UMF) is a nonprofit, nonstock corporation formed forthe benefit of The University of Mississippi. UMF promotes, encourages, and assists educational,scientific, literary, research, and service activities of UM and its affiliates.Basis of AccountingThese financial statements, which are presented on the accrual basis of accounting and followFinancial Accounting Standards Board (FASB) statements, have been prepared to presentbalances and transactions according to the existence or absence of donor-imposed restrictions.This has been accomplished by classification of net assets and transactions into three classes –permanently restricted, temporarily restricted or unrestricted as follows:Permanently restricted net assets – net assets subject to donor-imposed stipulations that they bemaintained permanently by UMF. Generally, the donor of these assets permits UMF to use all orpart of the income earned on related investments for general or specific purposes in support ofUM.Temporarily restricted net assets – net assets subject to donor-imposed stipulations that may orwill be met by actions of UMF and/or the passage of time.Unrestricted net assets – net assets subject to donor-imposed stipulations that may or will be metby actions of UMF and/or the passage of time.iii)Use of EstimatesUMF prepares its financial statements in accordance with U.S. generally accepted accountingprinciples, which require that management make estimates and assumptions that affect thereported amounts of assets and liabilities and revenues and expenses. Such estimates include thepresent value discount rates applied to the pledges receivable and liabilities under remaindertrusts, allowance for uncollectible pledges, fair market values of certain investments includingreal estate, partnership and member interests, and depreciation of property and equipment.Actual results could differ significantly from those estimates.102 (Continued)