Harvard University Policy: Harvard University Policy:
Unrestricted net assets are the part of net assets not subject to donor-imposed restrictions.
The unrestricted net asset policy defines the use and accounting treatment of net asset balances that are not subject to donor-imposed restrictions, but are designated for specific purposes by a unit. Previously, these balances had been termed as "reserves" or "special receipts" within the University.
For financial statement and government reporting purposes, the University's unrestricted net assets include:
FASB Statement of Financial Accounting Standards (SFAS) No. 116 (Accounting for Contributions) and SFAS No. 117 (Financial Statements for Not-for-Profit Organizations) require for financial reporting purposes, the classification of fund resources into three asset categories (permanently restricted, temporarily restricted, and unrestricted net assets) pursuant to any restrictions imposed by the donor.
This policy addresses the designation of unrestricted net assets. Unrestricted net assets are the part of net assets not subject to donor-restriction.
Unrestricted net assets can be designated or earmarked for future programs, investments, contingencies, purchase or construction of fixed assets or any other use imposed by the governing board of the University.
The University's unrestricted net assets include:
Using Designated
Unrestricted Net Asset Balances
The designation of an unrestricted net asset is accomplished by a transfer of balances and is not recorded as revenue, expense, or non-operating activity.
Designated unrestricted net asset balances are carried forward at the individual fund level from one fiscal year to the next.
See Schedule A for examples of Designated unrestricted net assets versus expenses.
The Office of Financial Systems and Office of Sponsored Research is responsible for writing, updating, and interpreting this policy.
The Financial Deans of the University are responsible for enforcing this policy.
For assistance in interpreting this policy, please call your Tub Financial Office.
Schedule A: Examples of Designated Unrestricted Net Assets vs. Expenses
|
Designation
of Net Assets
|
Expenses
|
| Putting aside funds for the purchase of an asset next year | Purchasing an asset under $5,000 |
| Setting aside funds for offering an incoming professor a three year, $50,000 stipend for research | Salary and laboratory costs incurred by a research scientist in the current year |
| Funds committed by the University to develop a community outreach program that has not occurred | Public relations activity in the current year to communicate the new program |
| Funds for a four year scholarship awarded by a department to a high school junior | Scholarships provided during the year |
| Funds for an advertising budget associated with an upcoming multi-year fundraising campaign | Advertising agency fees during the current year |
| Funds for an upcoming debt service (principal) payment | Interest payments |