Finding the “Net Position” on a college or university financial statement can be elusive due to several factors related to the structure, terminology, and accessibility of these financial documents. Listed below are the primary reasons why this difficulty arises:
Terminology Variations: The term “Net Position” is specific to financial statements prepared under the Governmental Accounting Standards Board (GASB) standards, commonly used by public colleges and universities. Private institutions, which follow Financial Accounting Standards Board (FASB) standards, typically use “Net Assets” instead. This difference in terminology can cause confusion when searching for “Net Position” in a private institution’s financial statement. For example, Cornell University’s financial statements refer to “Net Assets” rather than “Net Position.”
Even within GASB-compliant statements, “Net Position” may not be prominently labeled or may be buried in detailed sections like the Statement of Net Position (often called the Balance Sheet).
Complex Financial Statement Structure: College and university financial statements are often lengthy and complex, including multiple components such as the Statement of Net Position, Statement of Activities, Statement of Cash Flows, and extensive notes. The “Net Position” is typically reported in the Statement of Net Position, which details assets, deferred outflows, liabilities, and deferred inflows, with Net Position being the residual (assets plus deferred outflows minus liabilities). However, this section may not be immediately obvious to someone unfamiliar with the document’s layout.
The Net Position is often broken down into categories like “Net Investment in Capital Assets,” “Restricted,” and “Unrestricted,” which may be presented in a table or narrative format, making it harder to locate without careful review.
Limited Accessibility and Transparency: While public institutions are required to produce audited financial statements and report data to systems like the Integrated Postsecondary Education Data System (IPEDS), these documents are not always easily accessible on university websites. Private nonprofit colleges, while required to file Form 990 with the IRS, have more leeway in what they make public, and detailed financial statements may not be readily available without a specific request.
Institutions may not prioritize making financial statements user-friendly for the general public, focusing instead on compliance with regulatory requirements. As a result, finding the Statement of Net Position may require navigating complex institutional websites or requesting documents directly from the finance office.
Lack of Standardization Across Institutions: There is no universal format for presenting financial statements across all colleges and universities. Public institutions following GASB standards may present Net Position differently from private institutions using FASB standards. For example, public universities like the University of Colorado explicitly define Net Position as “assets plus deferred outflows less liabilities” in their financial reports, but the presentation style can vary.
Some institutions may include Net Position in summary tables, while others embed it within detailed notes, requiring familiarity with accounting conventions to locate it.
Restricted Audience and Technical Language:Financial statements are primarily designed for stakeholders like auditors, board members, and regulators, not for the general public or students. The technical accounting language and dense presentation can make it difficult for non-experts to identify key metrics like Net Position without guidance.
Faculty or students seeking this information may need to rely on principles of shared governance to request access, as institutions are not always proactive in providing these documents.
Focus on Other Metrics: Financial statements often emphasize other metrics like revenue, expenditures, or endowment income, which may overshadow Net Position. For instance, tuition dependence and endowment income are frequently highlighted as key indicators of financial health, potentially diverting attention from Net Position.
Institutions may also present summarized financial data in annual reports or donor-focused materials, which may not include Net Position or may present it in a less detailed format.
Net Position (or Net Assets) reflects the institution’s financial health by showing the difference between its resources (assets) and obligations (liabilities). A positive Net Position indicates financial stability, while a negative one may signal challenges. Understanding this metric is crucial for assessing how well an institution can sustain its operations, invest in infrastructure, or weather economic downturns.
