(a) Definitions Relating to Financial Requirements.
(1) Balance Sheet--A statement of financial position
or statement of condition, showing the status of assets, liabilities
and owner equity for a defined period i.e., monthly, quarterly, etc.
(2) Current ratio--ability to pay current obligations
from current assets.
(3) Generally Accepted Accounting Principles (GAAP)--Conventions,
rules and procedures that define accepted accounting practices to
include both broad guidelines as well as detailed procedures.
(4) Generally Accepted Auditing Standards (GAAS)--Conventions,
rules and procedures that define accepted audit practices.
(5) Stockholders Equity (net worth)--amount by which
assets exceed liabilities.
(6) Sworn statement--A notarized statement including
the following language: "I swear or affirm that the information in
these statements is true and correct to the best of my knowledge."
(7) Unearned income (tuition) affidavit--A statement
of income received but not yet earned during the current or most recent
fiscal year. This is usually shown as a liability on a balance sheet,
assuming it will be credited to income within the normal accounting
cycle.
(b) The balance sheet required in this subchapter shall
reflect the following:
(1) positive equity or net worth balance;
(2) unearned tuition as a current liability;
(3) a current ratio of at least one-to-one (current
assets divided by current liabilities); and
(4) stockholder's equity or net worth exceeding the
amount shown for goodwill, if applicable, under assets in the balance
sheet.
(c) Compilations shall be accompanied by the owner's
sworn statement that all submitted documents are true and correct
to the best of the owner's knowledge.
(d) All financial statements shall identify the name,
license number, and licensing state of the accountant associated with
the statements and be in accordance with GAAP.
(e) A school that maintains a financial responsibility
composite score that meets the general standards established in federal
regulations by the U.S. Department of Education for postsecondary
institutions participating in student financial assistance programs
authorized under Title IV of the Higher Education Act of 1965, as
amended, shall be considered to have met the financial standards of
this subchapter.
(f) A school that qualifies under an alternative standard
but not the general standard of these federal regulations will not
be considered to have met the financial standards of this subchapter
unless the school meets the other requirements stated in this subchapter.
(g) Requirements for Original Approvals.
(1) The owner shall furnish the commission with the
following:
(A) a school owned by a sole proprietor must submit
a reviewed personal balance sheet stating the disclosure of payments
for the next five years to meet debt agreements as required by GAAP;
or
(B) all other ownership structures must submit an audited
balance sheet consistent with GAAP and GAAS and certified by an accountant.
(2) The facility shall submit a balance sheet, a list
of the expected school-related expenses for the first three months
of operation of the school; a sworn statement signed by the owner
affirming the availability of sufficient cash to cover projected expenses
at the date of the certification. Projected expenses may include the
following:
(A) employee salaries, listed by position title, including
withholding and unemployment taxes, and other related expenses;
(B) lease or rent payments for listed equipment;
(C) lease or rent payments for facilities;
(D) accounting, legal and other specifically identified
professional fees;
(E) an estimate of expenses such as advertising, travel,
textbooks, office and classroom supplies, printing, telephone, utilities,
taxes;
(F) a projection of the gross amount of tuition and
fees to be collected during each of the first two years of operation;
and
(G) such other evidence as may be deemed appropriate
by the commission to establish financial stability.
(h) Prior to a change in ownership of a facility, the
purchaser shall furnish the commission a current balance sheet meeting
the requirements outlined in this subchapter for original approvals,
excluding the sufficient cash requirement for initial expenses. The
purchaser shall furnish any other evidence deemed appropriate by the
commission to establish financial stability.
(i) The deletion or addition of any person that would
be considered an owner is considered a change in facility ownership.
The facility must notify the commission of the change in ownership
within 14 days of the transaction.
(j) The commission may require submission of a full
application for approval of a change in ownership.
(k) Management agreements must be disclosed to the
commission. Parties to a management agreement shall be of good reputation
and character.
(l) The deletion, addition or moving of a facility
will be reported to the commission 14 days prior to the transaction.
(m) If the commission determines that the deletion,
addition or moving of a facility presents an unreasonable transportation
hardship which would prevent a student from completing the training
at the new location, the school shall provide a full refund of all
monies paid and a release from all obligations to the student.
(n) The commission shall be notified in writing of
any legal action to which the facility, any of its owners, representatives
or management employees is a party.
(o) The notification shall be within 14 days after
the action is known to be filed or the facility, owner, representative
or management employee is served.
(p) The facility shall include, with the required notice,
a file-marked copy of the petition, complaint, or other legal instrument,
including copies of any judgments.
(q) If the commission determines that reasonable cause
exists to question the validity of any financial information submitted,
or the financial stability of the facility, the commission may require
at the facility's expense:
(1) an audit of the facility that has been certified
by an accountant; or
(2) The owner must furnish any other evidence deemed
appropriate by the commission to establish financial stability.
(r) The entity certified under this subchapter shall
maintain, in a permanent format that is acceptable and readily accessible
to the commission, a record of any funds received from, or on behalf
of, the student. The entity shall clearly identify the payer, the
type of funding, and the reason for the charges. These records shall
be posted and kept current.
(s) An entity certified under this subchapter shall
issue written receipts of any charges or payments to the student and
maintain such records for review upon request by the commission. Each
separately charged item shall be clearly itemized on the student-signed
receipt.
(t) An entity certified under this subchapter shall
develop and maintain a cancellation and refund policy.
(u) The student shall be entitled to a full refund
of all monies paid to the facility if classes or courses are cancelled
by the facility.
(v) For classes or courses cancelled by the student,
refund policies will be based on a prorated basis or percentage of
the class or program completed by the student.
(w) An entity certified under this subchapter shall
comply with Chapter 437 of this title (relating to Fees).
(x) Upon application for renewal, an entity certified
under this subchapter will provide a balance sheet with a sworn statement.
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