Fort Valley State University, Fort Valley, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's report).

FORT VALLEY STATE UNIVERSITY
FORT VALLEY, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2015
A Member Institution of the University System of Georgia

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS)
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS)
C STATEMENT OF CASH FLOWS - (GAAP BASIS)
D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

Page
2 3 4 7
24 25 26 28 30 31

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 4, 2016

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Dr. Jessica Bailey, Interim President Fort Valley State University
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Report for the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2015, we have performed certain audit procedures at Fort Valley State University. Accordingly, the financial statements and compliance activities of Fort Valley State University were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
In addition, we have audited compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on its Federal programs for the year ended June 30, 2015.
This Management Report contains information pertinent to the financial and compliance activities of Fort Valley State University as of and for the year ended June 30, 2015. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Fort Valley State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

GSG:as

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2015
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Due from Affiliated Organizations Prepaid Items
Total Current Assets
Noncurrent Assets Due from USO - Capital Liability Reserve Fund Investments Notes Receivable, Net Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources Deferred Loss on Debt Refunding Related to Defined Benefit Pension Plan
Total Deferred Outflows of Resources
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Deposits Advances (Including Tuition and Fees) (Note 5) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Deferred Gain on Debt Refunding Related to Defined Benefit Pension Plan
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for:
Expendable Unrestricted
Total Net Position
- 2 -

EXHIBIT "A"

$

3,534,472

1,425,371 1,196,474 1,242,507
72,893

7,471,717

646,894 58,646
1,175,970 150,537,115
152,418,625
159,890,342

416,835 2,413,311
2,830,146

2,307,222 106,133 64,870 106,394 22,819
1,751,411 421,987 394,228 862,986
1,380,176
7,418,226
79,965,495 673,343
23,189,879
103,828,717
111,246,943
921,558 10,042,679
10,964,237

69,097,517
3,276,218 -31,864,427

$

40,509,308

FORT VALLEY STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Federal Appropriations Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts Federal State
Total Other Revenues, Expenses, Gains or Losses
Decrease in Net Position
Net Position - Beginning of Year, Originally Reported
Prior Year Adjustments
Net Position - Beginning of Year, Restated
Net Position - End of Year
- 3 -

EXHIBIT "B"

$

14,085,636

-5,547,261

6,330,065

844,511 55,084
161,917 278,126 116,935

4,921,299 45,633
2,967,996 275,717 339,934
1,290,375 950,763 244,978

27,361,708

9,953,230 18,295,567
8,617,071 754,650 791,265
5,389,487 4,311,308 19,973,346 5,959,810
74,045,734
-46,684,026

23,309,344
17,311,457 79,047
901,520 1,947,368
3,864 -3,028,477
3,252
40,527,375
-6,156,651
4,277,008 294,667
4,571,675
-1,584,976
74,182,336
-32,088,052
42,094,284

$

40,509,308

FORT VALLEY STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Federal Appropriations Grants and Contracts (Exchange) Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts, Net
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts, Net
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

8,784,238

6,330,065

686,840

278,126

-34,808,636

-28,736,712

-5,389,487

-96,872

4,456,562 58,566
3,016,050 282,181 351,572
1,302,954 821,538 102,231

-42,560,784

23,309,344 4,652
20,332,961 3,632
43,650,589

4,571,675 -4,199,661
-831,353 -3,031,559
-3,490,898

2,870 -2,398,223 5,932,695

$

3,534,472

- 4 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Other Assets Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Advances (Including Tuition and Fees) Other Liabilities Compensated Absences Net Pension Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest Income Lease Debt Reduction Due to Debt Refunding

EXHIBIT "C"

$ -46,684,026
5,959,810
-201,893 421,988 -24,142 -96,872 748,720 -1,208,297 -581,395
49,279 -91,985 -11,197,773
10,042,679 303,123
$ -42,560,784

$

994

$

924,640

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Fort Valley State University (the University) is one of thirty (30) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Fort Valley State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Fort Valley State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Fort Valley State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
FINANCIAL STATEMENT PREPARATION
The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows.
BASIS OF ACCOUNTING
For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement requires a restatement to beginning net position. The adoption of this statement has a significant impact on the University's financial statements.
In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The adoption of this statement does not have a significant impact on the University's financial statements.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

In fiscal year 2015, the University adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred outflows of resources and deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. Adoption of this statement in conjunction with GASB No. 68 had a significant impact on the University's financial statements.
PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers' Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
CAPITAL LIABILITY RESERVE FUND
In fiscal year 2014, the Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the University System of Georgia (USG) to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. The Fund is financed by all USG institutions participating in the PPV program. The Fund serves as a pooled reserve that is managed by the Board of Regents. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG institution is unable to make the required PPV capital lease payment to the designated cooperative organization. The Fund will continue as long as the Board of Regents has rental obligations under the PPV program and at the conclusion of the program, funds will be returned to the University. Fort Valley State University's contribution to the fund as of June 30, 2015 was $646,894.
NET POSITION
The University's net position is classified as follows:
Net Investment in Capital Assets: This represents the University's total investment in capital assets, net of outstanding debt obligations and deferred inflows, or resources related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of the net investment in capital assets.
Restricted - nonexpendable: Nonexpendable restricted net position consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Restricted - expendable: Restricted expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted: Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the categories above. Included in the net deficit reported is the University's Net Pension Liability of $23 million which is required for financial reporting and will not impact the economics of the plan or affect budgets or cash flows.
RESTATEMENT NOTE DISCLOSURE
For fiscal year 2015, the University made prior period adjustments due to the adoption of GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, which require the restatement of the June 30, 2014, net position. The result is a decrease in Net Position at July 1, 2014 of $32,088,052 attributable to a Net Pension Liability of $34,387,652 less plan contributions of $2,299,600 made during fiscal year 2014. This change is in accordance with generally accepted accounting principles.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS
The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

At June 30, 2015, the carrying value of deposits was $3,532,772 and the bank balance was $4,243,789. Of the University's deposits, $3,993,789 were uninsured. Of these uninsured deposits, $3,993,789 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
INVESTMENTS
At June 30, 2015, the carrying value of the University's investment was $58,646, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pool Board of Regents Balanced Income Fund

$

58,646

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia - System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits and Accounts - Education Audit Division or on their web site at http://www.audits.ga.gov.
NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2015.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal, State and Private Funds

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

Due from Component Units

1,255,170 184,569
1,425,371 226,012
1,242,507 634,846

Less Allowance for Doubtful Accounts

4,968,475 1,104,123

Net Accounts Receivable

$ 3,864,352

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the University's capital assets for the year ended June 30, 2015:

Beginning Balance July 1, 2014

Additions

Reductions

Ending Balance June 30, 2015

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress

$

3,762,548

$

3,762,548

7,612,368 $

4,205,207 $

5,017,735

6,799,840

Total Capital Assets, Not Being Depreciated

11,374,916

4,205,207

5,017,735

10,562,388

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

100,150,604 2,728,820
11,883,390 83,588,965
5,416,288

3,803,353 960,582 286,593

42,784 373,460
2,269

103,953,957 2,728,820
12,801,188 83,215,505
5,700,612

Total Assets Being Depreciated

203,768,067

5,050,528

418,513

208,400,082

Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

32,897,145 1,491,145 8,662,822
14,703,426 4,755,681

2,129,045 49,254
950,471 2,694,608
136,432

42,405 2,269

35,026,190 1,540,399 9,570,888
17,398,034 4,889,844

Total Accumulated Depreciation

62,510,219

5,959,810

44,674

68,425,355

Total Capital Assets, Being Depreciated, Net

141,257,848

-909,282

373,839

139,974,727

Capital Assets, Net

$

152,632,764 $

3,295,925 $

5,391,574 $

150,537,115

A comparison of depreciation expense for the last three fiscal years is as follows:

Fiscal Year

Depreciation Expense

2015 2014 2013

$ 5,959,810 $ 5,722,982 $ 5,827,729

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 5: ADVANCES Advances consisted of the following at June 30, 2015.

Prepaid Tuition and Fees $ Other Advances

Total Advances

$

591,272 1,160,139
1,751,411

NOTE 6: LONG-TERM LIABILITIES The University's Long-Term liability activity for the year ended June 30, 2015 was as follows:

Beginning Balance July 1, 2014 (Restated)

Additions

Reductions

Ending Balance June 30, 2015

Current Portion

Leases Lease Obligations

$ 82,602,506 $

0 $ 1,774,025 $ 80,828,481 $

862,986

Other Liabilities Compensated Absences Net Pension Liability

2,145,505 34,387,652

1,297,942

1,389,928 11,197,773

2,053,519 23,189,879

1,380,176

Total

36,533,157

1,297,942

12,587,701

25,243,398

1,380,176

Total Long-Term Obligations $ 119,135,663 $ 1,297,942 $ 14,361,726 $ 106,071,879 $ 2,243,162

NOTE 7: NET POSITION Changes in Net Position for the year ended June 30, 2015 are as follows:

Net Investments in Capital Assets Restricted Net Position Unrestricted Net Position Total Net Position

Beginning Balance July 1, 2014 (Restated)

Additions

Reductions

Ending Balance June 30, 2015

$

70,030,258 $

5,486,785 $

6,419,526 $

69,097,517

4,568,103

19,353,536

20,645,421

3,276,218

-32,504,077

56,135,699

55,496,049

-31,864,427

$

42,094,284 $ 80,976,020 $ 82,560,996 $

40,509,308

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The amounts within each category at June 30, 2015 were as follows:

Net Investments in Capital Assets

$

69,097,517

Restricted for Restricted E&G and Other Organized Activities Federal Loans Quasi-Endowments

283,091 1,409,859 1,583,268

Total Expendable

3,276,218

Unrestricted R&R Reserve Reserve and Encumbrances Other Unrestricted

5,157,559 3,871,409 -40,893,395

Total Unrestricted

-31,864,427

Total Net Position

$

40,509,308

NOTE 8: LEASE OBLIGATIONS

Fort Valley State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms

expiring in various years between 2016 and 2040. Payments for fiscal year 2015 were $5,132,822 of which $3,028,477 represented interest and $330,320 represented executory costs. Total principal reduction on capital leases for fiscal year ending June 30, 2015 was $1,774,025, which is attributable to a gain on debt refunding of $924,640 and principal paid on capital leases of $849,385. Interest rates range from 1.9 percent to 16.7 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2015:

Net Position

Outstanding

Held Under

Balances per

Accumulated

Capital Lease

Lease Schedules

Description

Gross Amount

Depreciation

at June 30, 2015 at June 30, 2015

(+)

(-)

(=)

Equipment

$

560,842 $

327,158 $

233,684 $

244,324

Buildings

82,654,662

17,070,876

65,583,786

80,584,157

Total Assets Held Under Capital Lease

at June 30, 2015

$

83,215,504 $ 17,398,034 $

65,817,470 $

80,828,481

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2015.

Wildcat Housing Phase I
Wildcat Housing Phase II
Student Amenities Center Stadium
Buses Copiers

(1) Fort Valley State University

Foundation Properties, LLC

$

(1) Fort Valley State University

Foundation Properties, LLC

(1)(2) Georgia Higher Education

Facilities Authority

Busmax Leasing, LLC

Xerox

43,334,897
19,603,070
19,451,021 167,332 367,818

30 years
30 years
30 years 5 years 5 years

5/2008
4/2009
7/2010 7/2012 7/2012

5/2037 $
3/2038
6/2040 5/2017 6/2017

42,148,850
19,663,338
18,771,969 72,991
171,333

$

82,924,138

$

80,828,481

(1) These capital leases are with related entities.

(2) In June 2015, the Georgia Higher Education Facilities Authority refunded bonds associated with this lease and passed the economic advantages of this refund to Fort Valley State University. The University reflected this economic advantages by reducingthe future minimum lease payments and the effective interest rate of the bonds. As a result of this refund, the University recongized a Deferred Gain on Debt Refunding in the amount of $924,640. The unamortized Deferred Gain on Debt Refunding at year-end related to this tranactions is $921,558.

OPERATING LEASES

Fort Valley State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2016 to 2019. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers, other small business equipment, and buildings.

Fort Valley State University's fiscal year 2015 expense for rental of real property and equipment under operating leases was $71,773.

FUTURE COMMITMENTS

Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2015, were as follows:

- 14 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Capital Leases

Operating Leases

Year Ending June 30: 2016 2017 2018 2019 2020 2021 - 2025 2026 - 2030 2031 - 2035 2036 - 2040

$

4,960,160 $

5,070,184

5,087,099

5,241,887

5,710,865

31,029,107

33,986,955

37,502,035

21,580,494

73,261 73,261 65,330 10,100

Total Minimum Lease Payments

150,168,786 $

221,952

Less: Interest Less: Executory Costs (if paid)

58,398,317 10,941,988

Principal Outstanding
NOTE 9: RETIREMENT PLANS

$

80,828,481

Fort Valley State University participates in a retirement plan administered by the State of Georgia under the Teachers' Retirement System of Georgia (TRS). The system issues separate publicly available financial reports that include the applicable financial statements and required supplementary information. Reports may be obtained from the Teachers' Retirement System of Georgia administrative office.
The significant retirement plan that Fort Valley State University participates in is described below. More detailed information can be found in the plan agreements and related legislation. The plan, including benefit and contribution provisions, was established and can be amended by State law.
Teachers' Retirement System of Georgia
General Information about the Teachers' Retirement System
Plan description: All teachers of the University as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers' Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.
Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years.

- 15 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2015. The University's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual University payroll. University contributions to TRS were $2,413,311 for the (fiscal year ended June 30, 2015) and $2,299,600 for the measurement period (fiscal year ended June 30, 2014).
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, the University reported a liability for its proportionate share of the net pension liability for TRS totaling $23,189,879. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The University's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2014. At June 30, 2014, the University's proportion was 0.184%, which was a decrease of .0138% from its proportion measured as of June 30, 2013.

For the year ended June 30, 2015, the University recognized pension expense of $1,144,506. At June 30, 2015, the University reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflow of

Inflows of

Resources

Resources

Net difference between projected and actual earnings on pension plan investments

$

8,084,484

Changes in proportion and differences between University contributions and proportionate share of contributions

1,958,195

University contributions subsequent to the measurement date

$

2,413,311

Total

$

2,413,311 $

10,042,679

- 16 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

University contributions subsequent to the measurement date of $2,413,311 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending June 30:

TRS

2016 2017 2018 2019 2020

$

-2,466,165

$

-2,466,165

$

-2,466,165

$

-2,466,167

$

-178,017

Actuarial assum ptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75% - 7.00%
7.50%

average, including inflation net of pension plan investment expense
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 - June 30, 2009.

The long-term expected rate of return on TRS pension plan investments was determined using a lognormal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Target Allocation

Long-Term Expected Real Rate of Return *

Fixed Income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

100.00% * Rates shown are net of the 3.00% assumed rate of inflation
- 17 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Discount rate: The discount rate used to measure the total TRS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the University's proportionate share of the net pension liability to changes in the discount rate: The following presents the University's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the University's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers' Retirement System:
University's proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$

42,735,836 $

23,189,879 $

7,094,190

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publically available at www.trsga.com/publications.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from three approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Fort Valley State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers' Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2015, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Fort Valley State University and the covered employees made the required contributions of $568,263 (9.24%) and $369,002 (6%), respectively.

VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

- 18 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Georgia Defined Contribution Plan
Plan Description Fort Valley State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2015 amounted to $77,272.33 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to four different healthcare plan options. For the University System of Georgia's Plan Year 2015, the following healthcare plan options were available:
BlueChoice HMO Comprehensive Care Plan Consumer Choice HSA Plan Kaiser Permanente HMO
Fort Valley State University and participating employees and retirees pay premiums to the healthcare plan options to access benefits coverage. The respective health plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with the self-insured plans; including the BlueChoice HMO, Comprehensive Care Plan and Consumer Choice HSA Plan.
The reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to serve as the claims administrator for the selfinsured healthcare plans. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser Permanente.
- 19 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Fort Valley State University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1.
The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Fort Valley State University expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Fort Valley State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015.
NOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.

- 20 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2015 plan year, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2015, there were 176 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2015, Fort Valley State University recognized as incurred $1,086,176 of expenditures, which was net of $692,869 of participant contributions.
NOTE 13: AFFILIATED ORGANIZATIONS
The Fort Valley State University Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Fort Valley State University. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus- an amendment of GASB Statements No. 14 and No. 34 and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in this financial statement. Copies of the financial statements for the affiliated organizations may be obtained from Fort Valley State University.

- 21 -

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SUPPLEMENTARY INFORMATION - 23 -

FORT VALLEY STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2015
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

3,986,755.68

1,984,489.54 3,439,618.21
67,616.74

$

9,478,480.17

$

104,535.27

3,841,410.46

679,415.15

1,593,119.35

6,218,480.23

149,666.43 871,218.38 767,018.45 958,147.43 322,220.28
191,728.97
3,259,999.94

$

9,478,480.17

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 24 -

FORT VALLEY STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2015

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2014
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 23,428,988.00 $ 23,428,988.00 $

0.00

60,391,943.00

41,473,646.84

-18,918,296.16

83,820,931.00

64,902,634.84

-18,918,296.16

0.00 83,820,931.00

1,617,448.37 66,520,083.21

1,617,448.37 -17,300,847.79

83,820,931.00

$

0.00

64,370,370.57

19,450,560.43

2,149,712.64 $ 2,149,712.64

2,543,965.41 119,644.25

345,818.87 -162,048.61
-119,644.25 -1,617,448.37 $ 3,259,999.94

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over
Total Reserved
Unreserved Surplus
Total Fund Balance

$

149,666.43

871,218.38

767,018.45

958,147.43

322,220.28

3,068,270.97

191,728.97

$ 3,259,999.94

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 25 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$ 3,695,233.00 $ 3,695,233.00 $ 3,695,233.00 $ 3,695,233.00

19,833,755.00 44,260,191.00
64,093,946.00

19,833,755.00 44,260,191.00
64,093,946.00

19,733,755.00 60,391,943.00
80,125,698.00

19,733,755.00 41,473,646.84
61,207,401.84

$ 67,789,179.00 $ 67,789,179.00 $ 83,820,931.00 $ 64,902,634.84

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 26 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers Funds Available

Variance Negative

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

0.00 $

0.00 $ 3,695,233.00 $

0.00 $ 3,695,233.00 $

0.00 $

0.00

0.00 1,617,448.37
1,617,448.37

0.00 0.00
0.00

19,733,755.00 43,091,095.21
62,824,850.21

0.00 -17,300,847.79
-17,300,847.79

19,729,350.27 40,945,787.30
60,675,137.57

4,404.73 19,446,155.70
19,450,560.43

4,404.73 2,145,307.91
2,149,712.64

$ 1,617,448.37 $

0.00 $ 66,520,083.21 $ -17,300,847.79 $ 64,370,370.57 $ 19,450,560.43 $

2,149,712.64

- 27 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2014
Surplus

Prior Period Adjustments

$

28,593.18 $

0.00 $

-28,593.18 $ 14,720.88

4,673.79 1,703,825.65
1,708,499.44
1,737,092.62

0.00 -1,617,448.37
-1,617,448.37
-1,617,448.37

-4,673.79 -86,377.28
-91,051.07
-119,644.25

11,043.82 158,005.56
169,049.38
183,770.26

926,517.04

0.00

0.00

0.00

Budget Unit Totals

$ 2,663,609.66 $

-1,617,448.37 $

-119,644.25 $ 183,770.26

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 28 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2015
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

0.00 $

0.00 $

14,720.88 $

0.00 $ 14,720.88 $

14,720.88

0.00 -31,630.39
-31,630.39
-31,630.39

0.00 0.00
0.00
0.00

4,404.73 2,145,307.91
2,149,712.64
2,149,712.64

15,448.55 2,271,683.08
2,287,131.63
2,301,852.51

0.00 2,110,123.54
2,110,123.54
2,110,123.54

15,448.55 161,559.54
177,008.09
191,728.97

15,448.55 2,271,683.08
2,287,131.63
2,301,852.51

31,630.39

0.00

0.00

958,147.43

958,147.43

0.00

958,147.43

$

0.00 $

0.00 $

2,149,712.64 $ 3,259,999.94 $ 3,068,270.97 $ 191,728.97 $ 3,259,999.94

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Ending Fund Balance - June 30

$ 149,666.43 871,218.38 767,018.45 958,147.43 322,220.28

$ 149,666.43 871,218.38 767,018.45 958,147.43 322,220.28

$ 191,728.97

191,728.97

$ 3,068,270.97 $ 191,728.97 $ 3,259,999.94

- 29 -

FORT VALLEY STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2015
Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")
Amounts reported for Business-Type Activities in the Statement of Net Position are different because:
Capital Assets used in Business-Type Activities are not reported in the Budget Fund.
Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position.
Funds placed on deposit with the Georgia State Financing and Investment Commission for use in capital outlay projects are reported as an outlay in the Budget Fund, but are included as a prepaid item on the Statement of Net Position.
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity
Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity
Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity
The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Prepaid items reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Payables for goods and services provided in the current fiscal year reported in the Budget Fund as encumbrances payable are reported as accounts payable for GAAP reporting. Total Net Effect of Encumbrance Activity
Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Advances Capital Leases Payable Compensated Absences Payable Contracts Payable Deferred Loss on Defined Benefit Pension Plan Net Pension Liability Deferred Gain on Defined Benefit Pension Plan Deferred Gain on Debt Refunding Total Liabilities
Net Position of Business-Type Activities (Exhibit "A")
The supplementary information presented on Schedules 1, 2, 3 and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
- 30 -

SCHEDULE "5"

$

3,259,999.94

150,537,113.92

-958,147.43

$ 1,409,747.63 -1,409,747.63

$ -2,915,085.45 -185,307.65

$ 1,583,268.18 0.00

$ 1,377,291.46 0.00

$

202,199.27

-16,918.59

-1,141,268.39 0.00
-3,100,393.10 1,583,268.18 1,377,291.46
185,280.68

$ 3,841,410.46 -5,243.56
-745,310.34

3,090,856.56

$

-12,328.65

-80,828,482.30

-2,053,518.74

-106,393.68

2,413,310.97

-23,189,879.00

-10,042,679.00

-504,723.42

-114,324,693.82

$ 40,509,308.00

FORT VALLEY STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2015

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2015 June 30, 2014
Compensated Absences June 30, 2015 June 30, 2014
Adjustments Shared Services on Jointly Staffed Personnel Dalton State College Harris, Angela Georgia College and State University Carwley, Cathy Martin, Charles McMullen, Rebecca Georgia Regents University Mackey, Dorothea Georgia Southern University Moore, Teah Georgia Southwestern State University Sanchez, Francisco Paredes Kennesaw State University Grimes, Jamie Middle Georgia State University Chatmon, Roddrick Coleman, Toya University of Georgia Byrd, Diane
Compensation Included in Other Personal Services

SALARIES

$

28,674,321 $

TRAVEL 791,265

106,133 -141,070

1,907,588 -1,993,037

42,633
8,210 6,000 7,114
32,187
-4,500
-2,250
9,689
-4,200 1,023
-9,000
-392,044

$

28,248,797 $

791,265

- 31 -

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FORT VALLEY STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-533-12-01 FS-533-14-01

Further Action Not Warranted Partially Resolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

FINANCIAL REPORTING Deficiencies in Controls over Financial Reporting Finding Control Number: FS-533-14-01

During fiscal year 2015, University officials made every effort possible to verify all balances that were noted as an audit concern in the previous year. These audit issues included uncollectible accounts receivable, interest payable, capital lease obligations, year ending bank balances, etc. In addition, a Budget to GAAP reconciliation has been completed and will be submitted to the auditors upon their request. While the current staff at FVSU is lacking a number of key officials, such as the Vice President, Controller and Budget Director, the University will continue to review its accounting controls and procedures and make improvements that will address any weaknesses that are identified.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-533-14-01 FA-533-14-02 FA-533-14-03 FA-533-14-04 FA-533-14-05 FA-533-14-06

Unresolved See Corrective Action/Responses Partially Resolved See Corrective Action/Responses Partially Resolved See Corrective Action/Responses Unresolved See Corrective Action/Responses Partially Resolved See Corrective Action/Responses Partially Resolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACTIVITIES ALLOWED OR UNALLOWED ELIGIBILITY Weaknesses in Logical Access IT General Controls U.S. Department of Education 84.SFA Student Financial Aid Cluster Program Finding Control Number: FA-533-14-01

The University will conduct a weekly review of all roles and assigned access for each authorized user. Access will be issued based on job functions and only currently active employees or authorized designee will have correct and appropriate access.

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FORT VALLEY STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CASH MANAGEMENT Excessive Cash Balances U.S. Department of Education 84.SFA Student Financial Aid Cluster Finding Control Number: FA-533-14-02
The University reviewed the policies and procedures relative to cash monitoring and has ensured that the personnel involved are aware of the time requirements of excess cash. The funds were returned, as well. In addition, the University is awaiting a response from the U.S. Department of Education in regards to the resolution of this finding.
ELIGIBILITY Overpayment of Student Financial Assistance U.S. Department of Education 84.SFA Student Financial Aid Cluster Finding Control Number: FA-533-14-03
The University has made changes to the Banner Financial Aid system to properly award eligible students. Processes are now being run to correct grade levels, C-Codes are being posted, and ISIR's are now being locked after processing. The Financial Aid Director is providing continuous staff training and revising Policies and Procedures as necessary. In addition, the University is awaiting a response from the U.S. Department of Education in regards to the resolution of this finding.
ELIGIBILITY Undocumented Cost of Attendance Budgets U.S. Department of Education 84.SFA Student Financial Aid Cluster Finding Control Number: FA-533-14-04
The cost of attendance budget documentation will be maintained by the University in the future.
MATCHING, LEVEL OF EFFORT, EARMARKING Failure to Comply with Federal Work-Study Earmarking Requirements U.S. Department of Education 84.SFA Student Financial Aid Cluster Finding Control Number: FA-533-14-05
The University has automated the Federal Work-Study process in the Banner Financial Aid system, which has more effectively identified areas of employment classified as appropriate community service activities. In addition, the University is awaiting a response from the U.S. Department of Education in regards to the resolution of this finding.
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FORT VALLEY STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES SPECIAL TESTS AND PROVISIONS Return of Title IV Funds U.S. Department of Education 84.SFA Student Financial Aid Cluster Finding Control Number: FA-533-14-06 The University has automated the R2T4 process in the Banner Financial Aid system and reviewed the reporting areas with the Registrar's Office and Student Financial Services staff. The University identified weekends that should or should not be included during breaks. In addition, the University is awaiting a response from the U.S. Department of Education in regards to the resolution of this finding.
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SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2015-001 Compliance Requirement:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Weaknesses in Logical Access IT General Controls Activities Allowed or Unallowed Eligibility Significant Deficiency N/A U. S. Department of Education 84.SFA Student Financial Assistance Cluster Program

Description: This is a repeat finding (FA-533-14-01) from year ended June 30, 2014. University policies and procedures were insufficient to provide adequate internal controls over logical access IT general controls.

Criteria: Management of the University is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly processed and reported.

Condition: Our review of the established internal control structure associated with significant financial applications at the University revealed design and operating effectiveness deficiencies in logical access controls intended to protect financial and student financial assistance information from unauthorized access, manipulation and corruption.

The details related to these deficiencies have been provided to University Management in accordance with Official Code of Georgia Annotated 50-6-9.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Cause: In discussing these deficiencies with the University, management stated that the cause was directly related to ineffective policies and failure to adequately monitor general security settings and user access to the financial application.

Effect or Potential Effect: Failure to maintain adequate internal controls related to logical access increases the risk that misappropriation of assets, fraud, errors, irregularities and/or noncompliance with Federal regulations could occur.

Recommendation: Management should review and enhance their policies and procedures to ensure the integrity and accuracy of the information used within the financial statements and as part of awarding financial assistance to students. Additionally, management should ensure proper separation of duties as it relates to financial and student financial assistance processes.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. To address the specific deficiencies noted in the audit, the University will review policies and procedures related to access controls. The Information Technology (IT) Department will conduct a review of all roles and access on a quarterly basis and distribute to all Banner coordinators. All discrepancies cited will be forwarded to IT for correction and or removal.

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

FA 2015-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Undocumented Cost of Attendance Budgets Eligibility Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: This is a repeat finding (FA-533-14-04) from the year ended June 30, 2014. The University's Student Financial Aid Office did not document the procedures used to establish their Cost of Attendance budgets.

Criteria: Provisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs.

Condition: Upon review of the University's Cost of Attendance (COA) budgets, it was noted that University personnel could not provide supporting documentation or explanations for the calculation of several components of the COA budgets, including Books and Supplies, Personal Expenses and Transportation.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Questioned Cost: N/A

Cause: In discussing these deficiencies with management, they stated that due to turnover in the SFA Office, the University could not locate documentation for the procedures used in calculating COA budget components or determine if this documentation initially existed.

Effect or Potential Effect: The University was not in compliance with Federal regulations concerning the COA budgets used as the basis for determining SFA eligibility. The COA is the cornerstone of establishing a student's financial need and sets a limit on the total aid a student may receive. If the estimated costs used for components in the COA budget are unreasonable and do not represent average costs for students at the University, a majority of the student population may have been significantly over awarded.

Recommendation: The University should reevaluate the components used in the COA budgets and document that these costs represent average costs for students enrolled at the University. The University should modify its procedures to ensure that any future changes to the COA budgets are reasonable and based on documented average costs for students. The University should also contact the U.S. Department of Education regarding resolution of this finding.

Views of Responsible Officials and Corrective Action Plans: We concur with the finding. To address the specific deficiencies noted in the audit, the University's Financial Aid Director will review the processes and procedures relative to determining the cost of attendance and maintain documentation.

Contact Person: Telephone: Fax: Email:

Cynthia Parks, Director of Financial Aid (478) 825-6605 (478) 825-6976 parksc@fvsu.edu

FA 2015-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Failure to Reconcile the Federal Direct Loan Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University did not perform the required monthly reconciliations for the Federal Direct Loan Program.

Criteria: Provisions included in 34 CFR 685.102(b), 685.301, and 685.303 provide program requirements for the Federal Direct Loan Program.

- 3 -

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Condition: University personnel perform a reconciliation of amounts reported in the student information system and the financial accounting system at the end of each month. However, monthly reconciliations of amounts disbursed by student per the Direct Loan Common Origination and Disbursement (COD) system and the student information system were not performed for eleven out of the twelve months in the fiscal year.

Questioned Cost: N/A

Cause: In discussing these deficiencies with management, they stated that due to turnover in the SFA Office, the University could not locate documentation for the reconciliations performed during the fiscal year or determine if this documentation initially existed.

Effect or Potential Effect: The University was not in compliance with Federal regulations concerning the program requirements of the Federal Direct Loan Program.

Recommendation: The University should establish procedures and assign responsibility for the monthly and yearly reconciliation of the Federal Direct Loan Program. The University's financial aid and business office should maintain their internal records in such a way that they can prepare for the monthly reconciliation. The University should establish a monitoring process to ensure the guidelines detained in the Federal Direct Loan School Guide are followed to ensure compliance with Federal Direct Loan requirements.

Views of Responsible Officials and Corrective Action Plans: We concur with the finding. To address the specific deficiencies noted in the audit, the University will establish guidelines to ensure the Federal Direct Loan Program is reconciled monthly. The designated Financial Aid Office and Accounting Services staff will include the reconciliation as part of the end of month process. A detailed comparison will include Banner, General Ledger and Department of Education awards made to students. All variances or exceptions will be finalized and noted on a monthly basis.

Contact Person: Telephone: Fax: Email:

Cynthia Parks, Director of Financial Aid (478) 825-6605 (478) 825-6976 parksc@fvsu.edu

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
Inadequate Controls over Financial Reporting Observation: Our review of the University's Year-End Journal Entries, GAAP basis financial statements and Notes to the Financial Statements revealed errors.

- 4 -

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Recommendation: The University made significant improvements to their financial reporting procedures during FY15. While these errors were immaterial to the financial statements, we recommend that the University continue to strengthen internal controls over the financial statement preparation and review process.

Views of Responsible Officials and Corrective Action Plans: The University will continue to maintain a log of year end journal entries and require review and approval of transactions before posting to general ledger.

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

Private Purpose Venture Not Self-Liquidating Observation: For fiscal year ended June 30, 2015, an analysis of the financial statement activity for the University's Student Housing public private venture, as well as the Stadium/Student Center public private venture, revealed that the projects' required capital lease payments and other operating costs exceeded yearly revenues by $1,368,455. The University has sufficient reserves to cover this operating deficit.

Recommendation: Management should closely monitor project activity to ensure that the revenues are sufficient to service capital lease debt as well as all other associated project costs. Also, management should continue to maintain adequate reserves for the project to protect against potential economic downturns.

Views of Responsible Officials and Corrective Action Plans: The University will closely monitor the revenue and expenditures for all public private ventures. The Stadium/Student Center was refinanced, and there will be a substantial saving in lease payments.

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

Failure to Reconcile Subsidiary Modules Observation: According to the Board of Regents' Business Procedures Manual, subsidiary reconciliations are required to be performed quarterly. Our review revealed a lack of documentation of quarterly reconciliations of the activity recorded in the accounts payable and asset management subsidiary modules of the financial accounting system to the General Ledger.

Recommendation: The University should review procedures in place and implement changes necessary to ensure that subsidiary reconciliations are completed in accordance with the Business Procedures Manual Section 10.6.2.

- 5 -

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Views of Responsible Officials and Corrective Action Plans: The University will require as part of the month end process all directors to complete a reconciliation of their prospective subsidiary modules and submit a quarterly report to management for review and approval.

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

Auxiliary Fund Deficits Observation: The Board of Regents Policy Manual Section 15 states that "Auxiliary Enterprises are operating on a self-supporting basis, where the combination of fees and other revenue is sufficient to meet costs". The University's Residence Halls, Intercollegiate Athletics and Other funds reported a loss during the year under review. The Residence Halls fund reported an overall net loss of $2,885,173 and is in a deficit of $7,811,640. The Food Services fund reported net income of $168,492 and is in a deficit of $1,820,225. The Intercollegiate Athletics fund reported a net loss of $165,622 and is in a deficit of $5,969,685. The Auxiliary Other fund reported a net loss of $558,339 and is in a deficit of $2,814,524. These funds contributed to the overall Auxiliary Fund deficit of $16,527,059.

Recommendation: The University should ensure that the revenue streams associated with the Auxiliary Enterprise funds are sufficient to pay all costs pertaining to the funds.

Views of Responsible Officials and Corrective Action Plans: The University has established and updated policies to increase Residence Halls and Intercollegiate Athletics revenue. The Food Service contract was renegotiated, which resulted in decrease in weekly meal charges.

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

Inadequate Controls over Encumbrances Observation: The University did not provide a reconciled listing of outstanding purchase orders as of June 30, 2015 that agreed to the budget basis financial statements. In addition, testing revealed $135,290.56 in outstanding purchase orders which were deemed invalid.

Recommendation: The University should review procedures in place and implement changes necessary to ensure that all outstanding purchase orders are reviewed for validity and are adequately documented.

Views of Responsible Officials and Corrective Action Plans: The University will review all outstanding encumbrances on a monthly basis to determine validity and ensure all required supporting documents are available per PeopleSoft listings.

- 6 -

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Contact Person: Telephone: Fax: Email:

Dorothy K. Stripling, Interim Chief Financial Officer (478) 825-6111 (478) 825-6977 striplingd@fvsu.edu

Student Financial Aid Cluster Program Fiscal Operations and Application to Participate (FISAP) Reporting Observation: All amounts reflected on the Fiscal Operations and Application to Participate (FISAP) report were not accurately completed and supported by the accounting records. Several amounts reported by the University did not agree to the accounting records. Additionally, auditor noted that the Administrative Cost Allowance amounts for the Federal Work Study and Federal Supplemental Educational Opportunity Grants programs were not recorded on the general ledger.

Recommendation: The University should implement policies and procedures to ensure that all reports submitted to the U.S. Department of Education are accurate and adequately supported by appropriate documentation. In addition, the University should implement procedures to ensure that Administrative Cost Allowance amounts are appropriately recorded on the general ledger.

Views of Responsible Officials and Corrective Action Plans: The University will ensure all FISAP data submitted is accurate and supports the general ledger.

Contact Person: Telephone: Fax: Email:

Cynthia Parks, Director of Financial Aid (478) 825-6605 (478) 825-6976 parksc@fvsu.edu

Student Financial Aid Cluster Program Timely Return of Title IV Funds Observation: Our sample of 18 students to test the University's compliance with 34 CFR 668.173, which is related to the timely return of Title IV funds, revealed that funds were not returned in the appropriate timeframe for six students.

Recommendation: We recommend that the University review its process for determining that students have withdrawn, either officially or unofficially, to ensure that Title IV funds are returned in a timely manner.

Views of Responsible Officials and Corrective Action Plans: The University will ensure all Title IV returns are processed and submitted timely to Department of Education and properly documented.

Contact Person: Telephone: Fax: Email:

Cynthia Parks, Director of Financial Aid (478) 825-6605 (478) 825-6976 parksc@fvsu.edu

- 7 -

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Student Financial Aid Cluster Program Untimely Enrollment Reporting Observation: Our testing of 17 students who withdrew during the Fall 2014 and Spring 2015 semesters revealed that withdrawn enrollment statuses for sixteen of the students were not reported to the National Student Loan Data System (NSLDS) in a timely manner. Additionally, nine students' withdrawn enrollment statuses were never reported to NSLDS.

Recommendation: The University should implement policies and procedures to ensure that all changes in student enrollment statuses are reported and in a timely manner to the NSLDS.

Views of Responsible Officials and Corrective Action Plans: The University will review policies and procedures as it relates to enrollment reporting and students withdrawn during the semester.

Contact Person: Telephone: Fax: Email:

Cynthia Parks, Director of Financial Aid (478) 825-6605 (478) 825-6976 parksc@fvsu.edu

- 8 -