Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended 2001 June 30

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STATE OF GEORGIA

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SAVANNAH STATE UNIVERSITY
SA VANNAH, GEORGIA

REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2001

RECEIVED.

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MARO 4 2002

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Russell W~R\~ro~ES

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SAVANNAH STATE UNIVERSITY -TABLE OF CONTENTS-

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS-UNRESTRICTED

22

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

24

SCHEDULES

SCHEDULESOFREVENUESANDEXPENDITURESCOMPAREDTOBUDGET

1

RESIDENT INSTRUCTION

26

2

LOTTERY FOR EDUCATION

29

3 CHANGES IN INVESTMENT IN PLANT

30

4 SCHEDULE OF FUND BALANCES

CURRENTFUNDSANDPLANTFUNDS

32

5 RECONCILIATION OF SALARIES AND TRAVEL

34

SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS SECTION II
AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS .SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
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8
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SECTION I FINANCIAL

w. RUSSELL

HINTON

STATE AUDITOR

(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S.W., Suite 214 Atlanta, Georgia 30334-8400
December 13, 2001

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Carlton E. Brown, President Savannah State University
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) of Savannah State University as of and for the year ended June 30, 2001. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the Unit~d States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon.
As more fully discussed in Section III, Current Year Findings and Questioned Costs, the University could not provide adequate subsidiary records or other evidence supporting the student accounts receivable which are a part of Accounts Receivable as reported on the Combined Balance Sheet. Accordingly, we were unable to satisfy ourselves as to the accuracy of the amount reported as accounts receivable on the Combined Balance Sheet as of June 30, 2001. Additionally, we were unable to determine the effects this matter may have on the financial statements.

01ARL-63X

As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with accounting princi --~s generally accepted in the United States of America with respect to the recording of encun1orances as expenditures and liabilities. To conform with accounting principles generally accepted in the United States of America, encumbrances should be recorded as a reservation offund balance. The effects on the financial statements of this departure from accounting principles generally accepted in the United States of America were not reasonably determinable, but are believed to be material.
As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by accounting principles generally accepted in the United States of America. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $1 ,022,492.91 as of June 30, 2001, and the net change in fund balance for the year ended June 30, 2001, would be decreased by $119,658.76.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence supporting student accounts receivable, and except for the effects on the financial statements of the matters discussed in the fourth and fifth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 2001, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 5) are presented for purposes ofadditional analysis and are not a required part ofthe financial statements of Savannah State University. Such information has been subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, except for the effects of such adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence supporting student accounts receivable, and except for the effects of the matters discussed in the fourth and fifth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,
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~sell W. Hinton State Auditor
RWH:gp 01ARL-63X

FINANCIAL STATEMENTS - 1-

SAVANNAH STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 2001

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Salaries Payable Student Deposits Deposits Held in Custody for Others Due to Other Fund Groups
Total Liabilities
Fund Balances U.S. Government Grants Refundable Institutional Loans - Restricted Endowment Term Endowment Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS UNRESTRICTED RESTRICTED

LOAN FUNDS

$

1,146,602.29 $ 392,281.45 $ 49,280.59

1,034,978.29

582,193.08

869,014.76

593,125.15

14,574.79

1,105,967.50

$

3,895,248.02 $ 974,474.53 $ 918,295.35

$

2,707,424.85

164,963.97

60,575.00

$ 1,105,967.50

$ 2,932,963.82 $ 1,105,967.50

$ 839,861.21 78,434.14

$ -131,492.97

$

962,284.20

$

962,284.20 $ -131,492.97 $ 918,295.35

$ 3,895,248.02 $ 974,474.53 $ 918,295.35

The notes to the financial statements are an integral part of this statement. -2-

EXHIBIT"A"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$ 1,002,214.88 $

382,648.68 $ 531 ,661 .54

1,046,183.77

------ $

$ 79,446,012.77

590,682.16 $ 6,267.00

4,609,893.82 3,024,114.67
593,125.15 14,574.79
1,105,967.50 79,446,012.77

$ 1,002,214.88 $ 914,310.22 $

1,046,183.77 $ 79,446,012.77 $ 596,949.16 $ 88,793,688.70

$ 745,473.02 $ 745,473.02

$ 107,212.36 $ 489,736.80

3,560,110.23 164,963.97 60,575.00 489,736.80
1,105,967.50

$ 5961949.16 $ 5,3811353.50

$ 771,224.61 230,990.27

$ $ 1,002,214.88 $

168,837.20 $ 168,837.20 $

$ 79,446,012.77 1,046,183.77 1,046,183.77 $ 79,446,012.77

$ 839,861 .21 78,434.14
771,224.61 230,990.27 79,446,012.77 -131,492.97 2,177,305.17
$ 83,412,335.20

$ 1,002,214.88 $ 914,310.22 $

1,046,183.77 $ 79,446,012.77 $ 596,949.16 $ 88,793,688.70

-3-

SAVANNAH STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30. 2001

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Regular Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
Endowment Other Net Increase in Fair Value of Investments Interest on Loans Receivable Adjustments Prior Years" Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Georgia State Financing and Investment Commission Other Additions Recovery of Prior Years" Cancelled Loans
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Refunded to Granters Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Loan Cancellations and Write-Offs Administrative and Collection Costs Expended for Plant Facilities
Capitalized Noncapitalized Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Mandatory Investment Income for Principal
Non mandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net lncrease/(Decrease) for the Year
FUND BALANCES JULY 1. 2000

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$ 28,960,086 .76

$ 18,331 ,820.78 1,282,817.02 7,785.10 $ 296 ,173.26
45,005.09
1,429.91
175,920.69 36,438.05

3,582.97 3,230.00
16,602.01

5 486.00 $ 29,172,445.50 $ 19,965,031 .16 $ 28,900.98

$ 24,866,437.21 $ 19,499,682.20 3,889,989.81 282,054.34 142,112.00

107,673 .61 10,917.23

$ 9,887.51 -1,425.47

$ 28,875,017.86 $ 19,923,848.54 $

8,462.04

$

-10,977.35

$

-190,791 .19

-15,534.52

$

-206,325.71 $

-10,977.35

$

91,101 .93 $

30,205.27 $ 20,438.94

871,182.27

-161,698.24

897,856.41

FUND BALANCES JUNE 30. 2001

$

The notes to the financial statements are an integral part of this statement.

-4 -

962,284.20 $ -131,492.97 $ 918,295.35

EXHIBIT "B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$ 1,479,535.00 27,019.34

$

31,914.47

273,325 .00

17,824.25

33,428.53 $

22,033.49

$

49,738.72 $ 1,835,341.36 $

$ 28,960,086.76

1,479,535.00 18,358,840.12
1,282,817.02 11,368.07
604,642.73

22,400 .00

45,005 .09 55,828.53 19,254.16 16,602.01

197,954.18 36,438 .05

$ 2,296 ,245.68

2,296,245.68

1,582,529.02 2,086,427.79

1,582,529.02 2,086,427.79

5 486.00

22,400.00 $ 5,965,202 .49 $ 57,039,060.21

$

0 .00

$

$

1,964.69

1,582,529.02 99,509.66

$

0.00 $ 1,684,003.37 $

0.00

$ 44,366,119.41

3,889,989.81

282,054 .34

142,112.00

$ 0.00 $

109,638.30

10,917.23 9,887.51 -1,425.47

615,113 .38

1,582,529.02 99,509.66
615 ,113.38

615,113.38 $ 51,106,445.19

$

10,977.35

$

$

15,534.52

$

10 977.35 $

15,534.52 $

$

60,716.07 $ 166,872.51 $

941 498.81

1,964.69

$

0.00

190,791 .19

0 .0 0

0 .00

190,791.19

$

0.00

213,191.19 $ 5,350,089.11 $ 5,932,615.02

832,992 .58

74,095,923 .66

77.479,720.18

$ 1,002,214.88 $ 168,837.20 $

1,046,183.77 $ 79,446,012.77 $ 83,412,335.20

-5-

SAVANNAH STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 2001

EXHIBIT"C"

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Endowment Income Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources
Total Revenues
EXPENDITURES AND MANDATORY TRANSFERS
Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships Mandatory Transfers for: Investment Income for Endowment Principal
Auxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units
Total Expenditures and Mandatory Transfers
OTHER TRANSFERS AND ADDITIONS/<DEDUCTIONS)
Excess of Restricted Receipts over Transfers to Revenues
Refunded to Granters Transfers for Renewals and Replacements Transfers for Capital Projects Prior Period Adjustments (Net) Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Total Other Transfers and Additions/(Deductions)

UNRESTRICTED

RESTRICTED

TOTAL (Memorandum
Only)

$ 18,299,248.00

$ 18,299,248.00

5 ,673,718 .01

5,673,718.01

279,137.19 $ 17,927,625.85

18,206,763.04

2,917 .15

1,227,608.89

1,230,526.04

9,460.49

9,460.49

256,453.97

256,453.97

78,533.00

78,533.00

176,349.54

176,349.54

4,109,118.81

4,109,118.81

419 ,598.06

419,598 .06

$ 28,960,086 .76 $ 19,499,682.20 $ 48,459,768.96

$ 10,541,669.42 $

271,907.82 $ 10,813,577.24

28.95

1,648,473.22

1,648,502.17

380,460.31

2,027,183.28

2,407,643.59

3,174,082.60

348,361.55

3,522,444 . 15

2,317,872.12

190,903.47

2,508,775.59

4,246,784.89

1,252,455.42

5,499,240.31

3,691,045.32

3,691,045.32

514,493 .60

13,760,397.44

14,274,891.04

10,977.35

10,977.35

920,784 .90 1,742.24
1,260,665.56 194,714.90
1,169,102.39 342,979.82

920,784.90 1,742.24
1,260,665.56 194,714.90
1,169,102.39 342,979.82

$ 28,756,427.02 $ 19,510,659.55 $ 48,267,086.57

$

183,294.62 $

183,294.62

-142, 112.00

-142,112.00

$

-190,791 .19

-190,791.19

-15,534 .52

-15,534.52

201,441.51

201,441.51

-107,673.61

-107 673.61

$

-112 557.81 $

41,182.62 $

-71 375.19

Net lncrease/(Decrease) in Fund Balances

$

The notes to the financial statements are an integral part of this statement.

-6-

91,101.93 $

30,205.27 $==12_1.._,3.,.0=7.=20=

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Savannah State University is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Savannah 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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit ofthe Board ofRegents of the University System of Georgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, research, public service, etc.
RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.
-7-

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
LOAN FUNDS
The fund used to account for resources which have been made available for financial loans to students.
ENDOWMENT AND SIMILAR FUNDS
The fund used to account for endowment funds and term endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized. Term endowment funds are similar to endowment funds except that upon the passage of a stated period of time or the occurrence of a particular event, all or part of the principal may be expended.
PLANT FUNDS
UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes.
RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties.
INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations.
BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis of accounting is defined as that method of accounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period.
-8-

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with accounting principles generally accepted in the United States ofAmerica, which provide for the recording ofencumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with accounting principles generally accepted in the United States of America.
Compensated absences represent obligations ofthe University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $1,022,492.91 and a related net current year expenditure of $119,658.76 have not been reported in the current funds as required by accounting principles generally accepted in the United States of America.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but differs from accounting principles generally accepted in the United States ofAmerica in that immaterial adjustments should be reported as current period revenues and expenditures. The effect ofthis departure is deemed to be immaterial to the fair presentation ofthe financial statements.
To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses.

-9-

SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET The Board ofRegents ofthe University System ofGeorgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of2000-2001. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

A comparison of anticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below:

Resident Instruction Personal Services: Education, General and Departmental Services Operating Expenses: Education, General and Departmental Services Capital Outlay

$ 182,944.05
$ 64,206.14 $ 202,503.68

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the Board object class level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.

ACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Board ofRegents ofthe University System of Georgia -Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method.

Inventories of goods for resale are valued at cost using the first-in, first-out method.

- 10 -

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt ofgoods and services that will benefit periods subsequent to the balance sheet date.
MEMORANDUM ONLY -TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia 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 ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, 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 ofdevelopment authorities created by the laws ofthe 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, or 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.
- 11 -

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.

The treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2001, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

Category 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name.

Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name.

Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 3 383 838.34 $ 5 459 )37 03 $ 320 752 5) $ 372 )77.94 $ 4 766 206.58

CATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as of June 30, 2001, are shown below:

Board of Regents Short-Term Fund Total Return Fund

$ 263,932.63 952,797.66

Total Investments

$ 1,216,730.29

Funds invested in an investment pool managed by another governmental entity are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool.

- 12 -

SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 2001:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 575,975.16 51,247,485.42 8,172,869.42 13,956,791.54 5,492,891.23

Total Investment in Plant

$79.446.012.77

NOTE 4: RISK MANAGEMENT

Savannah State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements of the Board of Regents of the University System ofGeorgia - Administrative Central Office. All units ofthe University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $2,000,000.00 per person and dental coverage up to an annual maximum of$1,000.00 per person. Blue Cross Blue Shield ofGeorgia processes medical and dental claims in accordance with the Health Benefits Plan as established by the Board of Regents. As of January 1, 2001, Express Scripts, Incorporated was contracted with to process pharmacy drug claims in accordance with the Pharmacy Benefit Program portion of the Health Benefits Plan.

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 ofaccidental 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. The University, as an organizational unit ofthe 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.

- 13 -

SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 4: RISK MANAGEMENT

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 SelfInsurance Fund.

NOTES: RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Savannah State University participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

Funding Policy Employees of the University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2001, the employer contribution rate was 11.29% for covered employees. In addition, the University contributed 2.33% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$1,404,295.16 $ 1,462,846.34 $ 1,462,909.44

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death

- 14 -

SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTES: RETIREMENTPLANS
REGENTS RETIREMENT PLAN
Plan Description benefits for eligible faculty and principal administrators. 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 Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly of the State ofGeorgia. The employer contributes 8.81 % ofthe participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
The University and the covered employees made the required contributions of $316,943 .16 (8.81 %) and $180,390.18 (5%), respectively.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Savannah State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. If a member has less than$ 3,500.00 credited to his/her account, the Board ofTrustees has the option of requiring a lump sum distribution to the member in lieu ofmaking 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 and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross 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.

- 15 -

SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE5: RETIREMENTPLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 2001 amounted to $30,717.76 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 6: LEAVE POLICIES
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Certain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.
NOTE7: 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 expenditures which are disallowed under grant terms. The amount ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Savannah 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, 2001.
NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life
- 16 -

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the University System of Georgia are eligible for these postemployment 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.

As ofJune 30, 2001, there were 163 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2001, Savannah State University recognized as incurred $412,188.88 of expenditures, which was net of $141,549.88 of participant contributions.

NOTE9: ENROLLMENT

The equivalent full-time student enrollment of Savannah State University was as follows:

Regular Term Fall Semester, 2000 Spring Semester, 2001

1,728 1.647

Average

Summer School, 2000

- 17 -

SUPPLEMENTARY INFORMATION - 19 -

SAVANNAH STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30, 2001

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$

965,369.87 $

656,602.77

75,388.80

14,574.79

1,277,907.34

61,988.80

Total Assets

$ 2,989,843.57 $ ==6==1=,9==8=8.=80=

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Salaries Payable Student Deposits Due to Other Fund Groups
Total Liabilities
Fund Balances Unrestricted

$ 2,644,005.47 $ 162,015.65

58,650.00

$ 2,806,021.12 $

58,650.00

183,822.45

3,338.80

Total Liabilities and Fund Balances

$ 2,989,843.57 $ ===6=1,=9=88==80=

See notes to the financial statements.

- 20 -

EXHIBIT "E"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$

800.00 $ 118,443.62 $ 1,146,602.29

369,128.87

9,246.65

1,034,978.29

517,736.35

593,125.15

14,574.79

1,277,907.34

$

887,665.22 $ 127,690.27 $ 4,067,187.86

$

4,769.38

2,948.32

60,575.00

171 939.84

$

240 ,232.54

$ 2,707,424.85 164,963.97 60,575.00 171,939.84
$ 3,104,903.66

647,432.68 $ 127,690.27

962,284.20

$

887,665.22 $ 127,690.27 $ 4,067,187.86

- 21 -

SAVANNAH $TATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 2001

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net lncrease/(Decrease) for the Year
FUND BALANCES JULY 1, 2000
FUND BALANCES JUNE 30, 2001

RESIDENT

LOTTERY FOR

INSTRUCTION EDUCATION

$ 24,252,541.48 $ 131,517.05

258,940 .00 3,338.80

$ 24,384,058.53 $

262,278 .80

$ 24,326,240.79 $

258,940.00

105,008.41 14 509.97

2,665.20

$ 24,445,759.17 $

261,605.20

$

-61,700.64 $

245,523.09

673.60 2,665.20

$

183,822.45 $ ======3,=33=8=.8=0=

See notes to the financial statements.

- 22 -

EXHIBIT "F"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 4,168,342.33 $ 280,262.95 $ 28,960,086.76

38,733 .82 36,345.05

2,331.02 93.00

175,920.69 36,438.05

$ 4,243,421.20 $ 282,686.97 $ 29 ,172,445.50

$ 281,256.42 $ 24,866,437.21

$ 3,889,989.81

3,889 ,989.81

-4 180.56

587.82

107,673.61 10 917.23

$ 3,885,809.25 $ 281,844.24 $ 28,875,017.86

$ -190,791.19 -15,534.52

$ -190,791.19 -15,534.52

$ -206,325.71

$ -206,325.71

$

151,286.24 $

842.73 $

91,101.93

496 146.44

126,847.54

871,182.27

$

647,432.68 $ 127,690.27 $

962,284.20

- 23 -

SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30, 2001

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources
Total Revenues
EXPENDITURES
Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/{DEDUCTIONS)
Transfers for Renewals and Replacements Transfers for Capital Projects Prior Period Adjustments (Net) Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Total Other Transfers and Additions/(Deductions)

Net lncrease/(Decrease) in Fund Balances
See notes to the financial statements.

- 24 -

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 18,040,308.00 $
5,468,068.10 279,137.19 2,917.15 176,349.54
285,761.50
$ 24,252,541.48 $

258,940.00 258,940.00

$ 10,344,519.22 $
28.95 380,460.31 3,112,292.80 2,036,615.70 4,246,784.89 3,691,045.32 514,493.60

197,150.20 61,789.80

$ 24,326,240.79 $

258,940 .00

$

117,007.08 $

3,338.80

-105 008.41

$

11 998.67 $

-2,665.20 673.60

$

-61,700.64 $ ====67=3=.6=0=

EXHIBIT "G"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 18,299,248.00

$ 205,649.91

5 ,673 ,718 .01

279 ,137.19

2,917.15

176,349.54

$ 4 ,109,118.81

4,109,118.81

59,223 .52

74,613 .04

419,598 .06

$ 4,168,342.33 $ 280,262.95 $ 28,960,086.76

$ $ 281,256.42

10,541,669.42 28.95
380,460.31 3,174 ,082.60 2,317,872.12 4,246,784 .89 3,691,045.32
514,493.60

$

920,784.90

1,742.24

1,260,665.56

194,714.90

1,169,102.39

342,979.82

920 ,784.90 1,742.24
1,260,665.56 194,714.90
1,169,102.39 342,979.82

$ 3,889,989.81 $ 281,256.42 $ 28,756,427.02

$

- 190,791.19

$

-190 ,791.19

-15,534 .52

-15,534.52

79,259.43 $ 1,836.20

201,441.51

-107 673.61

$

1,836.20 $ _ _-1;..1.;;_2,<.;;.5.;.;57.;_.8;_;1_

$

151,286.24 $

842.73 $ ===9=1 ,=10:1=.93=

- 25-

SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2001

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 18,040,308.00

$ 1,479,535.00

6,212,233.48 $ 19,499,682.20

333,772 .87 $

22,400.00

$ 24,252,541.48 $ 19,499,682.20 $ 1,813,307.87 $ _ _ _2....;2,'"""40_0_.o_o_

EXPENDITURES

Personal Services:

Education, General and Departmental Services $ 17,274,023.05

Sponsored Operations

$ 2,649,438.22

Operating Expenses:

Education, General and Departmental Services

6,198,523 .74

Sponsored Operations

16,850,243.98

Capital Outlay Special Funding Initiative

853 ,694.00

$ 1,682,038.68 $

0.00

Excess of Revenues over Expenditures

- - - - - - - $ 24,326,240.79 $ 19,499,682.20 $ 1,682,038.68 $

0.00

$

-73,699.31 $

0.00 $

131,269.19 $ ======2=2=,4=0=0.=00==

(1) To eliminate tuition waivers not budgeted and to reclassify current year transfers budgeted as Revenues.

See notes to the financial statements .

- 26 -

SCHEDULE "1 "

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$ 19,519,843.00 26 ,068,088.55 $

$ 19,519,843.00 $ 19,519 ,843 .00 $

-498,959.08

25 ,569 ,129.47

27 ,816,178 .00

0.00 -2,247,048.53

$ 45,587,931 .55 $

-498,959.08 $ 45,088,972.47 $ 47,336,021 .00 $ _ _-2-'-,2_4_7'--,0_48_.5_3_

$ 17,274,023 .05 2,649,438 .22
6,198,523.74 $ 16,850,243.98
1,682,038.68 853,694 .00

$ 17,274,023.05 $ 17,091,079.00 $

2,649,438.22

3 ,986,643 .00

-514,493 .60

5,684,030.14 16,850,243 .98
1,682,038.68 853,694.00

5,619,824 .00 18 ,305 ,246.00
1,479,535.00 853,694 .00

-182,944 .05 1,337,204.78
-64 ,206 . 14 1,455,002.02 -202 ,503 .68
0.00

$ 45,507 ,961 .67 $

-514,493.60 $ 44,993,468.07 $ 47,336,021 .00 $ _ _2-,'-3_4_2,'--5_52._9_3_

$

79,969.88 $

15,534.52 $

95,504.40

$ ====9=5 =50-4~.40~

- 27 -

SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 200 1

SCHEDULE "2"

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

258 ,940 .00 $ 258,940.00 $ - - - - - -0.0-0

EXPENDITURES

Equipment, Technology and Construction

Trust Fund

$

Special Funding Initiatives

138,940.00 $ 138,940.00 $

120,000.00

120,000.00

0.00 0.00

$

_ _ _ _ 258,940.00 $ 258,940.00 $

__;0,_.00_

Excess of Revenues over Expenditures

$ =====o==oo=

$ =====O=.O=O=

See notes to the financial statements.

- 29 -

SAVANNAH STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30, 2001

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

BALANCE JULY 1, 2000

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

325,975.16

48,592,996.34

7,963,515.26

12,276,148.71 $ 1,245,230.23 $ 489,412.41

4,937,288.19

561!603.04

$ 74,095,923.66 $ 1!806,833.27 $ 489,412.41

See notes to the financial statements.

- 30 -

SCHEDULE "3"

ADDITIONS
PLANT FUND UNEXPENDED

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

DEDUCTIONS DISPOSALS/ DELETIONS/ ADJUSTMENTS

BALANCE JUNE 30, 2001

$

250,000.00

$

575 ,975.16

1,030,547.65 $

1,623 ,941.43

51 ,247,485.42

209,354 .16

8,172 ,869.42

92,627 .21

462,486.36 $

609,113 .38

13,956,791 .54

6 000.00

5 1492,891.23

$ 1,582,529.02 $

2,086,427.79 $

615,113.38 $ 79,446,012.77

- 31 -

SAVANNAH STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30, 2001

NET INVESTMENT IN PLANT Investment in Plant Facilities
RESTRICTED Deficit
UNRESTRICTED Designated For Bus Replacement Reserve For Intercollegiate Athletics For Inventory Reserve For Renewals and Replacements Reserve For Subsequent Years' Expenditures For Uncollectible Accounts Surplus Regular Lottery for Education

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTTERY. FOR

AUXILIARY

EDUCATION

ENTERPRISES

$

91,735.19

$

-145,783.23

517,736.35

41,560.42

232,309.18 43,170.38

50,526.84

$

$

183!822.45 $

3,338.80 3,338.80 $

6471432.68

$ 183,822.45 $

3,338.80 $ ==64=7=,4=32=.6=8=

See notes to the financial statements.

- 32 -

SCHEDULE "4"

STUDENT ACTIVITIES

RESTRICTED

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 79,446,012.77 $ 79,446,012.77

$ -131,492.97

$ -131,492.97

$ 127,345.27 345.00

$

58 ,123.61

988,060.16

$

58,123.61

-145,783.23

609,471.54

988,060.16

359,654.45

85,075.80

$ 127,690.27

$ 168,837.20

$

168,837.20 $ _ _1..._,0_4-'"6,.._18"-'3'-'-7. '--'-7-

219,364.04 3,338.80
$ 2,177,305.17

$ 127,690.27 $ -131,492.97 $ 168,837.20 $

1,046,183.77 $ 79,446,012.77 $ 81,491,824.97

- 33 -

SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2001

SCHEDULE "5"

Totals per Annual Supplement

Accruals June 30, 2000 June 30 , 2001

Adjustments

Shared Services on Jointly Staffed Personnel

Armstrong Atlantic State University

Johnson,

Otis

Pierre-Clark, Martine

Shavers,

Sonja

Georgia Southern University

Davies,

David

SALARIES $ 17,292,716.58 $

TRAVEL 405,277.03

-204,947.00 164,963.97

-3 ,767.75 -1,679.34 -1,679.34
-250.00
$ 17,245,357.12 $======40=5=,2=7=7=.0=3

See notes to the financial statements.

- 34 -

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

SAYANNAH STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-548-98-02 FS-548-98-04 FS-548-99-02 FS-548-99-03 FS-548-99-04 FS-548-99-05 FS-548-99-06 FS-548-99-08 FS-548-99-09 FS-548-00-01 FS-548-00-02 FS-548-00-03 FS-548-00-04 FS-548-00-05 FS-548-00-06 FS-548-00-07 FS-548-00-08 FS-548-00-09 FS-548-00-10 FS-548-00-11 FS-548-00-12

Unresolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - 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

EXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balance Finding Control Number: FS-548-98-02

As of June 30, 2001, the NROTC deficit stands at $131,072.25. The administration has asked the Board ofRegents to assist the institution in finding ways to eliminate the deficit. The Office of Institutional Advancement is also working towards eliminating the deficit.

EMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03

1) Leave accrual often month employees: Identified finding was addressed and corrective action taken as of February 28, 2001.

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SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03
2) Employees were charged in error. This error has been corrected.
3) Documentation in file: Documentation has been secured and placed in the employee's file.
4) We are still investigating this finding. This finding will be resolved in subsequent years.
5) Employees' time sheets and overtime: The Office of Human Resources has implemented a campus-wide procedure to address the signing of timesheets. This procedure requires the identification ofa designee authorized to sign timesheets in the absence ofthe supervisor. Further, Human Resources has designed a document which requires the approval of the supervisor (per policy) to request overtime for qualifying staff. This procedure is in compliance with Employee Handbook.
6) The University has stressed the importance of safeguarding confidential documents. This is believed to be an isolated incident and procedures have been implemented to correct this problem.
7) A receivable was set up for the employee, but has not yet been collected. A journal entry for the benefits portion is being prepared for posting.
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05
1) This problem has been corrected.
2) This problem has been corrected.
3) An account receivable was set up for the garnishment of$ l ,054.50. The receivable has not been collected yet. Efforts will be made to locate the employee.
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SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05
4)- The University has contacted the Georgia Department ofRevenue about the receivable. They have requested additional information, which the University is working on providing.
5) The corrections to travel and salary were related to incorrect social security numbers used in the CUFA System. Once a number is used in CUFA, it becomes difficult to change the historical records. During the year under review, University staff communicated the adjustments to the Georgia Department of Audits.
6) Expenditure vouchers were placed in locked cabinets. The department is working on strategies to make a sign-out process more effective.
CASH AND CASH EQUIVALENTS REVENUES/RECENABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-548-00-01
The University is in the process of hiring and training additional personnel to address the issue ofinternal controls. The controller has been removed from certain :functions such as cash collecting, receipting and invoice preparations. The department is undergoing major re-organization ofduties and responsibilities. The scheduled completion is January 2002.
REVENUESIRECENABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-00-02
Students are only allowed to complete registration without full payment of fees in two circumstances. Each occurrence is supported by the expectation of receiving Financial Aid. The Cashier's Office is presented with a Deferment authorized by the Vice President for Business and Finance or the Vice President for Academic Affairs. There are situations where a student is awarded Financial Aid and it is subsequently removed from the student's account.
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SAYANNAH STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES1DISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-00-03
With the re-organization will be the re-training and possible re-assignment of staff. Monitoring of Accounts Payable and Purchase Orders will be at the top of this year's agenda.
EMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-00-04
1) Accumulation of sick leave by summer faculty: Beginning with year 1997, the University conducted an audit of leave balances for all faculty employed over the summer months. Ending balances were compared to beginning balances. The findings confirmed that these identified faculty members inadvertently accrued sick leave time when employed during the summer months. These faculty members were advised and their account balances were adjusted in February, 2001.
2) Vacation and sick leave report: (a) All impacted employees were identified. A process was established through the Peoplesoft Payroll/HR System to allow the HRIS Coordinator to log on to the Leave Accrual Adjustment panel, go to the adjustment history screen and make the necessary corrections. (b) Copies of identified staff members have been obtained. Further, an internal procedure will be enforced to return any time sheet which is not accompanied by the appropriate leave form. (c) The identified employee's leave balance has been adjusted to correctly reflect vacation time using the method outlined above.
3) Personnel file documentation: Beginning with year 2000, Human Resources required all documentation supporting summer salaries/stipends to be provided on an individual basis.
4) Employees' time sheets and overtime: The procedure will be enforced to address the signing of time sheets. Direct contact (written and verbal) has been made to supervisory personnel by the Office of Human Resources to reinforce the policy/procedure relating to overtime approvals.
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SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
GENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-00-05
The University is in the process of bringing in a consultant from another institution in the system to assist staff in this process.
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-00-06
1) The task of filing check vouchers has been assigned to an employee instead of the students.
2) This problem has been corrected.
3) A procedure will be enforced to review the cash summaries on a daily basis by the controller to ensure deposits submitted were made timely and recorded accurately.
4) The Office ofBudget, Contracts and Grants will review revenues and expenditures and make sure that it balances before we close the books for the year.
GENERAL LEDGER Failure to Correctly Maintain Payroll Agency Funds Finding Control Number: FS-548-00-07
University staff worked at reconciling several agency accounts during the year under review. Those accounts with remaining balances were consolidated and posted to one account in the following fiscal year.
GENERAL LEDGER Inadequate Documentation of Journal Entries Finding Control Number: FS-548-00-08
The University will file all journal entries in binders to help to alleviate the problem of missing entries. Beginning the next year, an employee, instead of students, was assigned the task of filing the entries.
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SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
GENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-00-09
The balances in these dormant restricted funds were expended with permission from the grantors.
GENERAL LEDGER Failure to Monitor Travel Advances Finding Control Number: FS-548-00-10
During the year under review, the University actively pursued employees with outstanding advances. Letters were sent to those individuals reminding them of their debt and funds were collected from employees leaving the University. We are working towards stricter enforcement of the travel advance policy.
GENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-00-11
The University has a policy to secure a completed Private Trust Agreement before establishing new accounts. Letters and calls were made to donors to secure letters ofintent on all new scholarship accounts. The University is working towards stricter enforcement of this policy.
FUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-00-12
An effort is made to draw down funds on a timely basis. Has shown great progress. Will continue to improve.
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SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

F A-548-98-02 F A-548-98-04 F A-548-98-05 F A-548-98-07 F A-548-99-01 F A-548-99-02 F A-548-99-03 F A-548-99-05 F A-548-99-07 F A-548-99-10 FA-548-00-01 F A-548-00-02 FA-548-00-03 F A-548-00-04 F A-548-00-05 F A-548-00-06 FA-548-00-07

Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/ Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

REPORTING Expenditures in Excess of Authorization Federal Pell Grant Program (CFDA 84.063) Finding Control Number: FA-548-99-07

The Office of Budgets, Contracts and Grants and the Office ofFinancial Aid are working together to resolve the issue of prior year balances. The Federal program has closed its books for fiscal year 1999. As such, the outstanding balance for this fiscal year has became institutional loan. We will analyze this account, identify the loan by student and assign this loan to accounts receivable for collection. Hopefully, this will be done in fiscal year 2002.

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SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ALLOWABLE COSTS/COST PRINCIPLES Time and Effort Report Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-01
The Office of Research and Sponsored Programs is charged to take the lead role to make sure that time and effort reports for all Federal programs are submitted to the Office of Business and Finance.
ELIGIBILITY Overpayment of Student Financial Aid Weakness in Internal Control Structure Student Financial Aid Cluster Program Finding Control Number: FA-548-00-03
The finding is only partially corrected. Planned corrective action has been implemented to correct noted deficiency, however the institution is waiting for a more definitive ruling from the Department ofEducation Case Management Division regarding one ofthe stated conditions.
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-04
The new software, Peoplesoft, will be able to handle grant award numbers after October 1, 2001. An inventory was conducted in June 1999 and is scheduled for every two years. Project directors have been charged to inform Federal agencies ofdisposals before calling surplus management. The University has policies and procedures to ensure that Title ill program purchases are utilized for the Title ill program.
SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-00-06
Requested information was sent to the Case -Management Specialist ofthe Department of Education on October 19, 2001, however the University is still awaiting their response regarding the finding and final resolution.
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SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-548-01-01
Our examination of the internal accounting control procedures revealed that the University did not provide for adequate separation of duties in the performance of the following accounting functions and related procedures:
1) Cash custody and receipting functions were not separated from cash disbursement and general ledger functions.
2) Cash collection functions and maintenance ofdetail accounts receivables records were not separated from general ledger functions.
3) Deposit preparation functions were not separated from cash receipts functions.
4) Banner receivable and accounts receivable functions were not separated from the check disbursement functions.
5) Miscellaneous invoice preparation and accounts receivable functions were not separated from cash receipts and general ledger functions.
6) Accounts payable and disbursement functions were not separated from general ledger functions.
7) Check signing functions were not separated from voucher preparation and approval for payment functions.
These conditions were the result of management not assigning employee duties in a manner to adequately safeguard assets and/or promote efficiency and accuracy in key accounting functions. The University should review the accounting procedures in place, design procedures that would enhance segregation of duties relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions.
CASH AND CASH EQUIVALENTS Theft of Funds Finding Control Number: FS-548-01-02
During the year under review, the University discovered that a theft of funds had occurred. An employee in the Cashier's office cashed student financial aid refund checks without proper
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SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Theft of Funds Finding Control Number: FS-548-01-02
endorsement. In addition, manual receipts were issued to students without properly receipting the funds in the general accounting receipting system.
This condition occurred because management failed to provide adequate internal controls over the cash collections and check disbursements functions. Procedures should be implemented to ensure that internal controls adequately safeguard cash and cash equivalents of the University.
REVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out of State Tuition Fee Waivers Finding Control Number: FS-548-01-03
Our examination of fee waivers for the year under review, revealed that management failed to monitor out of state tuition fee waivers. As a result, waivers for out-of-state tuition granted by the University exceeded the amount allowable per Board of Regents policy by $147,484.52.
This deficiency occurred because management did not comply with the Board of Regents Policy Manual, Section 704.0302 which states, "the number of such waivers in effect at any time does not exceed two-percent ofthe equivalent full-time students enrolled at the institution in the fall semester immediately preceding the semester for which the out-of-state tuition is to be waived". The University should follow policies and procedures to ensure that out-of-state tuition fee waivers are within the allowable limit.
REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Record Expenditures and Accounts Receivable Finding Control Number: FS-548-01-04
For the year under review, the University failed to record expenditures totaling $196,875.72 which consisted of the employer's portion of health and life insurance for six months. In addition, six months of retiree's portion of health and life insurance in the amount of $84,771.02 were not recorded as accounts receivable. This situation occurred because ofmanagement's failure to properly monitor general ledger account balances throughout the year. The University should develop and implement policies and procedures to ensure that expenditures and accounts receivable are properly recorded on an ongoing basis.
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-01-05
_An examination of the accounts payable subsidiary records was performed to test transactions for validity and accuracy. The following deficiencies were disclosed:
1) Payments ofaccounts payable were incorrectly charged to expenditure accounts rather than as liquidation of accounts payable.
2) Residual accounts payable balances were not transferred to the University's surplus account after final payment of all associated invoices.
These deficiencies occurred because the University did not have procedures in place to adequately monitor accounts payable. The University should develop and implement policies and procedures to ensure that accounts payable are adequately monitored and adjusted as necessary on a timely basis.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Accounting of Extra Compensation Paid to Employees Finding Control Number: FS-548-01-06
The University recorded extra compensation paid to three employees as Per Diem and Fees. This practice resulted in employees receiving compensation without appropriate payroll deductions being made. The Board ofRegents Policy Manual, Paragraph 803 .1404 states, "employees receiving extra compensation shall be paid said extra compensation through the institutional payroll".
This deficiency was the result of the University's failure to adhere to established policies and procedures concerning accounting for employee compensation. The University should follow policies and procedures to ensure that employee compensation is paid through the University's payroll.
EMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-01-07
Our examination of employee compensation records for fifty employees revealed the following deficiencies:
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-01-07
1) The vacation and sick leave report revealed that:
a) Eleven employees had leave slips in their personnel files but the leave was not posted to the leave report.
b) Five employees were charged for leave taken, however, no documentation was available to indicate leave taken.
2) Documentation in one employee's personnel file indicated that the employee was on leave for an extended illness; however, this documentation did not indicate specific dates the employee was on leave.
3) A review of three employees' weekly time sheets revealed that approval for overtime is obtained after being worked. According to the University's Employees Handbook, overtime must have prior approval by the Vice President of Business and Finance before being worked.
4) For the pay period tested, the University was unable to locate three cancelled checks issued to employees not on direct deposit.
These deficiencies were the result ofthe University's failure to have policies and procedures in place to determine that personnel files contained adequate documentation, annual and sick leave was correctly calculated and recorded and canceled checks were properly maintained. The University should implement policies and procedures to ensure that personnel files and canceled checks are properly maintained. In addition, the University should adhere to the overtime approval policy.
GENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-01-08
At June 30, 2001, the University had nineteen agency funds that had deficit balances totaling $137,344.49. In addition, the University failed to provide purpose statements for nine new individual agency funds established during the fiscal year.
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-01-08
These deficiencies were the result of the University disbursing funds prior to or in excess of the receipt of funds and from management's failure to establish agency funds in accordance with Board ofRegents policies and procedures. The University should implement procedures to ensure that all funds are received prior to disbursement and new accounts are supported by required purpose statements. The University should seek reimbursement for the deficit balances from the organizations involved.
GENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-01-09
For the year under review, the University failed to reconcile the Banner System to the general ledger and could not provide adequate supporting documentation for balance sheet clearing accounts at June 30, 2001. These clearing accounts consisted ofan accounts payable balance of(-)$67,568.53, a financial aid balance of(-)$134,267.17, a returned checkbalanceof$3,587.74 and an unapplied cash balance of (-)$148,325.81.
These account balances resulted primarily from interfaces between the University's Banner Student Registration System and the University's accounting system. Management was unable to produce subsidiary records from the Banner Student Registration System to support the balances recorded on the accounting system's general ledger.
The University should investigate the balances in the Balance Sheet clearing accounts, determine the cause and make appropriate adjustments to the accounting records to ensure that assets and liabilities are accurately represented on the accounting records. Procedures should be implemented to ensure that detailed subsidiary records are generated from the Banner Student Registration System that support the balances on the general ledger.
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-01-10
Our examination and testing for the year under review revealed the following deficiencies in accounting for financial transactions by Savannah State University:
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-01-10
1) Twelve exceptions were noted in our expenditure sample of seventy-five vouchers. One voucher could not be located, two vouchers did not have adequate documentation, three travel vouchers were incorrectly calculated and six vouchers were not properly approved.
2) Numerous expenditure vouchers could not be located and therefore were not available for examination.
3) Petty cash counts were performed and revealed a cash shortage of $966.67.
4) Checks outstanding for more than ninety days were not voided in a timely manner.
5) Numerous audit adjustments were necessary to rec~ncile salary and travel amounts reported to the Georgia Department of Audits with the amounts recorded as salaries and travel in the general ledger.
6) Manual receipts issued by the University's Cashier's office were not pre-numbered.
7) Restricted Fund revenues were not recognized in an amount equivalent to the Restricted Fund expenditures. Variances were identified and adjustments were made.
8) Student Activities Fund expenditures were not properly approved by the Vice President of Student Affairs.
9) Agency Fund receipts were not recorded in a timely manner.
10) Salaries for two employees were redistributed from Auxiliary Enterprises Fund to Resident Instruction Fund without proper authorization and adequate documentation.
These deficiencies occurred because the University failed to have adequate accounting policies and procedures in place. The University should review current accounting policies and procedures, identify weaknesses and implement procedures to ensure that expenditure vouchers are maintained with adequate documentation, revenue and expenditures are properly approved and recorded, salaries and travel are properly reconciled and the accounting records are monitored.
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SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-01-11
Two restricted fund projects had no activity during the year under review. It was noted that the grant period had ended on both projects; however, fund balances remained on these projects at June 30, 2001.
These dormant accounts are a result ofmanagement's failure to monitor the activity occurring in the Restricted Funds and return excess funds promptly to the granter when the project is complete. The University should implement procedures that will provide proper monitoring ofthe Restricted Fund and grant periods to ensure that funds are returned to the granter when the project is complete. The University should contact the granters to determine ifthe dormant account funds should be returned.
GENERAL LEDGER Excessive Journal Entries/Lack of Documentation Finding Control Number: FS-548-01-12
An excessive number ofjournal entries were recorded during the year under review. Numerous of these journal entries were not available for examination and others lacked adequate documentation. This situation occurred because ofthe University's failure to properly review and ensure thatjournal entries were adequately documented and maintained. The University should develop procedures to ensure that all journal entry transactions are properly maintained and supported by adequate documentation.
GENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-01-13
During the year under review, management failed to correctly maintain the payroll deductions and employer liability accounts as follows:
1) Variances existed between monthly receipts and disbursements for many of the payroll agency accounts. Management failed to perform monthly reconciliations and to identify vanances.
2) The employee payroll deduction (health, life and dental) accounts had a net deficit of $265,635.41. Also, the U.S. savings bond, Federal withholding tax, state withholding tax and credit union accounts had deficit balances totaling $68,519.83.
3) The employer liability (health and life) accounts had a net balance of$327,264.41 which management could not determine the proper disposition.
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SAYANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-01-13
The deficiencies were the result of the management's failure to properly monitor and reconcile the payroll agency funds. Management should implement policies and procedures to ensure payroll changes and adjustments are made timely and monthly reconciliations ofreceiptsand disbursements are performed.
GENERAL LEDGER Failure to Monitor Travel Advances Finding Control Number: FS-548-01-14
An examination ofemployee travel advances revealed that management failed to monitor employee travel advances. As a result, travel advances were not cleared in a timely manner and were cleared without adequate documentation. These deficiencies occurred because of management's noncompliance with the University's travel policy which states "advances must be cleared within three days subsequent to returning to campus or the conclusion ofthe event". The University should follow policies and procedures to ensure that travel advances are monitored and properly cleared in a timely manner.
GENERAL LEDGER Subsidiary Ledger of Students Accounts Receivable not Reconciled with General Ledger Finding Control Number: FS-548-01-15
For the year under review, the Banner System subsidiary ledger for student accounts receivable was not reconciled with the general ledger. The receivables reflected were not supported by adequate documentation nor could the University determine ifthe accounts receivable recorded on the general ledger or Banner System subsidiary ledger were accurate. This condition occurred because management failed to ensure that the subsidiary ledger agreed to the general ledger. Procedures should be implemented by the University to ensure that subsidiary records are reconciled to the general ledger.
FUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-01-16
At June 30, 2001, the University's Restricted Funds had an overall deficit balance of$132,161.14. This deficit is a result of the University's lack of sufficient funds to meet obligations on a current basis. The Board ofRegents' Policy Manual Section 703.02 states that "when any situation develops which would create a deficit at an institution, the president shall take the appropriate corrective action".
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-01-17
At June 30, 2001, the University's Intercollegiate Athletics, a sub-fund ofAuxiliary Enterprises, had a deficit balance of $145,783.23. The deficit was a result ofthe University's lack of sufficient funds to meet obligations on a current basis. The Board of Regents Policy Manual Section 702.02 states that auxiliary enterprises "will be placed on a self-supporting basis, .and the State will not make an appropriation to finance its operations". The University should take appropriate action to ensure the deficit is funded.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-01
At June 30, 2001, the University's accounting records reflected $565.00 of expenditures for "University's Image Building". In a letter dated June 27, 2001, based on their review, the U. S. Department of Education (USDOE) determined these types of expenditures to be unallowable according to Federal Regulation (34 CFR 608.10). No refund ofthis unallowable cost was requested by USDOE. In the subsequent fiscal period, the University incurred additional expenditures of $45,605.86 for "University's Image Building", which also appear unallowable. The University's failure to adhere to the Federal regulations governing allowable activities will result in questioned cost in the audit report for the subsequent year.
ALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02
For the year under review, our examination of67 expenditure vouchers revealed the University failed to comply with the general provision for allowable cost according to 0MB Circular A-21, Sections C and J. The following were excessive and/or improper expenditures:
1) Eight vouchers failed to meet the criteria necessary to be considered an allowable advertising and/or public relations cost resulting in questioned cost of $76,814.89. The unallowable expenditures included and were not limited to payments for University logo design, radio advertisement and University memorabilia.
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SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02
2) Two vouchers, totaling $2,268.61, were for costs to frame student artwork. These expenditures failed to meet the requirements for activities that may be carried out under the grant.
3) Four vouchers for receptions and meals totaling $4,927.54 were unallowable entertainment expenditures.
4) One voucher included excessive rental cost of $3,985.10.
5) One voucher included unallowable meal costs of $13.00. This amount was approved in error as part of an employee's travel reimbursement.
Additional instances of noncompliance were noted while performing other audit procedures.
1) One travel voucher was considered excessive in the amount of $72.00. 2) Two vouchers exceeded the U. S. Department ofEducation specific budget allowances for
an international trip resulting in questioned cost of $1,810.40. 3) An examination of seven journal entries disclosed an instance of duplicate program
expenditures being recorded, resulting in questioned cost of $4,899.54. An on-site review performed by the U. S. Department of Education's Program Monitoring and Information Technology Services revealed the following:
1) International student travel and program costs in the amount of$15,912.00 were incurred after failing to obtain approval from the U.S. Department of Education.
2) Local travel for a 14-member delegation to attend the University's International Education Symposium was deemed to be excessive in the amount of$6,476.00.
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02
These conditions were the result of management's failure to comply with 0MB Circular A-21 and failure to adhere to restricted budget allowances mandated by the U'. S. Department of Education. The University should develop and implement policies and procedures to ensure that program expenditures are allowable according to Federal regulations and according to restricted approved budgets issued by the U. S. Department of Education. In addition, the University should develop a monitoring process to ensure that controls are being followed. The University should contact the U.S. Department of Education for resolution of this finding.
ALLOWABLE COSTS/COST PRINCIPLES Time and Effort Report Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-03
For the year under review, our examination of sixty time and effort reports for five employees revealed the following deficiencies:
1) Twelve time and effort reports for one employee lacked date of supervisory approval.
2) One time and effort report lacked supervisory appr~:>Val.
These conditions occurred because ofmanagement's failure to ensure all time and effort reports were properly prepared by employees.
0MB Circular A-21, requires that activity reports or other payroll documents used as original documentation for payroll and payroll charges be prepared and signed by the employee and responsible official when salaries are charged to a Federal program. Management should ensure that complete time and effort reports are prepared by all employees whose salaries are charged to a Federal program. Time and effort reports should contain all required elements so that management can rely on the reports to support accounting and payroll records.
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Internal Controls Student Financial Aid Cluster Program Finding Control Number: FA-548-01-04
During the year under review, the University failed to provide adequate internal controls for monitoring, recording and safeguarding student financial aid funds. The following deficiencies were noted:
1) Numerous University issued student financial aid checks were not distributed and were voided before determining if students were eligible to receive the funds. Procedures were not in place and operational to monitor the check voiding process and to ascertain if resulting funds should be disbursed to the student or returned to the proper grantor agency. The lack ofcontrols resulted in the University having unreconciled balances on the general accounting records relating to voided student financial aid checks.
2) Management failed to properly monitor the disbursement of student financial aid checks resulting in the theft of funds. An employee in the University's Cashier's Office cashed student financial aid checks issued to students without proper endorsements.
These deficiencies were the result of management not assigning duties in a manner to adequately safeguard assets and not having written policies and procedures for the voiding of student financial aid checks. The University should review the accounting procedures in place, design procedures that would enhance segregation of duties relative to the above control categories. In addition, management should determine if refunds are due to students and/or grantor agencies.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Programs U.S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-05
Our examination included a review ofthe internal accounting controls utilized by the University in maintaining their property management system and also included testing the system for compliance with Federal laws and regulations. The following conditions existed:
1) The University failed to maintain a property management system that identified Federal equipment purchases by Federal grant award number. This deficiency is system-wide and affects all Federal awards.
2) The University was unable to ensure appropriate Federal agencies were notified when disposing of equipment due to inadequacies in the property management records.
3) The Title III Equipment Inventory Report, as presented for audit purposes by the University's Title III office, contained numerous errors and omissions. The report listed numerous incorrect locations; incorrect, missing or duplicated University decal numbers; and various omissions ofFederal Share percentage, dates ofpurchase, purchase prices and manufacturer's serial numbers.
4) Eight computers, one printer and one scanner, were not being utilized by the Title III program for which they were acquired. This deficiency was previously noted in the audit report for June 30, 1998, June 30, 1999 and June 30, 2000, for two ofthe aforementioned computers. University personnel assert that the computers were being used in the Title III program as required. However, our examination noted that the computers were not being used in the Title III program as indicated by the University.
The University failed to have internal controls in place and operational to ensure compliance with Federal requirements for equipment as set forth in 34 CFR 74 and 0MB Circular A-110, Subpart C.34. The University should establish policies and procedures to ensure that equipment purchases are identified by fund sources and grant award numbers, property records are maintained in accordance with Federal requirements and physical inventories are conducted every two years. Also, the University should establish policies and procedures to ensure equipment purchases are utilized for the Title III program. The U. S. Department of Education should review these matters and determine appropriate action by the University to resolve this finding.
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SAYANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Costs: $10,809.60 Finding Control Number: FA-548-01-06
For the year under review, an examination ofthe University's student financial aid refund process for student withdrawals revealed the following deficiencies:
1) Unearned Title N funds were not applied by the University to the appropriate student financial aid programs for six out of ten students selected for refund testing, resulting in questioned cost of $4,898.76. In addition, four of the students were disbursed Title N funds greater than the amounts earned resulting in additional questioned cost of$5,668.60.
2) One student received funds from the H.O.P.E. Scholarship Program and the University failed to return unearned funds in the amount of $242.24.
These deficiencies were the result of management's failure to complete the refund process in accordance with Federal regulations. The University should develop and implement procedures to ensure that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should contact the U.S. Department of Education regarding resolution of this finding.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Programs U.S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
PERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07
At June 30, 2001, the University's Federal Pell Grant Program had deficit fund balances of $112,135.28 for the fiscal year 1999 grant and $52,518.00 for the fiscal year 2001 grant. Also, the Federal Direct Loan Program maintained deficit fund balances of$18,674.96 for the fiscal year 1998 program and $83,967.00 for the fiscal year 1999 program. These deficit fund balances were the
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SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS PERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07 result of management's failure to establish controls to ensure that funds are disbursed only upon proper authorization. The University should implement procedures to ensure that funds are available to cover valid expenditures. In order to be reimbursed for these excess expenditures, the University, in conformity with Federal statutes, must certify the validity of these payments to the U. S. Department of Education. Federal Programs/Awards Affected: Student Financial Aid Cluster Programs
U.S. Department of Education Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
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