Audit report, state of Georgia, Albany State University, Albany, Georgia, year ended June 30, 1998

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AUDIT REPORT STATE OF GEORGIA ALBANY STATE UNIVERSITY ALBANY, GEORGIA YEAR ENDED JUNE 30, 1998
----_/

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

ALBANY STATE UNIVERSITY - TABLE OF CONTENTS -

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

21

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

23

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES CONWARED TO BUDGET

1

RESIDENT INSTRUCTION

24

2

LOTTERY FOR EDUCATION

27

3 CHANGES IN INVESTMENT IN PLANT

28

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

30

5 RECONCILIATION OF SALARIES AND TRAVEL

32

SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

ALBANY STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR (404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
October 30, 1998

Governor of the State of Georgia Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Portia H. Shields, President .Albany 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 Albany State University as of and for the year ended June 30, 1998. 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.
We conducted our audit in accordance with generally accepted auditing standards. 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 opinion.
As described in Note 1 to the fmancial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the financial statements of this departure from generally accepted accounting principles 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 generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would
98ARL-63

be decreased by $902,322.97 as of June 30, 1998, and the net change in fund balance for the year ended June 30, 1998, would be decreased by $48,141.01.
As discussed in Note 1 to the financial statements, the University did not report an allowance for estimated uncollectible accounts receivable. To confonn to generally accepted accounting principles, these amounts should be included in the fmancial statements. The effects on the fmancial statements of this departure from generally accepted accounting principles were not reasonable detenninable, but are believed to be material.
In our opinion, except for the effects on the financial statements of the matters discussed in the third, fourth, and fifth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position of Albany State University as of June 30, 1998, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The : accompanying supplementary infonnation (Exhibits E through G and Schedules 1 through 5) is presented for : purposes of additional analysis and is not a required part of the financial statements of Albany State
University. Such infonnation has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects of the matters discussed in the third, fourth, and fifth paragraphs, such infonnation is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:ds 98ARL-63

FINANCIAL STATEMENTS - 1-

ALBANY STATE UNIVERSITY COMBINED BALANCE SHEET
ALL FUND GROUPS JUNE 30. 1998

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Due from Other Fund Groups Investment in Plant

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

$

828,857.44 $ 2,250,955.70

373,997.54

1,489,058.98

40,829.76 352,659.01

Total Assets

$

2,691,913.96 $

2,250,955.70 $ ==""39...3.=,4:=8,,,,8.:.77==

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees Deposits Held in Custody for Others Due to Other Fund Groups Capital Lease Obligations
Total Liabilities
Fund Balances U. S. Govemment Grants Refundable Institutional Loans - Restricted Net Investment in Plant Restricted Unrestricted
Total Fund Balances

$

419,048.37 $

460,376.77

1,067,977.51

1,607,304.77

$ 1,487,025.88 $ 2,067,681.54

$ $ 1,204,888.08
$ 1,204,888.08 $

$ 183,274.16 183,274.16 $

390,789.19 2,699.58
393,488.77

Total Liabilities and Fund Balances

$ 2,691,913.96 $ 2,250,955.70 $ ==",,3::::93:=,4:=8:=8:..7==7

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

EXHIBIT "A"

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

24,169.60 $

78,931.90

1,820,957.17

$

549,175.87 _ _ _ _ _ _ $ 38,376,182.33

$ 631,355.96

143,931.26 5,884,785.28
373,997.54 2,038,234.85 38,376,182.33

$ 1,845,126.77 $

628,107.77 $ 38,376,182.33 $

631,355.96 $ 46,817,131.26

$ 1,842,563.69 $

$ 1,842,563.69 $

$

2,563.08 $

$

2,563.08 $

3,838.00
$ 3,838.00 $

$ 142,266.79 142,266.79 $

$
200,425.88 430,930.08
631,355.96 $

2,725,826.83
1,067,977.51 200,425.88
2,038,234.85 142,266.79
6,174,731.86

$ 38,233,915.54 624,269.77 624,269.77 $ 38,233,915.54

$

390,789.19

2,699.58

38,233,915.54

183,274.16

1,831,720.93

$ 40,642,399.40

$ 1,845,126.77 $

628,107.77 $ 38,376,182.33 $

631,355.96 $ 46,817,131.26

-3-

ALBANY STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30,1998

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 Interest on Loans Receivable Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Renewals and Replacements Other Additions Recovery of Prior Years' Cancelled Loans Recovery of Prior Years' Collection Costs
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Refunded to Grantors 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 DisposalslDeletionsiAdjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1, 1997

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$ 29,136,890.50
$ 17,912,224.54 $ 1,048,733.12 196,686.97 2,137,650.72

66,048.92 2,235.26

32,912.92

-1,280.00
-142.00 1,322.91 4,890.00

$ 29,205,174.68 $ 21,328,208.27 $

1,034.00 82.13
5,907.04

$ 24,257,937.58 $ 21,719,540.69 4,477,223.10 122,413.03 5,053.61
43,201.98
1,254.84 $

3,625.14 2,038.92

$ 28,779,617.50 $ 21,847,007.33 $

5,664.06

$

-237,655.92

$

187.901.26 $

1,016,986.82

-518,799.06 $ 702,073.22

242.98 393,245.79

FUND BALANCES JUNE 30.1998

$

1.204,888.08 $

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

-4-

183,274.16 $===3:;;9,;;,3,!::O4=88;;;".77==

EXHIBIT"B"

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

643,600.00 $

1,820,957.17

68,064.70 49.00

$

2,532,670.87 $

0.00 $
0.00 $

$
77,600.00
1,205,674.26 2,528,179.64
41,944.00 3,853,397.90 $

29,136,890.50
643,600.00 19,731,901.71
1,048,733.12 196,686.97
2,215,108.72 69,387.61 4,890.00
99,010.84 2,235.26
1,205,674.26
2,528,179.64 41,944.00
1,034.00 82.13
56,925,358.76

$

159.04

2,528,179.64 $ 1,928.15

$

2,530,266.83 $

41,944.00 545,704.46
$
587,648.46 $

$ 45,977,478.27 4,477,223.10 122,413.03 5,053.61

251,816.41 251,816.41 $

43,361.02
1,254.84 3,625.14 2,038.92
2,570,123.64 547,632.61 251,816.41
54,002,020.59

$

237,655.92

$

0.00

$

2,404.04 $

-349,992.54 $

3,601,581.49 $

2,923,338.17

159.04

974,262.31

34,632,334.05

37,719,061.23

$

2,563.08 $

624,269.77 $ 38,233,915.54 $ 40,642,399.40

-5-

ALBANY STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 1998

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 Sales and Services of Educational Activities

Sales and Services of Auxiliary Enterprises

Other Sources

Total Revenues

EXPENDITURES

Educational and General Instruction Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units

Total Expenditures

OTHER TRANSFERS AND ADDITIONS/{DEDUCTIONS)

Excess of Restricted Receipts over Transfers to Revenues
Refunded to Grantors Transfers for Renewals and Replacements 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 AdditionsJ(Deductions)

Net Increase/(Decrease) in Fund Balances

UNRESTRICTED

RESTRICTED

TOTAL (Memorandum
Only)

$ 16,965,119.00
6,858,071.06
120,317.42 $
3,637.61
42,957.17 4,950,457.74
196,330.50
$ 29,136,890.50 $

$
17,800,978.58 1,060,979.68 220,523.55 2,637,058.88
21,719,540.69 $

16,965,119.00 6,858,071.06
17,921,296.00 1,064,617.29 220,523.55 2,637,058.88 42,957.17 4,950,457.74 196,330.50
50,856,431.19

$ 12,533,734.66 $

1,762,881.74 $ 14,296,616.40

97,460.83

502,321.21

599,782.04

2,281,988.96

231,684.34

2,513,673.30

1,912,396.78

158,763.68

2,071,160.46

4,811,350.04

3,547,325.53

8,358,675.57

2,239,578.74

2,239,578.74

381,427.57

15,516,564.19

15,897,991.76

1,383,793.37 1,648,948.71
131,050.94 1,008,966.60
304,463.48

1,383,793.37 1,648,948.71
131,050.94 1,008,966.60
304,463.48

$ 28,735,160.68 $ 21,719,540.69 $ 50,454,701.37

$

$

-237,655.92

67,029.34

-546,658.37 $
-5,053.61
32,912.92

-546,658.37 -5,053.61
-237,655.92 99,942.26

-43,201.98

$

-213,828.56 $

-518,799.06 $

-43,201.98 -732,627.62

$

187,901.26 $

-518,799.06 $ ==-=33=:0=,8:=9=7.=80=

The notes to the financial statements are an integral part of this statement. -6-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Albany State University is one ofthirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Albany 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. Albany State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Albany State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting. Standards Board 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 fmancial 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 fmancial 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-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

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.
PLANT FUNDS
UNEXPENDED - The fund used to account for fmancial 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 ofaccounting, which is materially the same as the accrual basis ofaccounting applicable to colleges and universities prescribed in the American Institute ofCertified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting 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 fmance expenditures of the fiscal period.
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 generally accepted accounting principles, which provide for the recording of encumbrances as a reservation offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.

-8-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING Compensated absences represent obligations of the 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 $902,322.97 and a related net current year expenditure of $48, 141.01 have not been reported in the current funds as required by generally accepted accounting principles.

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 of the State of Georgia, but differs , from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this 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 behalf of the 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.

BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units ofthe University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19971998. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation of the appropriated budget is made to the College by the Administrative Central Office. In addition, the College 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

$ 27.490.51

- 9-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET Resident Instruction Capital Outlay

$ 2.343.471.25

Lottery for Education Equipment, Technology and Construction Trust Fund

$ 31.184.85

These overexpendituresof 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 departmental 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 of 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 fmancial 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.

MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the fmancial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate fmancial analysis. The columns do not present information that reflects fmancial position or changes in fmancial 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 of this data.

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES
Funds belonging to the State of Georgia 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 anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

- 10-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (l) 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 ofthe 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 of the State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, 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.
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 of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
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, 1998, 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.
- 11 -

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

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

Total Cash Deposits

Carrying Amount

Bank Balances

$ 139,53626 $ 2,42] 42526 $

Risk Categories

2

3

200000,00 $ 2221 425.26 $,==~oo~o

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 1998:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections
Total Investment in Plant
NOTE 4: CAPITAL LEASES

$ 1,705,037.84 21,880,802.90 2,937,757.18 7,410,400.95 4,442,183.46
$ 38.376,182.33

Albany State University acquires certain equipment through multi-year capital leases with varying terms and options. These agreements contain fiscal funding clauses in accordance with Official Code of Georgia Annotated Section 50-5-64 which prohibits the creation ofa debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. Ifrenewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

As of June 30, 1998, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30

1999 2000 2001
Total Future Minimum Lease Payments
Less: Amounts Representing Interest
Present Value of Future Minimum Lease Payments

$ 72,849.24 61,580.44 18,760.80
$ 153,190.48
10,923.69
$ 142,266.79

- 12-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 5: RISK MANAGEMENT
Albany 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 audit report of the Board of Regents of the University System of Georgia - Administrative Central Office. All units of the 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$l,OOO,OOO.OO per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board ofRegents.
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board of Regents ofthe University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 6: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights ofthe State of Georgia subject only to the claims of the State's general creditors. Participants' rights under the plan are equal to those of a general creditor of

- 13-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 6: DEFERRED CaMPENSAnON PLAN

the State of Georgia in an amount equal to the fair market value of the deferred account for each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1998.

A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999, all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan was converted effective July 1, 1998.

NOTE 7: RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Albany State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defmed 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 of Georgia. 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 ofAudits and Accounts.

Funding Policy Employees ofthe 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 of Trustees in accordance with State statute and as advised by their indeperident actuary. For fiscal year 1998, the employer contribution rate was 11.81% for covered employees. In addition, the University contributed 3.91 % 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

1998 1997 1996

100% 100% 100%

$1,739,759.66 $1,593,786.22 $1,546,104.88

REGENTS RETIREMENT PLAN

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

- 14-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 7: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Plan Description 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 ofthe 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 ofthe State of Georgia. The employer contributes 7.75% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable 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 $172,807.26 (7.75%) and $109,977.77 (5%), respectively.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Albany State University participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $ 3,500.00 credited to hislher account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to hislher 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-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 1998 amounted to $43,276.43 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
- 15 -

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 8: 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.
Effective July 1, 1998, certain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers RetirementSystem of Georgia.
NOTE 9: 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 Albany 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, 1998.
NOTE 10: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System of Georgia. It is the policy ofthe Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the University System ofGeorgia 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 of June 30, 1998, there were 113 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1998, Albany State University recognized as incurred $232,592.87 of expenditures, which was net of $76,994.02 of participant contributions.
- 16-

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 11: SIGNIFICANT EVENT

In July of 1994, Albany State University sustained major flood damage to its campus. Reconstruction expenditures incurred by the University through June 30, 1998, have been reflected in this report and amounts have been deleted from Investment in Plant for losses incurred. Fiscal year 1998 expenditures of $34,141,439.86 for repairs and reconstruction have been incurred by the Board of Regents of the University System of Georgia - Administrative Central Office which are not included in this report. The capitalized portion of these expenditures, totaling $32,841,198.53, in addition to prior years expenditures capitalized by the Administrative Central Office will be recorded in the Investment in Plant ofAlbany State University upon completion of all repairs and reconstruction associated with the flood.

NOTE 12: ENROLLMENT

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

Regular Term Fall Quarter, 1997 Winter Quarter, 1998 Spring Quarter, 1998

2,838 2,837 2,803

Average

Summer School, 1997

- 17 -

THIS PAGE LEFT BLANK

SUPPLEMENTARY INFORMAnON - 19-

ALBANY STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30, 1998

EXHIBIT"E"

ASSETS Accounts Receivable Inventories Due from Other Fund Groups
Total Assets

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$

419,434,40

100,639.62

707,536.51 $

$ 92,935.05

262,996.62 $ 273,357.92 661,035.08

146,426.42 $ 27,552.34

828,857.44 373,997.54 1,489,058,98

$ 1,227,610.53 $

92,935.05 $ 1,197,389.62 $

173,978.76 $ 2,691,913.96

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees
Total Liabilities
Fund Balances Unrestricted

$

346,273.47 $

796,291.51

$ 1,142,564.98 $

85,045.55

39,034.23 $ 39,034.23 $

7,658.78 $ 235,162.00 242,820.78 $

26,081.89 $

419,048.37

36,524.00

1,067,977.51

62,605.89 $ 1,487,025.88

53,900.82

954,568.84

111,372.87

1,204,888.08

Total Liabilities and Fund Balances

$ 1,227,610.53 $

92,935.05 $ 1,197,389.62 $

173,978.76 $ 2,691,913.96

See notes to the financial statements.

-20 -

ALBANY STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30.1998

EXHIBIT"F"

FUND BALANCES JUNE 3D. 1998

$

85,045.55 $

53,900.82 $

954,568.84 $

111,372.87 $ 1,204,888.08

See notes to the financial statements.

- 21 -

THIS PAGE LErr BLANK

ALBANY STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES. EXPENDITURES
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30.1998

EXHIBIT"G"

See notes to the financial statements.

. 23

ALBANY STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30.1998

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$ 16,613,634.00

$

6,916,895.21 $ _-::.21.:.:.,7:...;1~9.:.:::,54:;;:.0::::..::::69::....

643,600.00 $ 1,889,021.87

0.00

$ 23,530,529.21 $ 21,719,540.69 $

2,532,621.87 $

.-;;.;O.~OO;;...

EXPENDITURES
Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Capital Outlay Office of Minority Business Enterprise Special Funding Initiative

2,530,107.79 $

587,648.46

Excess of Revenues over Expenditures

$ 23,563,864.19 $ 21,719,540.69 $

2,530,107.79 $ _ _.......;;;58~7.:.:,64;",;,,;;..;.8..;.;46;;...

$

-33,334.98 $

0.00 $

===-... 2,514.08 $

58=7,;,;,64=.:=8.=46=

(1) To eliminate tuition waivers not budgeted and to reclassify prior year fund balances budgeted as revenues.

See notes to the financial statements.

- 24-

SCHEDULE "1"

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 17.257.234.00

$ 17,257,234.00 $ 17.257,234.00 $

30.525,457.77 $ _ _4..:..1:.::9.:.::,0:.:;89~.4;:.:6:..

30.944,547.23

32,493,625.00

0.00 -1,549.077.77

$ 47,782.691.77 $

419.089.46 $ 48,201,781.23 $ 49,750,859.00 $ _ _-,;,.:1,;;.,54;.,;;9,:.;:,0.;.,77;,.;,.7;.,.;7_

$ 19.693.036.51 1.948,889.70
3.549.273.45 $ 19,770.650,99 3.117.756.25
60.000.00 261.554.23

$ -168,559.00

19,693.036.51 $ 1,948,889.70
3.380.714.45 19,770,650.99 3,117.756.25
60,000.00 261,554.23

19,665,546.00 $ 2.697.785.00
3,423.865.00 22,865.612.00
774,285.00 60.000.00
263.766.00

-27,490.51 748,895.30
43.150.55 3,094,961.01 -2,343,471.25
0.00 2.211.77

$ 48,401.161.13 $

-168,559.00 $ 48,232.602.13 $ 49,750,859.00 $ _ _1"",,_51_8.;..,2_5_6._87_

$

-618,469.36 $

587,648.46 $

-30,820.90

$ ====-3=0.,.8.=2.0...9..0...

- 25-

THIS PAGE LEFT BLAHK

ALBANY STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 1998

SCHEDULE "2"

REVENUES State Appropriations
EXPENDITURES Equipment, Technology and Construction
Trust Fund Special Funding Initiatives

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$

351,485,00 $

- - - - - - 351,485.00 $

0.00

$

205,184.85 $

174,000,00 $

-31,184.85

172,771.13

177,485,00

4,713.87

$

377,955.98 $

351 ,485,00 $ _ _---.:-2:..;;.6.:..;,4..;,.70,;.;.,;.;98~

Excess of Revenues over Expenditures

$ ===-=2::.l6,=47=0=9,==8

$ ===-2;,;6:!:::,4=70=,9:=8=

See notes to the financial statements.

-27 -

ALBANY STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30,1998

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections
SUMMARY OF INVESTMENT University Capital Leases

BALANCE JULY 1,1997

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

$

1,699,858.95

19,416,245.73

2,937,757.18

6,639,347.29 $

451,850.35 $

473;556.50

4,176,872.01

198,713.35

81,554.06

$ 34,870,081.16 $

650,563.70 $ ===55=:5=:,1=10=:.5:=6=

$ 34,632,334.05 $
237,747.11

650,563.70 $

555,110.56

$ 34,870,081.16 $

650,563.70 $ ===5:=55:::,1=1=0.=5=6

See notes to the financial statements.

-28 -

SCHEDULE "3"

ADDITIONS

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$

5,178.89

2,464,557.17

58,443.58 $

41,944.00 $

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 1998

$

1,705,037.84

21,880,802.90

2,937,757.18

77,600.00 $

332,340.77

7,410,400.95

14,955.96

4,442,183.46

.$

2,528,179.64 $ ===4=1=,9=44=.=00:::$ =====77=,6=:0=0.=00:::$

347,296.73 $ 38,376,182.33

$

2,528,179.64 $

41,944.00 $

77,600.00 $

251,816.41 $ 95,480.32

38,233,915.54 142,266.79

$

2,528,179.64 $ ===4=1=,944:==.=00:::$ ===7=7=,6=:0=0.=00... $

347,296.73 $ 38,376,182.33

- 29-

ALBANY STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30, 1998

$ ======8.5,=04=5.,5=5::$ ====53;;,;,,9=0=0=,8=2 $ ===9=54:=;,5=68;,;,,84==$ ===1=1.1..,=3,;,;72;,;,,8;;,;7=

See notes to the financial statements,

- 30-

SCHEDULE "4"

RESTRICTED

UNEXPENDED REGULAR

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 38,233,915.54 $ 38,233,915.54

$

1;.;;;8. ;;.3,:.;;;2.;. 74.:.;. 1.:.,.:6:. .

$ _--"....;1;.;;;8""'3,:.;;;27.;..4;.:..1;.;;;6:....

$

146,708.00

477,561.77

$

146,708.00

-108,508.74

361,216.27

477,561.77

901,092.53

$

2,563.08

$

=2,:.;;;56.:;;3;;;.0:.:8:....$

6;::.;2:.,:4",:,2..;;.69:;..7:.:7_

-249.72 53,900.82 $ _.......;1"",8:.:;3-'-'1,e:.;72::.:0:.:.;.9:.:;3:....

$

183,274.16 $ ======2=,5=6:=3.:=08=$ ===6=2=4=,2=69:=..7=7=$ 38,233,915.54 $ 40,248,910.63

- 31 -

ALBANY STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 1998

SCHEDULE "5"

Totals per Annual Supplement

Adjustments

Shared Services on Jointly Staffed Personnel

Abraham Baldwin Agricultural College

Baker,

Merle M.

SALARIES $ 17,828,95155 $

TRAVEL 205,641.27

2,000.00

$ 17,830,951.55 $ ===2,,=05=,64==1..2..=7

See notes to the financial statements.

- 32

SECTIONll AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

ALBANY STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

521-96-01 521-96-02 FS-521-97-01 FS-521-97-02

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

CORRECTIVE ACTIONIRESPONSES

REVENUEIRECEIVABLEIRECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-521-97-01

The institution contracted with KPMG Peat Marwick to provide training for the Financial Aid staff, to ensure that proper procedures are used for the making of financial aid awards, including the need to obtain approved documentation to support fmancial aid before disbursement of funds. This training has occurred and the Institution will continue to monitor student accounts receivable closely. In addition, the institution has outsourced the collection of current receivables to private companies and feels confident that those balances will be reduced. Also, the institution will continue its effort to locate the three (3) student loan files.

FUND BALANCE Deficits to be Funded from Subsequent Years' Operation Finding Control Number: FS-521-97-02

The Athletic Director, the Business Office and the Vice President for Fiscal Affairs developed a plan ofaction to control operations ofthe Athletic Program for the current year such that revenues exceeded expenditures by $24,710.30. This action plan will be continued until the remaining deficit of$108,508.74 is eliminated.

PRIQR YEAR FEDERAL AWARDS FINDINGS AND QUESTIQNED COSTS

FINDING CONTROL NUMBER AND STATUS

521-96-05 FA-521-97-01

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

ALBANY STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

FINANCIAL-STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUEIRECEIVABLESIRECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-521-98-01

An examination of student accounts receivable at June 30, 1998 revealed that $431,135.35 ofreceivables were not supported by approved financial aid. This condition occurred because of management's failure to obtain approved documentation to support financial aid before disbursement of funds. There is no provision in the policies of the Board of Regents for deferments of student accounts without the student having approved documentation of fmancial aid at the time of registration.

: Collections of student accounts receivable should be made on at least a quarterly basis, and no student should

: be granted a deferment without having approved fmancial aid. It is recommended that legal means be used

to collect all student accounts receivable, if necessary.

.

EMPLOYEE COMPENSATION Failure to Maintain Time Records Finding Control Number: FS-521-98-02

The University typically enters into work agreements with graduate assistants which provide for a set stipend amount that includes payment oftuition and fees for course work with the residual amount to be paid to the graduate assistants evenly over a set time period. Working hours are not to exceed twenty hours per week. A review ofsalary charges revealed that time and attendance or equivalent records were not being maintained to document time actually worked by graduate assistants in order to ascertain if they were meeting the terms of their agreement.

Appropriate internal controls should be established by the Board to ensure that all salary charges ofemployees be based on actual hours worked and that this time be properly documented.

INVENTORIES Inadequate Resale Inventory Records Finding Control Number: FS.;.521-98-03

For the year under review, the internal accounting control procedures for resale inventories utilized by Albany State University were not adequate. The following deficiencies were noted regarding the University's records for resale inventories:

(1) Although we satisfied ourselves as to' the accuracy of inventories at June 30, 1998, as reflected in the financial statements, we were unable to reconcile the ending inventory through an analysis of yearly purchases/sales activity as reflected on the accounting records.

(2) Adequate procedures do not exist for the systematic and consistent mark-up of resale inventories.

- 1-

ALBANY STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
INVENTORIES Inadequate Resale Inventory Records Finding Control Number: FS-52l-98-03
These deficiencies are a result ofmanagement's failure to implement procedures which would ensure adequate monitoring of inventory costs throughout the fiscal year. The University should establish controls to ensure that accounting records accurately document the purchases/sales activity for all resale inventory.
FUND BALANCE Deficits to be Funded from Subsequent Years' Operations Finding Control Number: FS-52l-98-04
Our review of Intercollegiate Athletics revealed a deficit fund balance of$1 08,508.74 at June 30, 1998. This deficit is a result ofthe University's lack of sufficient funds to meet obligations on a current basis. The Board ofRegents 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 fmance its operation."
The University should take appropriate action to fund this deficit.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $19,795.25 Audit Control Number: FA-52l-98-01
For the year under review, a sample of forty studentfmancial aid files was selected to determine if fmancial aid was properly calculated and awarded to eligible students. The items sampled contained fmancial aid disbursements of $229,736.72 out ofa population of $15,461,354.43. Our examination revealed that six students received overpayments totaling $19,795.25 as shown below.
(1) One student's award was not adjusted based on a change in the cost of attendance. The needs analysis was originally computed for an off-campus student for four quarters; however, the student moved on campus for the summer quarter which lowered the amount of fmancial aid need. The questioned cost of$1,592.30 resulted from management's failure to adjust the award and subsequent disbursement, to the student.
(2) One student was awarded $218.35 offinancial aid in excess ofthe student's predetermined financial need based on estimated cost of attendance. Title IV ofthe Higher Education Act of 1986 states that an institution must coordinate Title IV programs with other Federal and non-Federal student financial aid programs it administers and must establish controls to preclude the awarding of
-2-

ALBANY STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $19,795.25 Audit Control Number: FA-521-98-01
(2) assistance in excess of a student's financial need. This error was caused by management's failure to review the student's grant award before disbursement was made.
(3) One student was disbursed $66.00 of Federal Pell Grant Program funds in excess of the approved grant award. This error was caused by management's failure to use the correct expected family contribution amount when calculating the award for the student.
(4) One graduate student was disbursed $966.00 in Federal Pell Grant Program (FPEL) and Federal Supplemental Educational Opportunity Grant Program (FSEOG) funds. According to Federal regulations 34 CFR 690.6 and 34 CFR 676.9, a student is eligible to receive FPEL and FSEOG respectively, only ifthat student is enrolled as an undergraduate student. This error was caused by management's failure to adequately verify a student's academic status prior to disbursing of grant funds.
(5) Two students were disbursed a total of $16,952.60 in excess of aggregate loan limits for the Federal Direct Student Loan Program. Chapter eleven of The Federal Student Financial Aid Handbook states that students who borrow more than aggregate loan limits for which they are eligible under student financial aid loan programs will lose eligibility for further aid from any student financial aid program until the excess amount is repaid in full or unless other arrangements are made. This questioned cost occurred because management failed to adequately monitor aggregate loan amounts made to students.
Procedures should be implemented to ensure that student financial aid awards are properly reviewed and approved prior to disbursement. The University should contact the U.S. Department of Education regarding resolution of these questioned costs.
Federal Programs/Awards Affected
Student Financial Aid Cluster Program 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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ALBANY STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Deficiencies In Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $2,960.80 Finding Control Number: FA-521-98-02
For the year under review, an examination of the University's student financial aid refund process revealed the following deficiencies:
(1) Refund amounts were incorrectly charged against student financial aid programs for two out of five students selected for refund testing. One incorrect refund charge of $39.90 occurred because the University failed to take into consideration all institutional costs incurred by the student. The other refund was calculated correctly; however, management failed to ensure that $108.00 ofthe refund was charged back to the Federal Direct Student Loan Program.
(2) Attendance records as well as statements from instructors were reviewed for eight students out of forty-five who received all failing and/or incomplete grades, for Winter Quarter 1998, to ascertain ifthe students had dropped out and were due a refund. Four out of the eight students examined did not appear to have attended class at all or had ceased attendance prior to the end ofthe refund period. Failure by management to implement procedures to detennine the last day of attendance in order to identify unofficial withdrawal resulted in a questioned cost of$2,812.90.
A projection ofthese errors to the total population resulted in a likely questioned cost in excess of$1 0,000.00.
The University should implement procedures to ensure that refunds are correctly calculated and applied to appropriate accounts in a timely manner and that refunds are calculated for all "unofficial" withdrawals. The University should contact the U. S. Department ofEducation regarding resolution of this fmding.
Federal Programs/Awards Affected
Student Financial Aid Cluster Program U. S. Department ofEducation Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
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