ATLANTA METROPOLITAN COLLEGE - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF 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, EXPENDmJRES, AND OTHER CHANGES 7 D NOTES TO THE FINANCIAL STATEMENTS 8 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, EXPENDmJRES, AND OTHER CHANGES UNRESTRICTED 24 SCHEDULES SCHEDULES OF REVENUES AND EXPENDmJRES COMPARED TO BUDGET 1 RESIDENT INSTRUCTION 26 2 LOTTERYFOR EDUCATION 29 3 CHANGES IN INVESTMENT IN PLANT 30 4 SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS 32 SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS ATLANTA METROPOLITAN COLLEGE - TABLE OF CONTENTS - SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL JSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 October 19, 2000 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 Harold E. Wade, President Atlanta Metropolitan College INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have reviewed the accompanying financial statements (Exhibits A through D) of Atlanta Metropolitan College as of and for the year ended June 30, 2000, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute ofCertified Public Accountants. All information included in these financial statements is the representation of the management of Atlanta Metropolitan College. A review consists principally ofinquiries ofCollege personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, with the exception ofthe matters described in the fourth and fifth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. As disclosed in Note 1 to the financial statements, generally accepted accounting principles require encumbrances to be recorded as a reservation offund balance. However, in accordance with Georgia Law and State budgetary policy, management recorded encumbrances as expenditures and liabilities. The effects of this departure from generally accepted accounting principles on the financial statements were not reasonably determinable. 00ARL-67 As disclosed in Note 1 to the financial statements, the College 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 be decreased by $428,615.02 as of June 30, 2000, and the net change in fund balance for the year ended June 30, 2000, would be decreased by $26,421.28. Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 4) are presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the fmancial statements, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, we are not aware of any material modifications which should be made thereto. Respectfully submitted, RWH:jb OOARL-67 Rus ell W. Hinton State Auditor FINANCIAL STATEMENTS - 1- ATLANTA METROPOLITAN COLLEGE COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30, 2000 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 Deferred Revenue Tuition and Fees Other Deposits Held in Custody for Others Due to Other Fund Groups Total Liabilities Fund Balances Net Investment in Plant Restricted Unrestricted Total Fund Balances Total Liabilities and Fund Balances CURRENT FUNDS UNRESTRICTED RESTRICTED $ 873,757,36 228,813.33 $ 365,209.95 60,650.45 243,097.14 229,243.55 $ 1,635,561,83 $ =====36=5=,2=0=9,=95= $ 1,106,695.64 1,361.00 926.00 $ 229,243.55 $ 1,108,982.64 $ 229,243.55 $ 135,966,40 $ 526,579.19 $ 526,579.19 $ 135,966.40 $ 1,635,561.83 $ =====36=5=,2=0=9.=95= See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -2- EXHIBIT "A" PLANT FUNDS INVESTMENT UNEXPENDED IN PLANT AGENCY FUNDS TOTAL (Memorandum Only) $ 677,249.02 $ _ _ _ _ _ $ 25,089,378.02 100,581.79 $ 1,651,588.17 594,023.28 60,650.45 243,097.14 229,243.55 25,089,378.02 $ 677,249.02 $ 25,089,378.02 $ 100,581.79 $ 27,867,980.61 $ 675,955.02 $ 675,955.02 $ 23,363.11 $ 1,806,013.77 77,218.68 1,361.00 926.00 77,218.68 229,243.55 $ 100,581.79 $ 2,114,763.00 $ 25,089,378.02 $ 1,294.00 $ 1,294.00 $ 25,089,378.02 $ 25,089,378.02 135,966.40 527,873.19 $ 25,753,217.61 $ 677,249.02 $ 25,089,378.02 $ 100,581.79 $ 27,867,980.61 -3- ATLANTA METROPOLITAN COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES ALL FUND GROUPS YEAR ENDED JUNE 30, 2000 REVENUES AND OTHER ADDITIONS Unrestricted Current Fund Revenues State Appropriations Regular Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income Other 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 Total Revenues and Other Additions EXPENDITURES AND OTHER DEDUCTIONS Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered 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 Expended for Plant Facilities Capitalized Noncapitalized DisposalslDeletions/Adjustments Total Expenditures and Other Deductions Net Increase/{Decrease) for the Year FUND BALANCES JULY 1, 1999 CURRENT FUNDS UNRESTRICTED RESTRICTED $ 11,743,286.48 $ 4,364,679.03 133,991.50 225,141.52 71,662.83 5,734.46 $ 11 ,820,683.77 $ 4,723,812.05 $ 11,461,066.95 $ 4,510,521.30 198,476.33 56,452.99 32,140.12 15,859.36 $ 11 ,707,542.76 $ 4,566,974.29 $ 113,141.01 $ 156,837.76 413,438.18 -20,871.36 FUND BALANCES JUNE 30, 2000 $ 526,579.19 $ ==1=3:=51::,9=:66=:.4=0,= See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -4- EXHIBIT"B" PLANT FUNDS INVESTMENT UNEXPENDED IN PLANT TOTAL (Memorandum Only) $ 11,743,286.48 $ 706,640.00 706,640.00 4,364,679.03 133,991.50 225,141.52 122,855.75 122,855.75 1,294.00 72,956.83 5,734.46 $ 696,237.34 696,237.34 72,913.73 3,919,901.50 72,913.73 3,919,901.50 $ 830,789.75 $ 4,689,052.57 $ 22,064,338.14 $ 15,971,588.25 198,476.33 56,452.99 $ 8,131.94 40,272.06 15,859.36 72,913.73 756,582.02 $ 34,247.94 72,913.73 756,582.02 34,247.94 $ 837,627.69 $ 34,247.94 $ 17,146,392.68 $ -6,837.94 $ 4,654,804.63 $ 4,917,945.46 8,131.94 20,434,573.39 20,835,272.15 $ 1,294.00 $ 25,089,378.02 $ 25,753,217.61 -5- ATLANTA METROPOLITAN COLLEGE STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES YEAR ENDED JUNE 30, 2000 EXHIBIT"C" Net Increase/(Decrease) in Fund Balances $ 113,141.01 $ 156,837.76 $ =====2~6;;;;:9;gJ9;,;,7;;;8',;,,77~ See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -7- ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Atlanta Metropolitan College is one ofthirty-four (34) State supported member institutions ofhigher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Atlanta Metropolitan College as a separate reporting entity. The Board of Regents has constitutional authority to govern, control and manage the University System ofGeorgia. 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. Atlanta Metropolitan College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Atlanta Metropolitan College 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 College, the accounts ofthe College 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 College'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 College retains full control to use for purposes of performing the primary functions of the College, e.g., instruction, public service, etc. RESTRICTED - The fund used to record externally restricted funds which may onlybe 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. - 8- ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING PLANT FUNDS UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes. INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the College. Net Investment in Plant is an equity account showing the total book value of physical properties belonging to the College less the amount of any indebtedness to others. AGENCY FUNDS The fund used to account for resources held by the College 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 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 finance expenditures of the fiscal period. Contractual obligations for goods and services which have not been received at the end ofthe 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 of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. Compensated absences represent obligations ofthe College 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 $428,615.02 and a related net current year expenditure of $26,421.28 have not been reported in the current funds as required by generally accepted accounting principles. -9- ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING 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 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 of the 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 ofthe College. 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. 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 of 1999-2000. 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 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 thatthe following object classes were overspent by the amounts identified below: Resident Instruction Operating Expenses: Education, General and Departmental Services Sponsored Operations Capital Outlay Year 2000 Project $ 100,281.38 $ 414,064.75 $ 122,855.75 $ 15,000.00 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. -10 - ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT"D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash and demand deposits in authorized financial institutions. ACCOUNTS RECEIVABLE Accounts receivable consist of reimbursements due from Federal, State, 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 ofconsumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method. 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 ffuancial 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 anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: (1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations ofthe United States or ofthe 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 ofGeorgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. -11 - ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2000 EXHIBIT "D" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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. 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, 2000, 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 College or by its agent in the College's name. Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the College'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 College's name, and amounts uncollateralized. Cash Deposits Carrying Amount Bank Balances Risk Categories 2 3 $ 1625:218.21 $ 2851.289.28 $ 174 324.56 $====Q~Q!QfQ $ 2,67696472 - 12- ATLANTA METROPOLITAN COLLEGE NOTESTOTHEFWANC~STATEMENTS JUNE 30, 2000 EXHffiIT"D" NOTE 3: INVESTMENT W PLANT The following is a summary of Investment in Plant fixed assets as of June 30, 2000: Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections $ 1,647,568.37 14,796,403.95 1,342,136.04 5,334,396.00 1,968,873.66 Total Investment in Plant $25.089.378.02 NOTE 4: RISK MANAGEMENT Atlanta Metropolitan College 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 College 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 $1,000,000.00 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 ofGeorgia 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 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 College, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are -13 - ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT"D" NOTE 4: RISK MANAGEMENT not immune from liability against personal liability for damages arising out ofthe perfonnance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund. NOTE 5: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Atlanta Metropolitan College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing 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 of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia 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 College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The College 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 independent actuary. For fiscal year 2000, the employer c~ntribution rate was 11.29% for covered employees. In addition, the College contributed 2.35% to the TRS on behalfofemployees 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 2000 1999 1998 100% 100% 100% $ 609,211.55 $ 628,481.32 $ 554,181.44 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 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 tenns of the annuity contracts. - 14- ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT"D" NOTE 5: RETIREMENT PLANS REGENTS RETIREMENT PLAN 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 ofGeorgia. The employer contributes 8.79% 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 College and the covered employees made the required contributions of$55,395.08 (8.79%) and $31,497.58 (5%), respectively.. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Atlanta Metropolitan College 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 part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees ofthe 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. Ifa member has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring 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. Total contributions made by employees during fiscal year 2000 amounted to $62,323.33 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan. - 15 - ATLANTA METROPOLITAN COLLEGE NOTESTOTHEFINANC~STATEMENTS JUNE 30, 2000 EXHIBIT"D" NOTE 6: LEAVEPOUCrnS 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. NOTE 7: CONTINGENCrnS 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 College expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against Atlanta Metropolitan College (an organizational unit ofthe Board ofRegents ofthe University System ofGeorgia), ifany, 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, 2000. NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board ofRegents ofthe University System ofGeorgia 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 forretirement or that become permanently and totally disabled to continue as members of the group health and life 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. - 16- ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT"D" NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS As of June 30, 2000, there were 31 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2000, Atlanta Metropolitan College recognized as incurred $65,563.47 of expenditures, which was net of $22,694.61 of participant contributions. NOTE 9: ENROLLMENT The equivalent full-time student enrollment of Atlanta Metropolitan College was as follows: Regular Term Fall Semester, 1999 Spring Semester, 2000 1,211 1,349 Average Summer School, 1999 - 17 - SUPPLEMENTARY INFORMATION -19 - ATLANTA METROPOLITAN COLLEGE COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED JUNE 30. 2000 ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups RESIDENT INSTRUCTION LOTTERY FOR EDUCATION $ 307,435.31 $ 136,254.50 227,647.83 60,650.45 242,968.18 229,243.55 Total Assets $ 1,067,945.32 $ ====13==:6=,2..5..=4.=50= LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Deferred Revenue Tuition and Fees Other Total Liabilities Fund Balances Unrestricted Total Liabilities and Fund Balances $ 930,023.36 $ 136,254.00 1,361.00 926;00 $ 932,310.36 $ 136,254.00 135,634.96 0.50 $ 1,067,945.32 $====13==:6=,2..5..=4.=50= See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. -20 - EXHIBIT"E" AUXILIARY ENTERPRISES STUDENT ACTIVITIES TOTAL $ 373,361.76 $ 56,705.79 $ 873,757.36 1,165.50 228,813.33 60,650.45 128.96 243,097.14 229,243.55 $ 373,361.76 $ 58,000.25 $ 1,635,561.83 $ 32,681.68 $ 7,736.60 $ 1,106,695.64 1,361.00 926.00 $ 32,681.68 $ 7,736.60 $ 1,108,982.64 340,680.08 50,263.65 526,579.19 $ 373,361.76 $ 58,000.25 $ 1,635,561.83 21 ATLANTA METROPOLITAN COLLEGE COMBINING STATEMENT OF CHANGES IN FUND BALANCES CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30. 2000 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 Net Increase/(Decrease) for the Year FUND BALANCES JULY 1.1999 FUND BALANCES JUNE 30. 2000 RESIDENT INSTRUCTION LOTTERY FOR EDUCATION $ 11,225,062.37 $ 71,110.83 5,734.46 $ 11,301,907.66 $ 171,426.00 171,426.00 $ 11,221,977.19 $ 171,425.50 32,140.12 14,295.51 $ 11 ,268,412.82 $ $ 33,494.84 $ 102,140.12 171,425.50 0.50 0.00 $ 135,634.96 $ =======0..5..0.== See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. -22 - EXHIBIT"F" AUXILIARY ENTERPRISES STUDENT ACTIVITIES TOTAL $ 267,679.36 $ 79,118.75 $ 11,743,286.48 255.00 297.00 71,662.83 5,734.46 $ 267,934.36 $ 79,415.75 $ 11,820,683.77 $ 67,664.26 $ 11,461,066.95 $ 198,476.33 198,476.33 1,290.70 273.15 32,140.12 15,859.36 $ 199,767.03 $ 67,937.41 $ 11,707,542.76 $ 68,167.33 $ 11,478.34 $ 113,141.01 272,512.75 38,785.31 413,438.18 $ 340,680.08 $ 50,263.65 $ ==5=2=::6=,5::79::::.1::::9= - 23- ATLANTA METROPOLITAN COLLEGE COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES UNRESTRICTED YEAR ENDED JUNE 30, 2000 REVENUES State Appropriations Tuition and Fees Federal 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 Intercollegiate Athletics Total Expenditures OTHER TRANSFERS AND ADDITIONS/{DEDUCTIONS) 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) RESIDENT INSTRUCTION LOTTERY FOR EDUCATION $ 8,128,570.00 $ 2,912,129.00 56,452.99 7,814.56 120,095.82 $ 11,225,062.37 $ 171,426.00 171,426.00 $ 4,870,357.95 200,000.00 862,566.54 $ 1,071,791.46 2,753,356.28 1,403,576.96 60,328.00 19,999.50 151,426.00 $ 11,221,977.19 $ 171,425.50 $ 62,549.78 -32,140.12 $ 30,409.66 Net Increase/(Decrease) in Fund Balances $ 33,494.84 $ ======0.=50= See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 24- EXHIBIT "Gil AUXILIARY ENTERPRISES STUDENT ACTIVITIES TOTAL $ 8,299,996.00 $ 79,047.25 2,991,176.25 56,452.99 7,814.56 $ 265,954.36 265,954.36 1,725.00 71.50 121,892.32 $ 267,679.36 $ 79,118.75 $ 11,743,286.48 $ 4,870,357.95 200,000.00 882,566.04 $ 67,664.26 1,139,455.72 2,904,782.28 1,403,576.96 60,328.00 $ 198,476.33 198,476.33 $ 198,476.33 $ 67,664.26 $ 11,659,543.28 $ -1,035.70 $ 23.85 $ 61,537.93 $ -1,035.70 $ -32,140.12 23.85 $ _ _-=2:.:;,9.1.:,3;:;.97:.:.8=-1:.. $ 68,167.33 $ 11,478.34 $ ======1.,;:13:;,,1=4=:1:=,0==1 - 25- ATLANTA METROPOLITAN COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 2000 REVENUES State Appropriations Other Revenues Retained CURRENT FUNDS UNRESTRICTED RESTRICTED PLANT FUNDS UNEXPENDED $ 8,128,570.00 $ 3,096,492.37 $ _--=4~,5::..;1c.:::0~.5::.21.:.:..3::::0~ 706,640.00 122,855.75 $ 11,225,062.37 $ 4,510.521.30 $ _ _.......;...82_9..:..,,4_95_._75_ 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 Year 2000 Project 8,414,906.89 $ 2,417,228.38 200,000.00 174,841.92 15,000.00 501,236.55 4,009,284.75 $ 829,495.75 $ 11,221,977.19 $ 4,510,521.30 $ _ _......;:;,;82:;;:;9..:..;,4~95;;.;.,;,.;75~ Excess of Revenues over Expenditures $ 3.085.18 $ 0.00 $ ..... 0..0...0_ (1) To eliminate tuition waivers not budgeted. See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. -26- SCHEDULE "1" TOTAL ADJUSTMENTS (1 ) TOTAl (Budget Basis) BUDGET VARIANCEFAVORABLE (UNFAVORABLE) $ 8,835,210.00 7,729,869.42 $ $ -60,328.00 8,835,210.00 $ 7,669,541.42 8,835,210.00 $ 7,462,713.00 0.00 206,828.42 $ 16,565,079.42 $ -60,328.00 $ 16,504,751.42 $ 16,297,923.00 $ _ _-=20:;:6:!..::,8::2::::.;8...:.:42=- $ 8,414,906.89 501,236.55 2,417,228.38 $ 4,009,284.75 829,495.75 200,000.00 174,841.92 15,000.00 $ -60,328.00 8,414,906.89 $ 501,236.55 2,356,900.38 4,009,284.75 829,495.75 200,000.00 174,841.92 15,000.00 8,759,761.00 $ 604,841.00 2,256,619.00 3,595,220.00 706,640.00 200,000.00 174,842.00 0.00 344,854.11 103,604.45 -100,281.38 -414,064.75 -122,855.75 0.00 0.08 -15,000.00 $ 16,561,994.24 $ -60,328.00 $ 16,501,666.24 $ 16,297,923.00 $ -=20:;:3~,7....:.4.::..:3..=.24~ $ 3,085.18 $ = ...................0...-.0.0.... $ 3,085.18 $ .............._~3~,O~85:;:,;..1.:.:;8~ -27 - ATLANTA METROPOLITAN COLLEGE SCHEDULE "2" SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET LOTTERY FOR EDUCATION YEAR ENDED JUNE 20, 2000 REVENUES State Appropriations CURRENT FUNDS UNRESTRICTED BUDGET VARIANCE FAVORABLE (UNFAVORABLE) $ 171,426,00 $ 171,426.00 $ --=.:0..::.;00:... EXPENDITURES Equipment, Technology and Construction Trust Fund $ 106,426.00 $ 106,426.00 $ 0.00 Special Funding Initiatives 64,999.50 65,000,00 0.50 $ 171,425,50 $ 171 ,426.00 $ ---=0:..:.:,5:.:0~ Excess of Revenues over Expenditures $========0,=:50= $=====0~.~50;;,." See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. 29 ATLANTA METROPOLITAN COLLEGE CHANGES IN INVESTMENT IN PLANT YEAR ENDED JUNE 30, 2000 Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections BALANCE JULY 1,1999 CURRENT FUNDS UNRESTRICTED RESTRICTED $ 1.647,568.37 10.882,334.47 1,323,123.27 4.678,120.25 $ 600,616.44 $ 10.514.65 1.903,427.03 85.106.25 $ 20,434.573.39 $ 685.722.69 $ ==1=0...5..=14=.==:65= See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 30- SCHEDULE "3" ADDITIONS PLANT FUNDS UNEXPENDED GEORGIA STATE FINANCING AND INVESTMENT COMMISSION DEDUCTIONS DISPOSALS/ DELETIONS/ ADJUSTMENTS BALANCE JUNE 30, 2000 $ 1,647,568.37 $ 4,167.98 $ 3,919,901.50 $ 10,000.00 14,796,403.95 19,012.77 1,342,136.04 49,732.98 4,588.32 5,334,396.00 19,659.62 1,968,873.66 $ 72,913.73 $ 3,919,901.50 $ 34,247.94 $ 25,089,378.02 - 31 - ATLANTA METROPOLITAN COLLEGE SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS JUNE 30, 2000 RESIDENT INSTRUCTION CURRENT FUNDS UNRESTRICTED LOTTERY FOR AUXILIARY EDUCATION ENTERPRISES NET INVESTMENT IN PLANT Investment in Plant Facilities RESTRICTED Designated for Subsequent Years' Expenditures UNRESTRICTED Designated For Intercollegiate Athletics $ 240,337.87 For Inventory Reserve $ 55,000.00 For Subsequent Years' Expenditures 100,342.21 Surplus Regular Lottery for Education 80,634.96 _____ $ $ 135,634.96 $ ----::0::.:.:.5~0:... 0.50 $ _----:3::..;4~0~,6:::.;80::.:..0:::.:8~ $ 135,634.96 $ 0.50 $ ==3=4=0=,6.8.0.;;,,;.=:08= See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information. - 32- SCHEDULE "4" STUDENT ACTIVITIES RESTRICTED PLANT FUNDS UNEXPENDED INVESTMENT REGULAR IN PLANT TOTAL $ 25,089,378.02 $ 25,089,378.02 $ 135,966.40 $ _..--:.1.:::.;35::.L:,9::.::6~6.~40=- $ 50.263.65 $ 240,337.87 55,000.00 150.605.86 $ _ _....:5:.:0.z::.2~63:..::::.;65=- $ 1.294.00 $ 1,294.00 81.928.96 0.50 $ 527,873.19 $ 50,263.65 $ 135,966.40 $ 1.294.00 $ 25,089,378.02 $ 25,753.217.61 - 33- SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS ATLANTA METROPOLITAN COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 561-96-01 561-96-02 Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses CORRECTIVE ACTIONIRESPONSES FUND EQUITIES Deficit Fund Balance Finding Control Number: 561-96-01 The College contacted the United States Department ofEducation in an effort to fund the fiscal year 1994 Pell Grant Program deficit by having the authorization amount for the fiscal year 1994 Pell Grant Program increased by $34,363.31. We explored the options available to us in this regard without success. The College has also contacted the Board of Regents regarding the funding of this deficit and will continue to explore all reasonable options available to the College to fund this deficit. FUND EQUITIES Deficit Fund Balance Finding Control Number: 561-96-02 The College contacted the United States Department ofEducation in an effort to fund the fiscal year 1995 Pell Grant Program deficit by having the authorization amount for the fiscal year 1995 Pell Grant increased by $64,595.20. In March 1998, the United States Department of Education notified the College that an authorization increase was appropriate for the fiscal year 1995 award year. The College has been given the opportunity to submit an official request for an authorization increase. The College has contracted with an accounting firm to provide assistance in preparation of the documentation required to support an authorization increase. The College has also contacted the Board of Regents regarding the funding of the deficit and will continue to explore all reasonable options available to the College to fund this deficit. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 561-96-02 See Prior Year Financial Statement Findings and Questioned Costs 561-96-04 Partially Resolved - See Corrective Action/Responses 561-96-05 Partially Resolved - See Corrective Action/Responses - 1- ATLANTA METROPOLITAN COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2000 PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS CORRECTIVE ACTIONIRESPONSES REPORTING Incorrect Student Payment Summary Report Finding Control Number: 561-96-04 The College is currently waiting for an additional upward adjustment from the United States Department ofEducation in the amount of$41,529.14 to fully fund the fiscal year 1996 Pell Grant Expenditures. SPECIAL TESTS AND PROVISIONS Overpayments to Federal Financial Aid Recipients Finding Control Number: 561-96-05 The student receiving $282.00 has not responded to our request for repayment of the amount received in error. The College will continue to place on hold the academic record of this student until the obligation is satisfied. -2- SECTION ill CURRENT YEAR FINDlNGS AND QUESTIONED COSTS ATLANTA METROPOLITAN COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-561-00-01 For the year under review, the College failed to reconcile the Banner System to the general ledger and therefore could not provide detailed supporting documentation for balance sheet accounts comprised of an accounts receivable balance of $32,448.93, several accounts payable accounts totaling $(-)111 ,621.67 and a cash clearing account balance of $4,790.50. These account balances resulted primarily from interfaces between the College's Banner Student Registration System and the College's accounting system. Management was unable to produce subsidiary records from the Banner Student Registration System to support the balances on the accounting system's general ledger. Further review ofthe College's receivable report revealed additional accounts receivable for which the College could not provide detailed supporting documentation. These amounts totaling $6,770.54 also appear to be related in part to problems associated with Banner interfaces. Several of the receivables discussed above had credit balances. Some of these were due to cash receipts being credited to a receivable account when no receivable had been established. Others were due to cash being posted to existing receivables even though the College had previously credited cash against established receivables. In addition the College recorded a liability for stale dated checks in the amount of $108,690.79. These checks represent financial aid disbursements made in prior years that were not delivered to the students. The College should investigate the matters described above and make the appropriate adjustments to the accounting records to ensure that general ledger accounts are accurately reported. Procedures should be implemented to ensure that detailed subsidiary records are maintained that support the balances reported on the general ledger. GENERAL LEDGER Agency Fund Deficits Finding Control Number: FS-561-00-02 At June 30, 2000, the College had several agency fund accounts with deficit balances totaling $8,363.11. These deficits were the result ofthe College disbursing funds prior to or in excess ofthe receipt offunds. The College should implement procedures to monitor the individual agency funds and to ensure that funds are received prior to disbursements. - 1- ATLANTA METROPOLITAN COLLEGE SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2000 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Reconcile Subsidiary Equipment Records to Accounting Records Finding Control Number: FS-56l-00-03 For the year under review, the College failed to properly reconcile the subsidiary equipment records to amounts recorded on the accounting records. This deficiency occurred because ofmanagement's failure to adequately monitor the subsidiary equipment inventory records. The College should establish appropriate procedures to ensure that the subsidiary equipment records are accurately reconciled to the accounting records and that appropriate adjustments are recorded on the accounting records. -2-