ATLANTA METROPOLITAN STATE COLLEGE ATLANTA, GEORGIA MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017 A Member Institution of the University System of Georgia ATLANTA METROPOLITAN STATE COLLEGE - TABLE OF CONTENTS - SECTION I FINANCIAL LETTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXHIBITS A STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND 4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND Page 2 3 4 5 21 22 24 26 SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS (This page left intentionally blank) SECTION I FINANCIAL (This page left intentionally blank) Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 9, 2017 Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia and Dr. Gary A. McGaha, President Atlanta Metropolitan State College Ladies and Gentlemen: This Management Report contains information pertinent to the Atlanta Metropolitan State College's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Core Requirement 2.11.1 (Financial resources) of as of and for the year ended June 30, 2017. Additionally, we audited Atlanta Metropolitan State College's Federal Student Aid programs for the year ended June 30, 2017 to meet the requirements of COC Comprehensive Standard 3.10.2. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement, including results of our audit of the Federal Student Aid programs. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it. Additionally, we have performed certain procedures at Atlanta Metropolitan State College to support our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2017. This report is intended solely for the information and use of the management of Atlanta Metropolitan State College, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. Respectfully, Greg S. Griffin State Auditor (This page left intentionally blank) SELECTED FINANCIAL INFORMATION - 1 - ATLANTA METROPOLITAN STATE COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS) JUNE 30, 2017 ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, Net Receivables - Federal Financial Assistance Receivables - Other Prepaid Items Total Current Assets Noncurrent Assets Due from USO - Capital Liability Reserve Fund Capital Assets, Net Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred Loss on Defined Benefit Pension Plan LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainage Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Claims & Judgements Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability Claims & Judgements Total Noncurrent Liabilities Total Liabilities Deferred Inflows of Resources Deferred Gain on Defined Benefit Pension Plan NET POSITION Net Investment in Capital Assets Restricted for: Expendable Unrestricted Total Net Position - 2 - EXHIBIT "A" $ 431,170 338,409 2,779,146 170,979 3,719,704 69,628 36,102,704 36,172,332 39,892,036 4,303,511 633,340 129,549 43,319 318,017 140,383 2,597 834,063 16,948 879,086 184,732 465,055 355,189 4,002,278 9,672,510 363,498 17,083,388 1,364,004 28,483,400 32,485,678 299,328 25,787,062 77,092 (14,453,613) $ 11,410,541 ATLANTA METROPOLITAN STATE COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS) YEAR ENDED JUNE 30, 2017 EXHIBIT "B" OPERATING REVENUES Student Tuition and Fees (Net) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Bookstore Food Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Salaries Faculty Staff Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Total Operating Expenses Operating Loss NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal Gifts Interest Expense (Capital Assets) Other Nonoperating Revenues Net Nonoperating Revenues Loss Before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts State Other Total Other Revenues, Expenses, Gains or Losses Decrease in Net Position Net Position - Beginning of Year Net Position - End of Year $ 4,673,303 2,546,240 5,823 7,626 8,884 171,596 113,106 114,509 421,113 9,416 188,458 8,260,074 4,642,660 8,943,146 4,836,534 115,651 122,689 3,854,431 829,000 3,847,394 1,214,238 28,405,743 (20,145,669) 10,616,567 8,108,457 240,433 (630,582) 3,475 18,338,350 (1,807,319) 1,348,219 23,503 1,371,722 (435,597) 11,846,138 $ 11,410,541 - 3 - ATLANTA METROPOLITAN STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS) YEAR ENDED JUNE 30, 2017 CASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Net Cash Used by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Net Cash Flows Provided by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases Net Cash Used by Capital and Related Financing Activities Net Decrease in Cash Cash and Cash Equivalents - Beginning of Year Cash and Cash Equivalents - End of Year RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating Loss Adjustments to Reconcile Operating Loss to Net Cash Used by Operating Activities Depreciation Operating Expenses Related to Noncash Gifts Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Accounts Payable Salaries Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Funds Held for Others Compensated Absences Claims and Judgements Net Pension Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources Net Cash Used by Operating Activities NONCASH ACTIVITY Capital Financing Activities Accounts Receivable Accrual, Net of Allowances Loss on Disposal of Capital Assets Accrual of Capital Asset Related Payables Accrual of Capital Financing Interest Payable - 4 - EXHIBIT "C" $ 5,505,558 3,644,740 (10,372,319) (13,675,735) (3,854,431) (18,752,187) 10,616,567 (616,921) 8,348,890 18,348,536 1,269,311 (1,994,549) (174,252) (582,674) (1,482,164) (1,885,815) 2,316,985 $ 431,170 $ (20,145,669) 1,214,238 655,673 (704) 55,677 (93,979) 21,287 524 109,238 13,468 (11,451) 11,272 (956,181) 4,424,322 (1,100,418) (2,949,484) $ (18,752,187) $ 102,411 $ (3,476) $ (458,400) $ (47,908) ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY As defined by Official Code of Georgia Annotated (O.C.G.A) 20-3-50, Atlanta Metropolitan State College (the Institution) is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor. The Institution does not have the right to sue/be sued without recourse to the State. The Institution's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the Institution is not legally separate from the State. Accordingly, the Institution is included within the State's basic financial statements as part of the primary government as defined in section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. The accompanying basic financial statements are intended to supplement the State's Comprehensive Annual Financial Report (CAFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State that is attributable to the transactions of the Institution. They do not purport to, and do not, present fairly the financial position of the State as of June 30, 2017, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying basic financial statements should be read in conjunction with the State's CAFR. The State's CAFR as of and for the year ended June 30, 2017 has not been issued as of the release of this report. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or found at https://sao.georgia.gov/comprehensive-annual-financial-reports. BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows. The Institution's business-type activities financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra-Institution transactions have been eliminated. - 5 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" NEW ACCOUNTING PRONOUNCEMENTS For fiscal year 2017, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 82, Pension Issues-an amendment of GASB Statements No. 67, No. 68, and No. 73. This Statement addresses accounting and financial reporting issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. For fiscal year 2017, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 80, Blending Requirements for Certain Component Units-an amendment of GASB Statement No. 14. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units. The adoption of this Statement does not have a significant impact on the Institution's financial statements. For fiscal year 2017, the Institution adopted GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. The adoption of this Statement does not have a significant impact on the Institution's financial statements. For fiscal year 2017, the Institution adopted GASB Statement No. 77, Tax Abatement Disclosures. This Statement requires governments that enter into tax abatement agreements to disclose certain information about the agreements. The adoption of this Statement does not have a significant impact on the Institution's financial statements. For fiscal year 2017, the Institution adopted GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution other postemployment benefit (OPEB) plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions. The adoption of this Statement does not have a significant impact on the Institution's financial statements. NET POSITION The Institution's net position is classified as follows: Net Investment in Capital Assets: This represents the Institution's total investment in capital assets, net of accumulated amortization/depreciation and reduced by outstanding debt obligations related to those capital assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of capital assets or related debt are included in Net Investment in Capital Assets. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount are not included in Net Investment in Capital Assets. - 6 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" Restricted non-expendable: includes endowment and similar type funds, in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may be either expended or added to principal. For Institution-controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University System of Georgia permits each individual Institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The Institution maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc. Restricted expendable: includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties. Unrestricted: Unrestricted represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institution, and may be used at the discretion of the Institution to meet current expenses for those purposes, except for unexpended state appropriations (surplus) in the amount of $340,173.78. Unexpended state appropriations must be refunded to the Office of the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. SCHOLARSHIP ALLOWANCES Scholarship allowances are the differences between the stated charge for goods and services provided by the Institution, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or non-operating revenues in the Institution's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Institution has recorded contra revenue for scholarship allowances. Student tuition and fees revenues reported on the Statement of Revenues, Expenses and Changes in Net Position are net of discounts and allowances of $4,571,802. NOTE 2: DEPOSITS DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institution's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institution) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: 1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. 2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. - 7 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" 3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. 4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. 5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association. 6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. At June 30, 2017, the carrying value of deposits was $431,170 and the bank balance was $1,044,088. Of the Institution's deposits, $794,088 were uninsured. Of these uninsured deposits, $794,088 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the Institution's name. NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2017: Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Other USG Institutions Other $ 2,116,648 388,957 338,409 563,545 69,628 1,483,100 Less Allowance for Doubtful Accounts 4,960,287 1,773,104 Net Accounts Receivable $ 3,187,183 - 8 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 NOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2017: EXHIBIT "D" Beginning Balance July 1, 2016 Additions Reductions Ending Balance June 30, 2017 Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress $ 3,025,433 $ 376,513 $ - $ - 2,459,369 674,490 3,401,946 1,784,879 Total Capital Assets, Not Being Depreciated 3,025,433 2,835,882 674,490 5,186,825 Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections 43,865,749 1,708,222 2,349,830 2,001,445 174,477 - 96,608 23,948 - 44,040,226 - 1,708,222 - 2,446,438 720 2,024,673 Total Assets Being Depreciated Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections 49,925,246 295,033 13,065,487 1,078,213 1,982,815 1,963,647 1,057,003 83,424 59,510 14,301 720 50,219,559 - 14,122,490 - 1,161,637 - 2,042,325 720 1,977,228 Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Capital Assets, Net 18,090,162 1,214,238 720 31,835,084 (919,205) - $ 34,860,517 $ 1,916,677 $ 674,490 $ 19,303,680 30,915,879 36,102,704 A comparison of depreciation expense for the last three fiscal years is as follows: Fiscal Year Expense 2017 $ 2016 $ 2015 $ NOTE 5: ADVANCES (INCLUDING TUITION AND FEES) 1,214,238 1,395,618 1,337,087 Advances (Including Tuitions and Fees) consisted of the following at June 30, 2017: Prepaid Tuition and Fees Other - Advances $ 684,056 150,007 Total Unearned Revenue $ 834,063 - 9 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" NOTE 6: LONG-TERM LIABILITIES The Institution's Long-Term Liability activity for the year ended June 30, 2017 was as follows: Beginning Balance July 1, 2016 Additions Reductions Ending Balance June 30, 2017 Current Portion Leases Lease Obligations $ 10,031,481 $ - $ 174,239 $ 9,857,242 $ 184,732 Other Liabilities Compensated Absences Net Pension Liability Claims and Judgments Total 817,280 12,659,066 2,675,376 16,151,722 573,989 4,424,322 - 4,998,311 562,716 - 956,183 1,518,899 828,553 17,083,388 1,719,193 19,631,134 465,055 - 355,189 820,244 Total Long-Term Obligations NOTE 7: NET POSITION $ 26,183,203 $ 4,998,311 $ 1,693,138 $ 29,488,376 $ Changes in Net Position for the year ended June 30, 2017 are as follows: 1,004,976 Beginning Balance July 1, 2016 Additions Reductions Ending Balance June 30, 2017 Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position Total Net Position $ 24,829,036 $ 59,067 (13,041,965) $ 11,846,138 $ 2,630,664 $ 12,039,868 16,557,386 31,227,918 $ 1,672,638 $ 25,787,062 12,021,843 77,092 17,969,034 (14,453,613) 31,663,515 $ 11,410,541 - 10 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" The amounts within each category at June 30, 2017 were as follows: Net Investment in Capital Assets Restricted for Expendable Sponsored and Other Organized Activities Unrestricted Auxiliary Operations R & R Reserve Reserve for Encumbrances Capital Liability Reserve Fund Other Unrestricted Total Unrestricted $ 25,787,062 77,092 (195,889) 78,415 95,887 69,628 (14,501,654) (14,453,613) Total Net Position $ 11,410,541 NOTE 8: LEASE OBLIGATIONS The Institution is obligated under various capital and operating leases for the acquisition or use of real property and equipment. CAPITAL LEASES The Institution has one capital lease which is payable in semi-annual installments expiring in 2041. Expenditures for fiscal year 2017 were $798,581 of which $582,674 represented interest and $41,655 represented executory costs. Total principal paid on capital leases was $174,252 for the fiscal year ended June 30, 2017. The interest rate associated with this lease is 5.85 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2017: Description Buildings Outstanding Net Assets Held Balances Under Capital per Lease Accumulated Lease at Schedules at Gross Amount Depreciation June 30, 2017 June 30, 2017 (+) (-) (=) $ 10,250,000 $ 1,565,972 $ 8,684,028 $ 9,857,242 - 11 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. The following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2017. Description Lessor (1) CAPITAL LEASE SCHEDULE Original Principal Lease Term Begin Date End Date Outstanding Principal Balance at June 30, 2017 Student Center Atlanta Metropolitan College Foundation, Inc. $ 10,250,000 28 years 7/2012 6/2041 $ 9,857,242 (1) Atlanta Metropolitan State College's capital lease is with a related party. OPERATING LEASES The Institution's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2018 through 2022. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Facilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $48,393 for the fiscal year ended June 30, 2017. - 12 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2017, were as follows: Capital Leases Operating Leases Year Ending June 30: 2018 2019 2020 2021 2022 2023 - 2027 2028 - 2032 2033 - 2037 2038 - 2042 $ 799,831 $ 801,533 805,231 806,596 808,003 4,075,599 4,147,645 4,232,368 3,450,021 47,779 15,379 7,650 4,645 549 - Total Minimum Lease Payments 19,926,827 $ 76,002 Less: Interest Less: Executory costs 8,592,528 1,477,057 Principal Outstanding $ 9,857,242 NOTE 9: RETIREMENT PLANS The Institution participates in the Teachers Retirement System of Georgia retirement plan administered by the State of Georgia. This plan issues separate publicly available financial reports that include the applicable financial statements and required supplementary information. Reports may be obtained from the Teachers Retirement System of Georgia administrative offices. The significant retirement plans that the Institution participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. A. Defined Benefit Plans: Teachers Retirement System of Georgia Summary of Significant Accounting Policies Pensions: For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. - 13 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" General Information about the Teachers Retirement System Plan description: All teachers of the Institution as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications. Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2017. The Institution's contractually required contribution rate for the year ended June 30, 2017 was 14.27% of annual Institution payroll. Institution contributions to TRS were $1,404,304 for the year ended June 30, 2017. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the Institution reported a liability for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2015. An expected total pension liability as of June 30, 2016 was determined using standard roll-forward techniques. The Institution's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2016. At June 30, 2016, the Institution's proportion was 0.082804%, which was a decrease of 0.000348% from its proportion measured as of June 30, 2015. - 14 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" For the year ended June 30, 2017, the Institution recognized pension expense of $1,778,628. At June 30, 2017, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources TRS Deferred Inflows of Resources Differences between expected and actual experience $ 254,496 $ 84,477 Changes of assumptions 442,778 - Net difference between projected and actual earnings on pension plan investments 2,161,119 - Changes in proportion and differences between Institution contributions and proportionate share of contributions 40,814 214,851 Institution contributions subsequent to the measurement date 1,404,304 - Total $ 4,303,511 $ 299,328 Institution contributions subsequent to the measurement date of $1,404,304 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30: TRS 2018 2019 2020 2021 2022 $ 281,863 $ 281,862 $ 1,183,410 $ 821,769 $ 30,975 Actuarial assumptions: The total pension liability as of June 30, 2016 was determined by an actuarial valuation as of June 30, 2015 using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.25 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disability Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used - 15 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Total * Rates shown are net of the 2.75% assumed rate of inflation Target allocation 30.00% 39.80% 3.70% 1.50% 19.40% 5.60% 100.00% Long-term expected real rate of return* (0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Institution's proportionate share of the net pension liability to changes in the discount rate: The following presents the Institution's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the Institution's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: Institution's proportionate share of the net pension liability 1% Decrease (6.50%) Current discount rate (7.50%) $ 26,590,505 $ 17,083,388 $ 1% Increase (8.50%) 9,255,845 Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publically available at www.trsga.com/publications. - 16 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" B. Defined Contribution Plan: Regents Retirement Plan Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. Funding Policy The Institution makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2017, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. The Institution and the covered employees made the required contributions of $201,149 (9.24%) and $130,616 (6%), respectively. VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. NOTE 10: RISK MANAGEMENT The USG offers its employees and retirees under the age of 65 access to four different healthcare plan options. For the USG's Plan Year 2017, the following healthcare plan options were available: BlueChoice HMO Comprehensive Care Consumer Choice HSA Kaiser Permanente HMO The Institution's participating employees and eligible retirees pay premiums into the plan fund to access benefits coverage. All units of the USG share the risk of loss for claims associated with these plans. The plan fund is considered to be a self-sustaining risk fund. The USG has contracted with Blue Cross and Blue Shield of Georgia, a wholly owned subsidiary of Anthem, Inc., to serve as the claims administrator for the self-insured healthcare plan options. In addition to the self-insured healthcare plan options offered to the employees and eligible retirees of the USG, a fully insured HMO healthcare plan option also is offered through Kaiser Permanente. The Comprehensive Care plan has a carvedout prescription drug plan administered through CVS Caremark. Pharmacy drug claims are processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. - 17 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" Generally, claims are submitted by participating pharmacies directly to CVS Caremark for verification, processing and payment. CVS Caremark maintains an eligibility file based on information furnished by Blue Cross and Blue Shield of Georgia on behalf of the various organizational units of the University System of Georgia. The dental plan is administered through Delta Dental. Retirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree healthcare exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-ofpocket healthcare-related expenses. The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Institution, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. NOTE 11: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institution expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against the Institution (an organizational unit 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, 2017. - 18 - ATLANTA METROPOLITAN STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2017 EXHIBIT "D" NOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institution pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. As of June 30, 2017, there were 85 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2017, the Institution recognized as incurred $115,856 of expenditures, which was net of $92,830 of participant contributions. - 19 - SUPPLEMENTARY INFORMATION - 20 - ATLANTA METROPOLITAN STATE COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2017 ASSETS Accounts Receivable Federal Financial Assistance Other Prepaid Expenditures Total Assets LIABILITIES AND FUND EQUITY Liabilities Cash Overdraft Accrued Payroll Encumbrances Payable Accounts Payable Unearned Revenue Funds Held for Others Other Liabilities Total Liabilities Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus Total Fund Balances Total Liabilities and Fund Balances SCHEDULE "1" $ 338,409.48 2,701,674.01 164,263.24 $ 3,204,346.73 $ 159,239.99 138,282.68 92,570.13 154,050.93 677,809.62 9,346.63 17,896.40 1,249,196.38 88,708.18 48,135.70 1,292,306.88 185,825.81 340,173.78 1,955,150.35 $ 3,204,346.73 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 21 - ATLANTA METROPOLITAN STATE COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2017 SCHEDULE "2" REVENUES State Appropriation $ Other Funds Total Revenues CARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance Total Funds Available EXPENDITURES Teaching Excess of Funds Available over Expenditures $ FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prior Year Payables/Expenditures Unreserved Fund Balance (Surplus) Returned to Board of Regents - University System Office Year Ended June 30, 2016 Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCE JUNE 30 BUDGET 10,849,507.00 $ 24,485,147.00 35,334,654.00 0.00 35,334,654.00 35,334,654.00 0.00 $ ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) 10,849,507.00 $ 20,502,195.63 31,351,702.63 0.00 (3,982,951.37) (3,982,951.37) 692,980.93 32,044,683.56 692,980.93 (3,289,970.44) 31,845,812.60 198,870.96 $ 3,488,841.40 198,870.96 2,109,086.54 232,940.45 340,173.78 (232,940.45) (692,980.93) 1,955,150.35 SUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recoveries Uncollectible Accounts Receivable Tuition Carry-Over Total Reserved Unreserved Surplus $ 88,708.18 48,135.70 1,292,306.88 185,825.81 1,614,976.57 340,173.78 Total Fund Balance $ 1,955,150.35 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 22 - (This page left intentionally blank) ATLANTA METROPOLITAN STATE COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2017 Teaching State Appropriation State General Funds Other Funds Total Operating Activity Original Appropriation Amended Appropriation Final Budget Current Year Revenues $ 10,849,507.00 $ 10,849,507.00 $ 10,849,507.00 $ 10,849,507.00 23,303,787.00 23,303,787.00 24,485,147.00 20,502,195.63 $ 34,153,294.00 $ 34,153,294.00 $ 35,334,654.00 $ 31,351,702.63 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 24 - SCHEDULE "3" Funds Available Compared to Budget Prior Year Adjustments and Total Carry-Over Program Transfers Funds Available Variance Negative Expenditures Compared to Budget Variance Actual Positive Excess of Funds Available Over Expenditures $ 0.00 $ 692,980.93 0.00 $ 0.00 10,849,507.00 $ 21,195,176.56 0.00 $ (3,289,970.44) 10,849,507.00 $ 20,996,305.60 0.00 $ 3,488,841.40 0.00 198,870.96 $ 692,980.93 $ 0.00 $ 32,044,683.56 $ (3,289,970.44) $ 31,845,812.60 $ 3,488,841.40 $ 198,870.96 - 25 - ATLANTA METROPOLITAN STATE COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2017 Teaching State Appropriation State General Funds Other Funds Total Teaching Prior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable Beginning Fund Balance July 1 Fund Balance Carried Over from Prior Period as Funds Available Return of Fiscal Year 2016 Surplus Prior Period Adjustments $ 15,279.02 $ 0.00 $ (15,279.02) $ 34,576.17 910,642.36 (692,980.93) (217,661.43) 305,597.61 925,921.38 (692,980.93) (232,940.45) 340,173.78 1,416,105.61 0.00 0.00 0.00 Budget Unit Totals $ 2,342,026.99 $ (692,980.93) $ (232,940.45) $ 340,173.78 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 26 - SCHEDULE "4" Other Adjustments Early Return Fiscal Year 2017 Surplus Excess of Funds Available Over Expenditures Ending Fund Balance June 30 Analysis of Ending Fund Balance Reserved Surplus Total $ 0.00 $ 123,798.73 123,798.73 0.00 $ 0.00 0.00 0.00 $ 198,870.96 198,870.96 34,576.17 $ 628,267.30 662,843.47 0.00 $ 322,669.69 322,669.69 34,576.17 $ 305,597.61 340,173.78 34,576.17 628,267.30 662,843.47 (123,798.73) $ 0.00 $ 0.00 0.00 $ 0.00 1,292,306.88 1,292,306.88 0.00 1,292,306.88 198,870.96 $ 1,955,150.35 $ 1,614,976.57 $ 340,173.78 $ 1,955,150.35 Summary of Ending Fund Balance Reserved Department Sales and Services Indirect Cost Recoveries Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus Total Ending Fund Balance - June 30 $ 88,708.18 $ 48,135.70 1,284,474.06 193,658.63 0.00 $ 1,614,976.57 $ 0.00 $ 0.00 0.00 0.00 88,708.18 48,135.70 1,284,474.06 193,658.63 340,173.78 340,173.78 340,173.78 $ 1,955,150.35 - 27 - (This page left intentionally blank) SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS (This page left intentionally blank) ATLANTA METROPOLITAN STATE COLLEGE ENTITY'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FS 2016-001 Deficiencies in Controls over Financial Reporting Internal Control Impact: Material Weakness Compliance Impact: None Finding Status: Partially Resolved This finding is partially resolved. The Institution has completed a realignment and restructuring of the entire Fiscal Affairs unit. The new leadership team is currently performing risk assessments and implementing the necessary controls. All journal entries are being approved and reviewed prior to posting, monthly reconciliations are being reviewed and approved and policy and procedures are being modified to ensure compliance with Board of Regents and State policy and procedures. FS 2016-002 Internal Controls over Capital Assets Internal Control Impact: Material Weakness Compliance Impact: None Finding Status: Partially Resolved This finding is partially resolved. The Institution has completed a realignment and restructuring of the entire Fiscal Affairs unit. The new leadership team is currently performing risk assessments and implementing the necessary controls. All journal entries are being approved and reviewed prior to posting, monthly reconciliations are being reviewed and approved and policy and procedures are being modified to ensure compliance with Board of Regents and State policy and procedures. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. (This page left intentionally blank) SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS (This page left intentionally blank) ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FS-2017-001 Controls over Financial Reporting Internal Control Impact: Material Weakness Compliance Impact: None Repeat of Prior Year Findings: FS-2016-001 Description: Review of the Institution's financial statements revealed several errors. Criteria: A system of internal control over financial reporting does not stop at the general ledger. Management is responsible for implementing a system of internal control over the preparation of the financial statements prepared in accordance with generally accepted accounting principles (GAAP). Additionally, the Institution is required to annually submit GAAP basis financial statements for inclusion in the State of Georgia's Comprehensive Annual Financial Report and the State of Georgia's Single Audit Report. In addition, the Institution is required to annually submit budget basis financial statements for inclusion in the State of Georgia's Budgetary Compliance Report. Condition: Our review of the Institution's GAAP basis financial statements, budget basis financial statements, and Notes to the Financial Statements revealed several errors. Some of the items noted were as follows: 1. The Institution was unable to reconcile capital gifts and grants revenue to the supplemental information provided by the Georgia State Financing and Investment Commission (GSFIC) by $21,755. Revenues appear to be understated on the Statement of Revenues, Expenditures and Changes in Net Position. 2. The Institution could not provide adequate supporting documentation for numerous items reflected on the Statement of Net Position including $873,275 of accounts receivable, $69,023 of accounts payable, $343,123 of deposits held for other organizations, $48,581 of advances and $2,597 of deposits. - 1 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS 3. The Institution made errors with several year-end journal entries. These errors caused Accounts Receivable and Advances to be understated by $48,581, compensated absences to be misclassified between the current and non-current portion by $41,513 and claims and judgments and the related expenditures to be understated by $97,282. 4. Several errors were noted in the Notes to the Financial Statements. The Institution did not disclose $41,655 in current year executory costs related to its capital leases as required by the standard template. Additionally, the Scholarship Allowance disclosed did not include Institutional Waivers in the amount of $242,994. Depreciation expense reported for fiscal year 2015 did not agree to the prior year report by $41,904. Lastly, recognized pension expense for TRS was misstated by $141,907. 5. A misclassification in the amount of $18,025 was noted between Restricted Expendable Net Position and Unrestricted Net Position reported on the Statement of Net Position. 6. Accounts Payable and Accounts Receivable appear to be understated by $24,867, based on a review of the General Ledger and Post-Closing journal entries made by the entity. 7. Claims and Judgments appear to be understated by $600,000.00 related to the down payment for the United States Department of Education liability. Cause: In discussing this deficiency with the Institution, management indicated that the cause was the College's previous Fiscal Affairs management's failure to implement satisfactory controls to ensure that activity is properly documented and recorded in the accounting records. Effect or Potential Effect: Significant misstatements and undocumented balances were included in the financial statements presented for review. In addition, the lack of controls and monitoring could impact the reporting of the Institution's financial position and results of operation. Recommendation: The Institution should provide additional training and review the accounting controls and procedures currently in place, identify weaknesses, and design and implement procedures necessary to strengthen controls over the preparation of the financial statements. Improved financial reporting controls will help ensure the Institution's financial submissions are materially correct and accurately represent its operations to meet the University System of Georgia and the State of Georgia's financial reporting needs. Views of Responsible Officials and Corrective Action Plans: Management agrees with the recommendation. As a result of current management's efforts, new controls and procedures have been implemented to ensure that the Institution's financial submissions are materially correct and accurately represent the College's operations. Contact Person: Arisa Burgest Telephone: 404-756-2744 Email: aburgest@atlm.edu - 2 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FS-2017-002 Internal Controls over Capital Assets Internal Control Impact: Material Weakness Compliance Impact: None Repeat of Prior Year Findings: FS-2016-002 Description: Capital Asset activity recorded by the Institution contained significant errors and omissions. Criteria: The Institution's management is responsible for designing and maintaining internal controls to provide assurance that capital asset records are accurately maintained and are in accordance with capitalization guidelines and instructions provided in Section 7 of the Board of Regents' Business Procedures Manual. Condition: Deficiencies noted during our engagement were as follows: 1. The Institution could not provide adequate supporting documentation for the prior year building addition. A likely understatement of $800,176 was noted. 2. Construction in progress was understated by $123,500. 3. The addition to land was overstated by $6,550, and construction work in progress was understated by $6,550 due to the Institution recording invoices in the wrong projects. 4. The Institution did not perform a complete physical inventory for the year under review. Only 50 assets out of 195 were reviewed. 5. The Institution incorrectly capitalized one item in the prior year in the amount of $31,785 that did not meet the capitalization threshold set out in the Board of Regents Business Procedures Manual. The asset was not removed in the current year, and the net book value at June 30, 2017 was $20,130. In addition, the entity incorrectly capitalized one item in the current year in the amount of $4,499 that did not meet the capitalization threshold. 6. The Institution failed to capitalize a smartboard purchased in the year under review with a cost of $5,316. 7. The auditor noted four capital asset additions without proper documentation of approval. 8. Beginning accumulated depreciation for equipment was overstated by $209,000, and beginning accumulated depreciation for buildings was understated by the same amount. 9. In the prior year, the Institution failed to capitalize one capital lease. This error was not corrected in the year under review, and the net book value at June 30, 2017 was $13,060. Additionally, the Institution failed to capitalize two capital leases in the current year with net book values at fiscal year-end of $9,811. - 3 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Cause: In discussing these issues with management, they believe that these deficiencies were the result of the College's previous Fiscal Affairs management's failure to implement appropriate internal controls and procedures necessary to properly record, maintain and track capital assets. Effect or Potential Effect: The breakdown of internal control by the Institution over maintaining capital assets could result in potential misappropriation of assets and misrepresentation of the Institution's financial position and result of operations. Recommendation: The Institution should implement controls over capital assets to ensure that asset additions are adequately documented and recorded, that accurate capitalization thresholds are used and that inventory discrepancies are addressed. Views of Responsible Officials and Corrective Action Plans: Management agrees with the recommendation. As a result of current management's efforts, the Institution's capital assets reported as of June 30, 2017 are materially correct and reconciled with the subsidiary ledger. Depreciation expense and accumulated depreciation are also correctly stated as of the balance sheet date. New procedures have been put in place for reconciliations to be completed in accordance with BOR policy and procedures. Contact Person: Arisa Burgest Telephone: 404-756-2744 Email: aburgest@atlm.edu FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FA 2017-001 Excessive Cash Balances Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Cost: Cash Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster P268K173513 (Fiscal Year: 2017), P268K163513 (Fiscal Year: 2016), P268K153513 (Fiscal Year: 2015), P268K143513 (Fiscal Year: 2014), P268K133513 (Fiscal Year: 2013), P268K123513 (Fiscal Year: 2012) None Identified Description: The Institution maintained excessive cash balances related to the Direct Loan program. Criteria: Provisions included in 34 CFR 668.163 and 668.166 provide requirements for maintaining and accounting for funds and excess cash, respectively. - 4 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: Upon review of cash drawdowns and disbursements related to the Federal Direct Loan program, excessive cash balances were noted for up to 73 days in the fiscal year. Provisions included in 34 CFR 668.166(a), "The Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Secretary." Cause: In discussing these deficiencies with management, they stated that drawdowns are made after disbursements, but reconciliations between PeopleSoft and Banner were not performed regularly during the year under review. It appears this lead to discrepancies between cash on hand versus cash needs. Effect or Potential Effect: The Institution was not in compliance with Federal regulations concerning the disbursement of Federal Direct Loan funds and excess cash. Recommendation: The Institution should establish procedures to ensure that Federal Direct Loan funds are disbursed within three business days of the receipt of such funds. The Institution should only request Federal Direct Loan funds when the amounts are immediately needed to disburse funds to students or parents. Additionally, the Institution should develop and implement a monitoring process to ensure that controls are properly implemented. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. Effective Fall 2017, which started August 21, 2017, new procedures have been implemented ensuring the Bursar performs timely reconciliations of disbursements and drawdowns and returning any undisbursed cash within the stipulated time frame. Contact Person : Takiela Owens, Bursar Telephone : 678-623-1130 Email : towens@atlm.edu FA-2017-002 Overpayment of Student Financial Assistance Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: Eligibility Material Weakness Material Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster PO63P163513 (Fiscal Year: 2017) $6,943.50 Description: The Institution's Student Financial Assistance Office improperly determined the financial need of eligible students. - 5 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Criteria: Provisions included in 34 CFR 668 provide general provisions for administering Student Financial Assistance (SFA) programs and 34 CFR, 675, 676, 685, and 690 provide eligibility and other related program requirements that are specific to the Federal Work-Study program, Federal Supplemental Educational Opportunity Grant (FSEOG) Program, Federal Direct Loan Program, and Federal Pell Grant Program, respectively. Condition: A sample of forty financial assistance files was selected to determine if financial assistance was properly calculated and disbursed to eligible students. The following deficiencies were noted: 1. Two students in the sample were not in compliance with the Institution's published satisfactory academic progress (SAP) policies. Federal regulations (34 CFR 668.32 and 668.34) state that a student is eligible to receive financial assistance under Title IV programs if satisfactory academic progress is maintained. The students did not meet the quantitative and qualitative requirement of satisfactory academic progress, which resulted in SFA over disbursements totaling $6,943.50. Questioned Cost: Questioned costs of $6,943.50, with likely questioned costs of $491,703.65, were identified for the students who received student financial assistance in excess of their eligible need. Cause: In discussing these deficiencies with management, they stated that the SAP process for these two students was processed manually. Effect or Potential Effect: The Institution was not in compliance with Federal regulations concerning awarding of SFA funds to students. Recommendation: The Institution should review its processes and procedures for determining each student's financial aid eligibility. Where vulnerable, the Institution should develop and/or modify its policies and procedures to ensure that correct amounts will be awarded to students in conformity with financial need requirements. Additionally, the Institution should develop and implement a monitoring process to ensure that controls are properly implemented. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The financial aid management team will continue to review the satisfactory academic progress (SAP) processes and ensure a checkpoint is implemented and monitored by sampling files after Satisfactory Academic Processes are completed. Contact Person: Anna English, Director of Financial Aid Telephone: 678-623-1182 Email: aenglish@atlm.edu - 6 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FA-2017-003 Reports Not Reconciled Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Cost: Reporting Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster P007A150964 (Fiscal Year: 2016), P033A150964 (Fiscal Year: 2016), P063P153513 (Fiscal Year: 2016), P268K163513 (Fiscal Year: 2016) None Identified Description: Fiscal year 2016 amounts reported on the Fiscal Operations and Application to Participate (FISAP) report submitted by the Institution to the U.S. Department of Education were not properly reconciled. Criteria: Federal regulations (34 CFR 668.24, 34 CFR 675.19, 34 CFR 690.81 and 34 CFR 690.83) require the Institution to ensure that reported information is accurate and reconciled as necessary. Condition: The fiscal year 2016 FISAP report included amounts reported for Information on Enrollment, State Grants and Scholarships, the Federal Supplemental Educational Opportunity Grant (FSEOG) Program, the Federal Work-Study (FWS) Program, and the Distribution of Program Recipients and Expenditures by Type of Student could not be reconciled to the accounting records. Cause: In discussing these deficiencies with management, they stated the previous Director of Financial Aid did not maintain documentation for the fiscal year 2016 FISAP report. Effect or Potential Effect: Information submitted to the U.S. Department of Education was not accurate and was not supported by the accounting records. Recommendation: The Institution should implement policy and procedures to ensure that all reports submitted to the U.S. Department of Education are accurately completed and supported by the accounting records. The Institution should also contact the U.S. Department of Education regarding the resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The previous Financial Aid Director no longer works for Atlanta Metropolitan State College. The new financial aid management team has implemented new procedures to ensure that all FISAP reports are accurate, complete and maintained for good record keeping. - 7 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Contact Person: Anna English, Director of Financial Aid Telephone: 678-623-1182 Email: aenglish@atlm.edu FA-2017-004 Return of Title IV Funds Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster P268K173513 (Fiscal Year: 2017), P063P163513 (Fiscal Year: 2017), P007A160964 (Fiscal Year: 2017), P033A160964 (Fiscal Year: 2017) $12,355.03 Description: The Institution did not properly perform the refund process to ensure that unearned Title IV funds were returned in a timely manner. Criteria: The provisions in 34 CFR 668.22 provides requirements over the treatment of Title IV funds when a student withdraws. The Institution is required to determine the amount of Title IV grant that the student earned as of the student's withdrawal date when a recipient of a Title IV grant withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance. A refund must be returned to Title IV programs when the total amount of Title IV grant or loan assistance, or both, that the student earned is less than the amount of the Title IV grant or loan assistance that was disbursed to the student as of the withdrawal date. Condition: Twenty-five students who received Federal financial assistance for the Fall 2016 and Spring 2017 semesters and withdrew from the Institution were selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student in a timely manner. Our examination revealed the following deficiencies: 1. The refund calculations for eleven students who withdrew during the Fall 2016 semester and thirteen students who withdrew during Spring 2017 were calculated incorrectly due to the use of an improper number of scheduled break days and inaccurate institutional charges. These students were requested to return $12,355.03 less than the required amount to various SFA programs. 2. The proration between the school and student portion of the refund was incorrect for four of the students who withdrew during the Fall 2016 semester and five of the students who withdrew during the Spring 2017 semester. 3. Funds were not returned to the appropriate grantor programs within the required time frame of 45 days for sixteen of the withdrawn students tested. - 8 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Questioned Cost: Questioned costs of $12,355.03, with likely questioned costs of $76,304.57, were identified for refunds calculated incorrectly. Cause: In discussing these deficiencies with management, they stated that the Registrar's office did not add the scheduled breaks into the Banner system and all of the Institutional Charges were not added to the Banner System. Effect or Potential Effect: The Student Financial Assistance Office did not calculate the correct amount of refunds for the Title IV Federal program and did not apply the SFA refunds to the Title IV Federal programs in a timely manner. Recommendation: The Institution should develop and implement procedures to ensure that student financial aid refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments 1998, Public Law 105-244. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Financial Aid processes have been updated to include all scheduled breaks in the Banner calculation process to ensure that our R2T4 calculations include the proper number of scheduled breaks and accurate institutional charges in a timely manner. Contact Person: Anna English, Director of Financial Aid Telephone: 678-623-1182 Email: aenglish@atlm.edu FA-2017-005 Federal Direct Loan Program Reconciliations Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Cost: Special Tests and Provisions Material Weakness Material Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster P268K173513 (Fiscal Year: 2017) None Identified Description: The Institution did not perform the required monthly reconciliations for the Federal Direct Loan Program appropriately. Criteria: Provisions included in 34 CFR 685.102(b), 685.301, and 685.303 provide program requirements for the Federal Direct Loan program. - 9 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: Monthly reconciliations of amounts disbursed by student per the Direct Loan Common Origination and Disbursement (COD) system and the student information system were not performed appropriately for eleven months during the fiscal year. Cause: In discussing these deficiencies with management, they stated internal controls, to ensure reconciliations were being performed, were not in place. Effect or Potential Effect: The Institution was not in compliance with Federal regulations concerning the program requirements of the Federal Direct Loan program. Recommendation: The Institution should establish procedures and assign responsibility for the monthly and yearly reconciliation of the Federal Direct Loan program. The Institution's financial aid and business office should maintain their internal records in such a way that they can prepare for the monthly reconciliation. The Institution should establish a monitoring process to ensure the guidelines detained in the Federal Direct Loan School Guide are followed to ensure compliance with Federal Direct Loan requirements. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. Effective Fall 2017, which started August 21, 2017, new procedures have been implemented to perform monthly internal reconciliations between the financial aid and business offices to compare the Direct Loan records to ensure that they match, both in disbursement dates and disbursement amounts. Monthly reconciliation efforts will be documented for future reference. Contact Person : Anna English, Director of Financial Aid Telephone : 678-623-1182 Email : aenglish@atlm.edu OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) Reconciliation of Subsidiary Modules Observation: According to the Board of Regents Business Procedures Manual, subsidiary reconciliations are required to be performed quarterly. The reconciliations could not be provided for the entire year for most subsidiary modules. The entity was able to provide ADP reconciliations for the entire year, the April, 2017 and June 30, 2017 Banner Reconciliations and the year ending PO module and asset management module to capitals ledger reconciliations. Recommendation: The Institution should review procedures in place and implement changes necessary to ensure that subsidiary reconciliations are performed, documented and complete in accordance with Business Procedures Manual Section 1.9. In addition, the Institution should implement a review process to ensure complete documentation of reconciliation efforts and appropriate resolution of reconciling items. - 10 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. New procedures will be implemented to ensure all reconciliations for subsidiary modules will be completed monthly with a quarterly submission, in accordance with BOR requirement. Contact Person: Arisa Burgest Telephone: 404-756-2744 Email: aburgest@atlm.edu Invalid Encumbrance Observation: Testing revealed $19,920 in outstanding purchase orders that appear to be invalid. Recommendation: The Institution should review procedures in place and implement changes necessary to ensure that all outstanding purchase orders are reviewed for validity and are adequately documented. Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. New procedures will be implemented to ensure all purchase orders will have adequate documentation and be reviewed for validity. Contact Person: Arisa Burgest Telephone: 404-756-2744 Email: aburgest@atlm.edu Accounting Controls Overall Observation: Our review of the established internal control structure associated with significant financial applications at the Institution revealed design deficiencies in logical access controls intended to protect information from unauthorized access, manipulation and corruption. The details related to these deficiencies have been provided to management of the institution in accordance with Official Code of Georgia Annotated 50-6-9. Recommendation: Management should review and enhance their policies and procedures to ensure the integrity and accuracy of the information used within the financial statements and as part of awarding financial assistance to students. Additionally, management should ensure proper separation of duties as it relates to financial and student financial assistance processes. Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. In addition to conducting ongoing audits of segregation of duties, the Financial Aid Office will ensure that our Banner monitored processes will continuously be assessed and enhanced to prevent deficiencies in our internal controls. Contact Person: Anna English, Director of Financial Aid Telephone: 678-623-1182 Email: aenglish@atlm.edu - 11 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) Pell Origination Records Observation: Our testing of thirty-five students who received Pell grant funds during the Fall 2016, Spring 2017 and Summer 2017 semesters revealed that the following information was reported incorrectly within the Common Origination and Disbursement (COD) system: The verification status code for thirteen students, the enrollment date for eight students, and the transaction number for one student. Recommendation: The Institution should implement policies and procedures to ensure that all Pell origination records submitted to the COD system are supported by information reflected within the Institution's student information system. Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. Effective Fall 2017, which started August 21, 2017, new procedures have been implemented to ensure that the correct verification codes are being reported to the Common Origination and Disbursement (COD) system. Contact Person : Anna English, Director of Financial Aid Telephone : 678-623-1182 Email : aenglish@atlm.edu Enrollment Reporting Observation: Our testing of twenty-five students who withdrew during the Fall 2016 and Spring 2017 semesters revealed that eleven of the students' withdrawn enrollment statuses were not reported to the National Student Loan Data System (NSLDS) within the required 30 days or 60 days if a roster file was previously scheduled to be submitted. Additionally, eleven students' withdrawn enrollment statuses were never reported to NSLDS. Recommendation: The Institution should implement written policies and procedures to ensure that all changes in student enrollment statuses are reported in a timely manner. Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. Effective Summer 2017, We have put into place a monitoring process and procedure to ensure that all changes in student enrollment statuses are reported in a timely manner to include unofficial withdrawals. Contact Person: Candace Perry, Director of Enrollment Services/College Registrar Telephone: 678-623-1106 Email: cperry@atlm.edu Unofficial Withdrawals Observation: Our review of a sample of thirty-seven students to test the Institution's compliance with 34 CFR 668.22, which is related to the return of Title IV funds, revealed that a refund was not calculated for three students who unofficially withdrew. - 12 - ATLANTA METROPOLITAN STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2017 OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) Recommendation: We recommend that the Institution review its policies and procedures to ensure that students who unofficially withdrew and received Title IV funds are identified and the required refund calculation is performed. Views of Responsible Officials and Corrective Action Plans: We concur with this deficiency. Effective Fall 2017, which started August 21, 2017, new procedures have been implemented to ensure and capture all students that unofficially withdraw from the college upon thirty days of notification. Contact Person : Anna English, Director of Financial Aid Telephone : 678-623-1182 Email : aenglish@atlm.edu - 13 -