Augusta State University, Augusta, Georgia, report on review of the financial statements for the fiscal year ended June 30, 2002

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,, ~EPORT ON REVIEW \1

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OF THE FINANCIAL STATEMENTS

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FISCAL-

YEAR ,

ENDED JUNE

30,' 2002 '

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Russell W. Hinton'

state Auditor -
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AUGUSTA STATE UNNERSITY -TABLEOFCONTENTS-

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

2

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

11

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

12

C STATEMENT OF CASH FLOWS

13

D NOTES TO THE FINANCIAL STATEMENTS

15

SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO

BUDGET - (NON-GAAP BASIS)

1

RESIDENT INSTRUCTION

33

2

LOTTERY FOR EDUCATION

34

3 RECONCILIATION OF SALARIES AND TRAVEL

35

4 RECONCILIATION OF PER DIEM AND FEES

36

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

AUGUSTA STATE UNIVERSITY -TABLEOFCONTENTS-
SECfIONill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I
FINANCIAL

Rll"U I \\. H','TO ....
STATE AUDITOR ,AOAl656 2'74

DEPARTMENT OF AUDITS AND ACCOUNTS
~"'4 \\J,hmglOn ~[rClt "i \\' ~UIIl: ~14 All.JntJ Georgia ':\IJ33.tX4()()
November 26, 2002

Honorable Sonny Perdue, Governor Members of the General Assembly of GeorgIa Members of the Board of Regents of the Umverslty System of GeorgIa
and Honorable WIllIam A Bloodworth, Jr , President Augusta State Umverslty
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladles and Gentlemen
We have reVIewed the accompanymg baSIC financial statements (ExlubIts A through D) ofAugusta State Umverslty, an organIzatIonal urnt ofthe State ofGeorgIa, as of and for the year ended June 30, 2002, m accordance With Statements on Standards for AccountIng and ReVIew Services ISSUed by the Amencan InstItute of CertIfied PublIc Accountants All mfonnatIon mcluded m these finanCIal statements IS the representation of the management of Augusta State Umverslty
A review consIsts pnnclpally of mqumes of Augusta State Umverslty personnel and analytIcal procedures applIed to finanCIal data It IS substantIally less m scope than an audIt m accordance With audItmg standards generally accepted m the Umted States of Amenca, the objectIve ofwhich IS the expressIOn of an 0plmon regardmg the finanCial statements taken as a whole Accordmgly, we do not express such an oplmon
Based on our reView, WIth the exceptIon of the matter dIscussed m the fourth paragraph, we are not aware ofany matenal mOllIficatIons that should be made to the accompanymg finanCial statements m order for them to be m confonnlty WIth accountmg pnnclples generally accepted m the Umted States of Amenca
As descnbed m Note I to the finanCial statements, the UmversIty did not recogmzc June 30, 2001, encumbrances as expenses m the June 3D, 2002, basiC finanCial statements To confonn to generally accepted accountmg pnnclples, encumbrances should be recogmzed as expenses and lIabilItIes m the penod that goods and services are received The effects on the basiC finanCial statements of thIS departure from generally accepted accountmg pnnclples were not reasonably determmable
02ARL-67

As descnbed In Note I, Augusta State Umverslty adopted the provIsIOns of Governmcntal Accounting Standards Board (GASB) Statement No 35, BasIc Fmanczal Slalemems - and Management's DIscussIOn and Ana(vsls - for Publlc Colleges and Umversllles, as amended by GASB Statement No 37, BasIc Fmancza/ Slalemenls - and Management's DIscussIOn and Ana(VS1Sfor Stale and Local Governments, and GASB Statement No 38, Certam Fmanczal StalemenH Note Disclosures, as of July I, 2001, to Implement a new financial reporting model

Management's DIscussIOn and AnalysIs IS not a reqUIred part of the basIc financIal statements but IS supplementary informatIOn reqUIred by the GASB We have applied certaln limited procedures, wluch consisted pnnclpally of Inqumes ofmanagement regardIng the methods of measuremcnt and presentatIon oftlus supplementary informatIon, and we are not aware of any matenal modificatIOns that should be made thereto

Our review was made for the purpose of expressing Imuted assurance that there are no matenal modificatIons that should be made to the financial statements In order for them to be In conformity With accounting pnnclples generally accepted In the Umted States of Amenca The accompanYing supplementary mformatlOn (Schedules 1 through 4) IS presented for additIonal analYSis purposes Such informatIOn has been subjected to the Inqumes and analytIcal procedures applied In the reVIew ofthe financlal.statements, and we are not aware ofany matenal modlficauons that should be made to such data

Respectfully submitted,

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~ell W. Hmton

State AudItor

RWH.as 02ARL-67

REQUIRED SUPPLEMENTARY INFORMATION - 1-

AUGUSTA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

Augusta State UruVerslty IS one ofthe 34 Insl1tutIons ofthe Umverslty System ofGeorgia Augusta State IS the pnmary instItutIon oflngher leanung In the state's second largest City Wlnle It shares the technolOgical and mnoval1ve resources of the Uruverslty System, Augusta State mamtams ItS Instoncal roots that make the learmng expenence as uruque as the campus Itself The Uruverslty IS well known for ItS dedicatIOns to expanding educatIon opportUnIties for people of all ages and backgrounds, WIth a specIfic emphasiS on semce to Georgians m the Central Savannah Rlver Area The mstItutIon contInues to grow as shown by the companson numbers that follow.

Faculty

Students

FY2002 FY2001 FY2000

195

8,671

199

8,074

197

8,333

Durmg fiscal year 2002, the UnIVersity conferred a total of 466 bachelors degrees and 121 masters degrees These figures are down slIghtly from the 485 bachelors degrees and 123 masters degrees In fiscal year 2001.

Overview ofthe Financial Statements and Financial Analysis

Augusta State UruVerslty IS proud to present Its finanCIal statements for fiscal year 2002. The emphasiS ofdISCUSSIOns about these statements WIll be on current year data There are three finanCial statements presented. the Statement of Net Assets; the Statement of Revenues, Expenses and Changes In Net Assets, and, the Statement of Cash Flows TIns diSCUSSIon and analysIS of the Umverslty's finanCial statements proVIdes an OVerview of Its finanCIal actIvItIes for the year. Augusta Stale UnIVersIty has elected to not restate pnor penods for purposes of proVIdmg the comparatIve data for thIS Management's DIscussion and AnalYSiS. However, m future years, when pnor penod mformatIon is avatlable, a comparatIve analYSIS WIll be presented.

Statement ofNet Assets

The Statement ofNet Assets presents the assets, liabilItIes, and net assets of the Umverslty as of the end of the fiscal year The Statement of Net Assets IS a pomt of tIme finanCial statement The purpose ofthe Statement ofNet Assets IS to present to the readers ofthe finanCIal statements a fiscal snapshot of Augusta State Umverslty The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), LIabIlItIes (current and non-current), and Net Assets (assets mmus lIabllInes). The difference between current and non-current assets WIll be dIscussed In the notes to the fmanclal statements.

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From the data presented, readers of the Statement of Net Assets are able to determIne the assets
aVaIlable to contInue the operalions of the InslitutlOn They are also able to determIne how much the InstItutIOn owes vendors, Investors and lendIng Inslitulions

FInally, the Statement ofNet Assets provides a picture ofthe net assets (assets mInUS hablhtles) and theIr aVaIlablhty for expendIture by the Inslitulion Net assets are dIvIded Into three major categones The first category, Invested In capItal assets, net ofdebt, provIdes the InstItulion's eqwty In property, plant and eqUIpment owned by the InslitutlOn The next asset category IS restncted net assets, wIuch IS dIVIded Into two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources IS only aVaIlable for mvestment purposes. Expendable restncted net assets are avaIlable for expenditure by the mstltulion but must be spent for purposes as determmed by donors and/or external enlilies that have placed lime or purpose restnclions on the use of the assets The final category IS unrestncted net assets Unrestncted assets are aVaIlable to the Instltulion for any lawful purpose of the Inslitulion.

Statement of Net Assets, Condensed (thousands of dollars)

Assets Current Assets Capital Assets, Net Other Assets

$ 8,446 34,077 1,108

Total Assets

$ 43,631

Liabilities Current LIablhlies Non-Current LIabIlilies

$ 4,018 398

Total Liabilities

$ 4.416

Net Assets Invested In CapItal Assets, Net of Debt Restncted - Nonexpendable Restncted - Expendable Unrestncted

$ 34,077 303
1,424 3.411

Total Net Assets

$ 39,lli

Statement ofRevenues, Expenses and Changes in Net Assets

Changes In total net assets as presented on the Statement of Net Assets are based on the acliVIty presented In the Statement of Revenues, Expenses and Changes In Net Assets. The purpose of the statement IS to present the revenues received by the InSlitution, both operatIng and nonoperatIng, and the expenses paId by the InstItulion, operatIng and nonoperaling, and any other revenues, expenses, gaIns and losses receIved or spent by the Instltulion Generally speakmg operaling revenues are receIved for proVIdIng goods and SerVIces to the vanous customers and conslituencles of the

-3-

mstltutlOn Operatmg expenses are those expenses paid to acqUIre or produce the goods and servIces provIded m rcturn for the operatmg revenues, and to carry out the miSSIon of thc mstItutlon Nonoperatmg revenues are revenues receIved for whIch goods and servIces are not provIded For examplc state appropnatlons are nonoperatmg because they are provIded by the LegIslature to the mstItutlon WIthout the Legislature directly recelvmg commensurate goods and services for those revenues

Statement of Revenues, Expenses and Changes m Net Assets, Condensed (thousands of dollars)

Operatmg Revenues Operatmg Expenses

$ 18,11 1 -43,120

Operating Loss

$-25,009

Nonoperatmg Revenues and Expenses

27,295

Income (Loss) Before Other Revenues, Expenses, Gams or Losses

$ 2,286

Other Revenues, Expenses, Gains or Losses

681

Increase m Net Assets

$ 2,967

Net Assets at Beglmung of Year, as Onglnally Reported

$ 97,814

Cumulative Effect of Changes m Accountmg Pnnclple

-61.566

Net Assets at Beglnnmg of Year Restated

$ 36.248

Net Assets at End of Year

$ 39.215

The Statement of Revenues, Expenses and Changes m Net Assets reflects a positive year WIth an mcrease m net assets at the end ofthe year Some hlghhghts of the mformatlon are presented on the Statement of Revenues, Expenses and Changes m Net Assets are as follows

-4-

Revenue By Source (thousands of dollars)
For The Year Ended Junc 30, 2002
Operatmg Revenue TUItion and Fees Grants and Contracts Rents and Royalties Sales and Services of Educational Departments AUXIliary Other
Total Operatmg Revenue
Nonoperatmg Revenue State AppropnatlOns Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Total Revenues
Operating Expenses (thousands of dollars) For The Year Ended June 30, 2002
Operating Expenses Instruction Research Public Service AcademiC Support Student Services InstitutIonal Support Plant OperatIOns and Maintenance Scholarships and Fellowships AUXIliary Enterpnses Unallocated DepreciatIon
Total Operatmg Expenses

$ 8,654 5,198 63 552 3,525 I 19
$ 18.1 11
$ 26,01 I 744 20 204 316
$ 27,295
$ 45,406
$ 17,716 74
597 3,928 2,674 5,484 4,383 2,939 3,336 1,989
$ 43 120

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Statement of Cash Flows

Thc final statement presented by the Umverslty IS the Statement of Cash Flows The Statement of Cash Flows presents detaIled InfonnatlOn about the cash actIvIty of the InstItutIon dunng the year The statement IS dIVIded Into five parts The first part deals WIth operatIng cash flows and shows thc net cash used by the operatIng acllvltIes of the InstItutIOn The second sectIon reflects cash flows from non-capItal finanCIng actlVltIes ThIS sectIon reflects the cash receIved and spent for nonoperatIng, non-InvestIng, and non-capital finanCIng purposes The tlnrd section reflects the cash flows from InvestIng actiVItIes and shows the purchases, proceeds, and Interest receIved from InvestIng actIVIties Thc fourth sectIOn deals With cash flows from capItal and related finanCIng actIVIties TIns sectIon deals With the cash used for the acquIsitIOn and constructIon of capItal and related Items The fifth sectIon reconCIles the net cash used to the operatmg Income or loss reflected on the Statement of Revenues, Expenses and Changes In Net Assets.

Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars)

Cash ProVIded (Used) By OperatIng ActIVItIes Non-CapItal FInanCIng ActIVitIes InvestIng ActlVltles CapItal and Related FInancmg ActIVItIes

$ -24,135 26,734 151 -1,198

Net Change In Cash Cash, Begmrung of Year

$ 1,552 2,005

Cash, End of Year

$ 3557

Capital Assets

The Umverslty dId not have any SIgnIficant capital asset addItIons for faCIlItIes In fiscal year 2002 The Uruverslty'S most SIgnIficant capItal assets, as reflected by the net book value, are the new SCIence BuIldIng and the PhysIcal EducatIon and AthletIc Complex (pEAC). Many other campus bUildIngs are fully deprecIated WIth the exceptIon ofproJects for renovatIon or upgrades

ConstructIOn ofa new classroom bUIldIng, Allgood Hall, was nearmg completIon at the end offiscal year 2002 The costs of constructIon on tins $18.2 millIon dollar project wIll show on the Umverslty's finanCIal records In fiscal year 2003 Also ground was broken In late fiscal year 2002 for a second new classroom bUildIng ThIs $21.7 rrullIon project IS expected to be completed In late 2004 Both of these bUildIngs are beIng constructed under the auspices of the GeorgIa State FInanCIng and Investment ConlDlIsslOn (GSFIC).

For addItIOnal InformatIon concerrung CapItal Assets, see Notes I and 6 in the notes to the finanCIal statements

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Economic Outlook The Umverslty IS not aware of any currently known factors, decIsIOns or condItions that would have a slgmficant Impact on the UmversIty's results or financIal pOSitIOn Enrollment rose dunng the past year and effective cost control programs have been put m place Recent budget cuts have Impacted the Umverslty's ability to fully meet Its needs at a lime when expenses are nsmg from the expanded enrollment and from mcreased faclhty ownership costs as the new bUlldmgs come on lme Further state budget reductions would, of course, exacerbate thiS sItuation In summary, the Umverslty expects the commg year to be much hke the year Just ended, requmng tight controls on spendmg and challengmg deciSIOns on deployment of resources to successfully fulfill Its miSSion WIlham A Bloodworth, Jr , PresIdent Augusta State Umverslty
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BASIC FINANCIAL STATEMENTS -9-

AUGUSTA STATE UNlYERSIJY STATEMENT QF NET ASSETS
JUNE 30 2002
ASSETS
Current Assets Cash and Cash EqUivalents Short-Term Investments Accounts ReceIVable, Net Federal Flnaooal AssIstance Other Prepaid Items Inventones
Total Current Assets
Noncurrent Assets Cash and Casll EqUivalents Inves1ments Notes ReoelVabla CapItal Assets, Net (see Note 6)
Total Noncurrenl Assets
Total Assets
LIABILITlES
Currenl Liabilibes salanes Payable Payroll Wlthholdlngs Accounts Payable Deferred Revenue Funds Held for Others Compensa1ed Absences Other Llab.llbes
Total Currenl Liabillbes
Noncurrent LJablllbes Compensated Absences
Totall..Jabillbes
NET ASSETS
Invested ,n Capital Assets, Net of Related Debt Restnctad for
Nonexpendable Expendable Unrestncted
Total Net Assets
see Independent Aa:ountanfs Combined Report on RevIeW of IlasJc FinanCIal Sta1emems
and Supplementary Informabon
The notes to the flnandal atatements are en Integral part of thIS statement
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EXHIBIT "A"

$ 3,557,20301 2,38834514
231,21880 794,890 93 1,020,77072 453,841 81
$ 8,446,27041

$

31859

302,60150

805,33886

34,076,52553

$ 35,184,784 48

$ 43,631,054 89

$

86,61336

77,53300

324,28817

2,863,271 23

174,20283

68642529

5,208 25

$ 4,017,54213

398,33208 $ 4,415,87421

$ 34,076,525 53
302,92009 1,424,64986 3,411,08520

$ 39,215,16068

AUGpSTA STATE UN!\IERSln STATEMENT OF REVENyes EXPENSES AND CHANGFiS IN NET ASSETS
yeAR sNDED JUNE 39 2902
OpERATING REVENyES
Student Tuition end Fees leu Scholarship Allowenee.
Grants lind ContraetJ FedtlrJ!lll Local
Renta end Royaltle.
SlIle. end Servll:e. of EduCilbonal Departments
AwoI_ry Enterpn...
e-.tore
PerkJngIT~n.poIUibon
Intarcolleg... Alhlabca Other ~n1ZIIUon' Other Opa~tIng Revenun
Total Opebng Raven,,"
OPERATING EXPENSES
Sala.... Focuhy Sta'
Employn Benefits Other Personal ServICe' Travel SCholarshIPS end FeI1OW'Ihlpa Utll/bes S00up..p.f.te..l _lind Other Services
Total O....lIng ~
Operabng Income (lou)
NONOPERATINg REVENUES (EXPENSES)
State Approprtatkln. Granta alld Contractl
F. . . . . . S1ata Locol Nongovemmentlll GrIta In.rut end Other InveatFnentlncome Oth.r Nonoperating Rwenun
Incom. Before Other R....-nuea, Expenae. GIIan. or Louea
Capltal Grants and GIfta
S....
NorIg~mmenlllr
TctaI Other Revenue.
InCl'8llae/(OeC:l'eaM) In Net AaMII
NetAaMII
Net AuatI - 8egInntng of V. .r e. Ongl'l.ny R.porWcI
CumuJetlve Elfect of Cheng" ., Accounting PrIndple
Net AuetI - Be;tnrung 01 VelIr RMtatad
Net AuetI - End of VHr
See Independent Acco\lntllnf. Combn-.ed Repart on Revwew of BII.1e Fmel'ldal ~ end Supplem.nIlIry Infonnabon
T'Iw notes to the fir\llnclal atatDmGlIti .,. en Integral pert of thl' statement
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EXHIBIT ~B

S 10830628'5 -2177 031 fl7
519504581 3 38-4 3.01
6272762 55200622
215970788 154 983 88
115995831 50 3G8 04 119730 0.01
S '811 ',448 02

S 12572,40728 1152102917 61(5103933 907;800 242414 34 3895851 57 143363578 54'434987 1 988,59368
S "3.120 , 17 00
S -25008,668 98

S 2601122332
105572 as
80.23781 ,367055 544,881 15 1"7210\0 203945 og 31552125
S 21 ,2'Q.4,513 43
S 2.28590.01 45

S

GS9 181 93

,

22421 S4

881 58377

S 2987,48822

S 9781382403 -61,566,13157
S 36 247,8;2 415

S 39 1215180 lI8

AUGUSJASIATEUNN;RSITY STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30 2002
CASH FLOWS FROM OPERA"flNG ACTMTIES Tulbon and Fees Grants and Conbllcb Sales and servICeS of EducabOnal Department!!
Payment!! to Suppliers
Payments to Emptoyees Payments tor SCholarshrps and Fellowships, Loans Issued to Student!! and Employees Collecbon of Loans to Students and Employees Auxiliary Enterpnle Cherges
Bookstore Par1rJngITrensportatlon tnterCOlleglite Athletrcs Other OrgamznOnlS Other RecelptS (Payments)
Not Cuh Provided (Uoed) by Ope_g I\ctMbOS
CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES State AppropnatJons Agency Funds Tranaae:tlons
GI1ts Ind Grant!! R8C8fVed tor Other than C&p1tII Purposes
Other Nonoperating Receipts
Net Cash FIovriI Provided (Used) by Noncapltsl Filancing ActMtIe,
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Purchases of C8pltll Nsets
CASH FLOWS FROM INVES"flNG ACTMTIES Interest on Investments
Nel tncn!Iasel(Dec:;ruse) lI'l calh
C8ah and caSh EquNa~ntt - June 30, 2001 Leu ShortTerm Investments
cash and Cash EqUivalent!! Beginning of Year
Cash Ind Cash EqurvlJents - End of Year
RECONCILIATION OF OPERA"flNG LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTMTIES
Operallng Income (Lou) Adjustments to Recond~ Net blcome (Lou) to Net CUh
Provided Uoed by O_ng ~ Depredation Change If! Aueta 100 Ll8.bllrbes AInc.c.o_unt!! ReCfllvableS Net
Prepaid ttems
Notes ReC8fV8b1es Net Account!! Plyable sal..1lP Payable Payroll W\thhOldmg Deferred Revenue Other LlabJbbeI
eo_led AbsenCeS
No' Cosh Provodod (Uoed) by Opomng _ _
See loo-pendent Aceountanfs Combtned Report on RilMeW of BaSIC Flnandat Statements and SuppiemenbUY tn1ormatlon
The notes to the fnanclalltatementJ Ir-. an Integral part of tnls statement.

S 8738 018 93 5011801011009 661 741 96
15 012 725115 -24 053,045 05
-3695 851 57 -401 900 22 286,!572 98
2236,43071 156 067 10
1,252670 67 50,31604
101J6,n5341
S 2011[134,786 20

S 26 011.223 :12 356,0111580 763,88377 315.5210115
S 26,73011 212 74

S 1,198,040 03

S

151,321 33

S 1,552.727 &4

S 4,30196328 -2,21i17.161i152

S 2,004,79376

S 3557[152180

S 25 008,668 IiI8
1,IiISS.5938S
-84 289 66 0271805 336 238 75 -11532724 1 G2B,006 71
-1,72808 2,00940 714136 48
88800 51 206 21
S .2411301J78820

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCiAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Augusta State Uruverslty serves the state, and natIOnal commumtles by proVldmg Its students With academiC mstructlon that advances fundamental knowledge, and by dlssemmatmg knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Augusta State Umverslty IS one ofthrrty-four (34) State supported member mstltutlons oflugher educatIOn m Georgia which compnse the Uruverslty System ofGeorgia, an orgamzatlonal urnt ofthe State of Georgia The accompanymg financial statements reflect the operatlons of Augusta State Uruverslty as a separate reporting entlty
The Board of Regents has constitutlonal authonty to govern, control and manage the Umverslty System of Georgia ThiS authonty mcludes but IS not lumted to the power to designate management, the ability to slgntficantly mfluence operatlons, the authonty to control InstltutlOns' budgets, the power to determme allotments of State funds to member InstltutlOns and the authonty to prescnbe accountmg systems and admlmstratlve poliCies for member mstltutlons Augusta State Uruverslty does not have authonty to retam unexpended State appropnatlons (surplus) for any given fiscal year. Accordmgly, Augusta State Umverslty IS considered an orgaruzatlonal umt ofthe Board ofRegents ofthe Umverslty System ofGeorgia reportIng entlty for fmanclal reportmg purposes because ofthe Significance of Its legal, operatlonal, and fmanclal relatlonships With the Board ofRegents as defined m Sectlon 2100 of the Governmental Accounnng Standards Board (GASB) CodificatIOn of Governmental Accountmg and FinanCial ReportIng Standards
F1NANCIAL STATEMENT PRESENTATION In June 1999, the GASB ISSUed Statement No. 34, BasIC Fmanclal Statements and Management D,SCUSSIOn and AnalyslSfor State and Local Govemments. Tlus was followed m November 1999 by GASB Statement No. 35, BasIC Fmanclal Statements and Management's D,scuss,on and AnalysIS for Public Colleges and Umversltles The State of Georgia IS reqUired to Implement GASB Statement No. 34 as of and for the year ended June 30, 2002 As an orgaruzatlOnal urnt ofthe State of Georgia, the Umversity IS also reqUIred to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38. The finanCial statement presentatlon reqUired by GASB Statements No 34 and No. 35 as amended by GASB Statements No 37 and No 38 proVides a comprehenSive, entlty-Wlde perspectlve of the Umverslty's assets, !Iabllitles, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspectlve preVIOusly reqUired.
The UruVerslty has elected to not restate Its 200 I finanCial statements to conform With the new finanCial statement presentatlon, therefore comparatlve finanCial InformatIOn Will not be presented for fiscal year 2002 Slgntficant accounnng changes made m order to comply With the new reqwrements mclude (I) adoptlon of depreciation on Capital assets, and (2) recognttlon of compensated absences Generally Accepted Accountlng Pnnclples (GAAP) reqUITes that the
- 15 -

AUGUSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION
reportIng of summer school revenues and expenses be between fiscal years rather than In one fiscal year. Due to the lack ofmatenahty, InslitutlOns ofthe UnIVersity System ofGeorgm Will contInue to report summer revenues and expenses In the year In wluch the predominate actIVIty takes place
At June 30, 200 I, encumbrances (contractual obhgallons for goods and ServICes not received at fiscal year end) were recorded as expendItures by the UnIVersity Instead ofreservallons of fund balance as requIred by generally accepted accounting pnnclples For fiscal year 2002, the UnIVersity changed its method ofrecording encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses This change IS In accordance WIth generally accepted accounting pnnclples
No adjustments however, have been made on the finanCial statements to restate the fund balance at July 1,2001 for the June 3D, 2001 encumbrances recorded as expenditures In fiscal year 2001 The net effect of the above accounting treatment resulted In an understatement of expenses on the accompanying finanCial statements for pnor year encumbrances wluch should have been reflected as expenses In the penod when goods and ServIces were received.
BASIS OF ACCOUNTING
For financial reporting purposes, the Umverslty is collSldered a special-purpose government engaged only In bUSiness-type acllV111es Accordingly, the Umverslty's finanCial statements have been presented USing the econormc resources measurement focus and the accrual basiS of accounling, except as noted In the preceding paragraphs. Under the accrual basiS, revenues are recogrnzed when earned, and expenses are recorded when an oblIgatIon has been inCurred All SIgnIficant mtraUnIversity transactions have been eliminated.
The UnIVersity has the opllon to apply all FinanCial Accounllng Standards Board (FASB) pronouncements ISSUed after November 30, 1989, unless FASB COnfliCts With GASB The UnIversity has elected to not apply FASB pronouncements ISSUed after the apphcable date
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR
As a result of the adopllon of GASB Statement No 34, the Umverslty was also reqUIred to make certaIn changes In accounting pnnclples, specifically (l) adopllon of depreciatIOn on capital assets, and (2) recording of compensated absences. GASB Statement No 34 requires certain summer semester revenues be recogrnzed between fiscal years rather than the fiscal year In which the semester was predominantly conducted The UnIVersity System ofGeorgia has chosen to continue to record summer revenue In the year In wluch the semester was predominantly conducted Net assets at July 1, 2001 were reduced by $61,566,131.57 for the cumulallve effect of these changes

- 16 -

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits In authonzed financial InstltutlOns, and cash management pools that have the general charactenstlCS of demand deposit accounts
INVESTMENTS The Umverslty accounts for ItS Investments at fau value In accordance With GASB Statement No 31, Accounting and FinancIal Reponlngfor Cenaln Investments andfor External Investment Pools Changes In unrealized gain (loss) on the carrYing value of Investments are reported as a component of Investment mcome In the statements of revenues, expenses, and changes In net assets.
ACCOUNTS RECEIVABLE Accounts receivable consIsts oftultlon and fee charges to students and aUXIlIary enterpnse services proVided to students, faculty and staff, the ma]onty of each resldmg In the State of GeorgIa Accounts receivable also Include amounts due from the Federal government, state and local governments, or pnvate sources, In connection With reImbursement ofallowable expenditures made pursuant to the Umverslty's grant and contracts Accounts receivable are recorded net ofestlmated uncollectlble amounts
INVENTORIES Consumable supplIes are recorded on the consumptlon method and are valued at cost usmg the weighted average method
Resale Inventones are valued at cost usmg the weighted average method
PREPAID ITEMS Prepaid Items are payments made to vendors m advance ofthe receipt ofgoods and ServIces that WIll benefitsubsequentpenods
NON-CURRENT CASH AND INVESTMENTS Cash and mvestments that are externally restncted and cannot be used to pay current IIabllItles are clasSified as non-current assets m the statements of net assets.
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqulsltlOn, or fair market value at the date of donation m the case of gifts For eqUipment, the Uruverslty'S capitalizatIOn polIcy mcludes all Items With a urnt cost of $5,000 00 or more, and an estimated useful lIfe of greater than one year RenovatIOns to buildmgs, Infrastructure, and land Improvements that exceed $100,000.00 and slgruficantly mcrease the value or extend the useful lIfe of the structure are capitalIzed Routine

- 17 -

AUGUSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "0"

NOTE I SUMMARY OF SIGNIFlCANT ACCOUNTING POLICIES
CAPITAL ASSETS reparrs and maintenance are charged to operating expense In the year In which the expense was inCurred. DepreciatIOn IS computed uSing the stralght-lme method over the estImated useful lIves of the assets, generally 40 to 60 years for bUildings, 20 to 25 years for Infrastructure and land Improvements, 10 years for lIbrary books, and 3 to 7 years for eqUipment
To obtain the total picture of plant additIons m the Uruverslty System, It IS necessary to look at the actIvItIes ofthe Georgia State Flnancmg and Investment ComnusslOn (GSFIC) - an organizatIOn that IS external to the System GSFIC ISSUes bonds for and on behalf ofthe State of Georgia, pursuant to powers granted to It In the ConstItutIon ofthe State of GeorgJa and the Act creating the GSFIC. The bonds so ISSUed constItute direct and general oblIgatIOns of the State of Georgia, to the payment of which the full faith, credit and taxmg power of the State are pledged
EffectIve July I, 2001, the GSFIC retains constructIOn In progress on their books throughout the constructIOn penod and transfers the entIre project to Augusta State Uruverslty when complete For the year ended June 30, 2002, GSFIC transferred capital additIOns valued at $624,34704 to Augusta State Umverslty
DEFERRED REVENUES Deferred revenues Include amounts received for tuitIon and fees and certam auxiliary actIVItIes pnor to the end ofthe fiscal year but related to the subsequent accounting penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned.
COMPENSATED ABSENCES Employee vacatIon pay IS accrued at year-end for financial statement purposes. The lIabilIty and expense mcurred are recorded at year-end as accrued vacatIon payable m the Statement of Net Assets, and as a component of compensatJon and benefit expense m the Statements of Revenues, Expenses, and Changes In Net Assets Augusta State Umverslty had accrued lIabilIty for compensated absences In the amount of$I,033,551.16 as of July 1,2001. For FIscal Year 2002, $820,94725 was earned In compensated absences and employees were paid $769,741 04, for a net mcrease of $51,206.21.
NON-CURRENT LIABILmES Non-current lIabilIties include lIabllItJes that Will not be paid Wlthm the next fiscal year
NET ASSETS The Uruverslty's net assets are clasSified as follows

- 18 -

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Invested In capital assets, net ofrelated debt Tlus represents the Umverslty's total mvestment 10 capital assets, net of outstandmg debt oblIgatIOns related to those capital assets To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested 10 capital assets, net ofrelated debt (The term "debt oblIgatIOns" as used In tlus defimtlOn does not mclude debt of the GSFIC as discussed above.)
Restricted net assets - nonexpendable Nonexpendable restncted net assets COnsist of endowment and similar type funds 10 which donors or other outside sources have stipulated, as a conrntlOn ofthe gift mstrument, that the pnnclpalls to be mamtamed mVlOlate and 10 perpetuity, and mvested for the purpose of producmg present and future mcome, winch may either be expended or added to pnnclpal. The Umverslty may accumulate as much ofthe annual net mcome ofan Institutional fund as IS prudent under the standard establIshed by Code Section 44-15-7 ofAnnotated Code ofGeorgia
Restricted net assets - expendable Restncted expendable net assets mclude resources 10 wluch the Umverslty IS legally or contractually oblIgated to spend resources 10 accordance With restnctlons unposed by external tlurd parties.
Unrestricted net assets Umestncted net assets represent resources denved from student tuition and fees, state appropnatlons, and sales and seTVIces of educational departments and aUXIlIary enterpnses. These resources are used for transacllons relatmg to the educatIOnal and general operallons of the Umverslty, and may be used at the discretIOn of the governmg board to meet current expenses for those purposes, except for unexpended state appropnatlons (surplus) of SII ,017 4'7 Unexpended state appropnatlons must be refunded to the Board of Regents of the Umverslty System of Georgia - AdmlDlstralive Central Office for renuttance to the Office of Treasury and Fiscal ServiCes. These resources also mclude aUXIlIary enterpnses, which are substantially self-suppomng actIVities that proVide services for students, faculty and staff
When an expense IS mcurred that can be prod usmg either restncted or unrestncted resources, the Umverslty's polIcy IS to first apply the expense towards unrestncted resources, and then towards restncted resources
INCOME TAXES Augusta State Umverslty, as a polItIcal subdiVISion ofthe State of Georgia, IS excluded from Federal mcome taxes under SectIon 115(1) of the Internal Revenue Code, as amended
CLASSIFICATION OF REVENUES The Umverslty has classified Its revenues as either operatmg or non-operatmg revenues 10 the Statement ofRevenues, Expenses, and Changes 10 Net Assets accordmg to the followmg cntena

- 19 -

AUGUSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIF1CATION OF REVENUES Operating revenues Operatmg revenues melude actIVItIes that have the charactenslIcs ofexchange transactIons, such as (I) student tuitIon and fees, net ofscholarshIp allowances, (2) sales and services of auxlhary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnallons, and (4) mterest on InstItutIOnal student loans.
Non-operating revenues Non-operatIng revenues melude actIvItIes that have the charactenstIcs of non-exchange transaCtIons, such as gIfts and contnbutlOns, and other revenue sources that are defined as non-operatmg revenues by GASB No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No 34, such as state appropnatIons and mvestrnent IDcome
SCHOLARSHIP ALLOWANCES Student tUition and fee revenues, and certam other revenues from students, are reported at gross WIth a contra revenue account of scholarshIp allowances m the Statement of Revenues, Expenses and Changes m Net Assets ScholarshIp allowances are the dIfference between the stated charge for goods and SerVIces prOVided by the Umverslty, and the amount that IS pllld by students and/or thIrd parties makmg payments on the students' behalf. Certllln governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatIng revenues m the Umverslty's finanCial statements To the extent that revenues from such programs are used to satiSfy tuitIon and fees and other student charges, the Umverslty has recorded contra revenue for scholarshIp allowances.
NOTE 2 CASH AND CASH EOurlALENTS: OTHER DEPOSITS, AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongIng to the State of GeorgIa (and thus Augusta State Umverslty) carmot be placed m a depOSitory paYIng mterest longer than ten days WIthout the depOSitory provldmg a surety bond to the State. In heu of a surety bond, the depOSitory may pledge as collateral anyone or more of the follOWIng secuntIes as enumerated m the OffiCial Code of GeorgIa Annotated SectIOn 50-17-59
I. Bonds, bIll, certIficates ofmdebtedness, notes, or other dIrect obhgauons ofthe Umted States or of the State of GeorgIa.
2 Bonds, bills, certIficates of mdebtedness, notes, or other obhgatIons of the countIes or mumclpailtIes of the State of Georgia
3 Bonds of any pubhc authonty created by the laws ofthe State of GeorgIa, provldlDg that the statute that created the authonty authonzed the use of the bonds for thIs purpose
4 Industnal revenue bonds and bonds of development authontIes created by the laws of the State of Georgia
- 20-

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "0"

NOTE 2 CASH AND CASH EOUNALENTS, OTHER DEPOSITS, AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5 Bonds, bills, certificates of mdebtedness, notes, or other obhgatlons of a SUbSidiary corporatIOn of the UnIted States government, which are fully guaranteed by the UnIted States government both as to pnnclpal and mterest, 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 authonzed In the OffiCial Code of GeorgIa Annotated Section 50-17-53, the State DepOSitory Board has adopted polICies wluch allow agencies of the State of GeorgIa (and thus Augusta State UnIVersIty), the option of exemptmg demand depOSits from the collateral reqUIrements

The Treasurer ofthe Board ofRegents IS responSible for all details relative to furmslung the reqUIred deposItory protection for all UnIts of the UnIversity System of GeorgIa

CATEGORIZATION OF DEPOSITS The UnIVersIty's cash depoSits are categonzed by osk as follows

Category 1 - Amounts covered by depOSitory Insurance or collateralIzed With secuntles (at fair value) held by the UnIversity or by Its agent m the UnIVersIty's name

Category 2 - Amounts collateralIZed WIth secunlles (at fair value) held by the pledgIng finanCial Institution's trust department or agent In the UnIVersity'S name

Category 3 Amounts collateralIzed With secuntles (at fair value) held by the pledgIng finanCial mstltutlOn, or by Its trust department or agent but not m the UnIversIty's name, and amounts uncollateralized

Cash DepOSits as of June 30, 2002 are as follows

Cash DepoSIts

CarryIng
Amount

Bank
BalanceS

$ 3546 721 60 S 4 349 622 92 S

Risk CategQoes

2

3

I QQ 009 00 S 4 249 622 22 S_ _..I0Iol00lll

- 21 -

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EOillYALENTS, OTHER DEPOSITS, AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS At June 30, 2002, the Umverslty's Investments consisted of the follOWing

Type of Investments

Investments Not Subject to CategonzatlOnS:

Board ofRegents

Short-Tenn Fund

Total Return Fund

"

State Investment Pool

$ 2,32 I ,392.38 288,601.50 80,95276

Total Investments

$ 2.690,946.64

Funds mvested m an Investment pool managed by another governmental entIty are not required to be categonzed since the Umverslty did not own any specific, IdentIfiable mvestment secuntIes of the pool.

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable COnsiSted of the followmg at June 30, 2002:

Student TwtIon and Fees AUXIlIary Enterpnses and Other OperatIng ActIVItIes Federal, State, and Pnvate Funets Other

$ 158,252.51 94,26526
328,50560 459.51687

$ 1,040,540.24

Less Allowance for Doubtful Accounts

14,43051

Net Accounts Receivable

$ 1,026,109,73

NOTE 4 INVENTORIES

Inventones consisted of the followmg at June 30, 2002:

Bookstore PhYSical Plant Other
Total

$ 425,756,80 17,256.08 10,82893
$ 4S3841,81

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AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "0"

NOTE 5 NOTES/LOANS RECEIVABLE
NoteslLoans receIvable, at June 30, 2002 pnmanly COnsIst ofstudent loans made through the Federal Perkms Loan Program (the Program) The Program proVIdes for cancellatIOn of a loan at rates of 10% to 30% per year up to a maxmlUm of 100% If the participant comphes With certain provIsions The Federal government reimburses the UruVerslty for amounts cancelled under these proVIsIons. At; the UruversIty determmes that loans are uncollectible mtemally and not ehglble for reimbursement by the Federal government, the loans are placed With an outSIde collectIOn agency The loan IS left WIth the collection agency for one year and If they are unsuccessful In collection or estabhslung a repayment plan, the loan IS returned to the Umverslty The Umverslty attempts to contact the borrower and make payment arrangements If the UruversIty IS unsuccessful, the account IS once again sent to a second outside collection agency. The loan IS sent out to a total of three collection agenCIes for collectIons If the collectIOns attempts are not successful, the account IS sent out for htlgatlOn With a law firm There IS not a time hrmt that the law firm can hold these loans In their office We keep all the records for students who have defaulted loans on hold lfthe borrower needs a transcnpt or wants to take classes, they must repay therr loan m full. Perkins borrowers have the opportumty to rehablhtate theIr loan, wluch mcludes haVIng all negative informatIOn removed from theIr credit bureau accounts once a repayment plan has been estabhshed and ten consecutIve payments made
NOTE 6 CAPITAL ASSETS
The balance at July I, 2001 was adjusted for accountmg changes reqUIred In Implementmg GASB Statements 34 and 35 as dIsclosed In Note I, Followmg are the changes m capital assets for the year ended June 30, 2002:

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AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 6 CAPITAL ASSETS

Adjusted Balance July I. 2001

AdditIOns

Reductions

Balance June 30, 2002

CapItal Asscts, Not Bemg Depreciated

Land and Land Improvements

S 2, I52,770 49

5 215277049

CapItal Assets, Bemg DeprecIated BUlldmg and BUlldmg Improvements Facllmcs and Other Improvements EquIpment LIbrary CollecllOns Capltahzed Collections

S 39,126,898 00 S \,657,75\ 00 5,094,55495 6,636,059 00 75 005,00

1,324,800 67
188,260 SO 366,56263 S

540,451,69867 \,657,75\ 00 5,282,815 45
15,43700 6,987,18463 75,005 OQ

S 52.590 267 95 S 1.879,623 80 S

154~700 5 5445445475

Less Accumulated Depreciation BUlldmg and BUlldmg Improvements Facilities and Other Improvements EquIpment Library Collections

S 11,460,709 79 S 941,306 OS
3,010,192 19 5,14533500

1,049,74579 155,16363 450,66126 333,02300 S

$ 12.510.455 58 1,096,46968 3.460,853 45
J5 437,00 5.462,92 I 00

S 20 557,543 03 S I 988 593 68 S 15.43700 $ 2253069971

Total CapItal Assets, Bemg DeprCClated,

Net

5 32,032,72492 S

CapItal Assets, Net

S 3418549541 S

-10896988 $,

-"0"'00'" $ 3192375504

_JOS 269 88 S'_ _.....I0IlolOOAl S l4 076 525 53

NOTE 7: DEFERRED REVENUE

Deferred revenue consisted ofthe followmg at June 30, 2002

Prepllld TUitIon and Fees Other Deferred Revenue

$ 2, I 09,230.59 554,04064

Totals

$ 2.663 271,23

NOTE 8' LONG-TERM LIABILITIES

Long-tenn hablhty actIVIty for the year ended June 30, 2002, was as follows

Other Liabilities
Compensilted Absences

Balance July I 200!

Additions

Reductions

Balance June 30, 2992

Current
portion

S 103355116 S 82094725 S 76974104 S I 08475737 S 68642529

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AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 9 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Augusta State UniVersIty partiCipates m the Teachers RetIrement System of Georgia (TRS), a costsharIng multIple-employer defined benefit pensIOn plan estabhshed by the General Assembly of GeorgIa for the purpose of provldmg 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 m accordance WIth State statute The Teachers RetIrement System of GeorgIa Issues a separate stand alone finanCIal audIt report and a copy can be obtamed from the GeorgIa DepartInent of AudIts and Accounts

Funding Policy
Employees of Augusta State Uruverslty who are covered by IRS are requIred by State statute to
contrIbute 5% of their gross earnmgs to IRS Augusta State UruVerslty makes monthly employer contrIbutIOns to TRS at rates adopted by the IRS Board ofTrustees m accordance wIth State statute and as adVIsed by theIr mdependent aclIIary For fiscal year 2002, the employer contrIbutIon rate was 9 24% for covered employees. Employer contrIbutIons for the current fiscal year and the precedmg two fiscal years are as follows

Fiscal Year

Percentage ContrIbuted

ReqUIred ContrIbutIon

2002 2001 2000

100% 100% 100%

$1,276,177 72 5) 1,670,61833 $ 1,687,795.00

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a smgle-employer defined contrIbutIon plan, IS an optional retirement plan establIshed and admmlstered by the Board of Regents of the UniversIty System of Georgia, under which It may purchase annUIty contracts for the purpose of provldmg retIrement and death benefits for elIgible faculty and pnnclpal adrmnIstrators. Benefits depend solely on amounts contrIbuted to the plan plus mvestment earmngs Benefits are payable to partIclpatmg employees or their benefiCIarIes m accordance With the terms of the annUIty contracts

Funding Polley Member contrIbution requirements are estabhshed by the Board of Trustees of the Teachers RetIrement System Employer contrIbutIons are establIshed by stalIIte and may be amended onlyby the General Assembly ofthe State ofGeorgia The employer contributes 9 62% ofthe partlclpatmg empioyee's earnable compensation Employees contrIbute 5% of their earnable compensation Amounts attnbutable to all plan contrIbutions are fully vested and non-forfeitable at all tImes

- 25-

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHffilT"D"

NOTE 9 RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Policy Augusta State Umverslty and the covered employees made the reqwred contributIOns of$834,138 92 (962%) and $465,116.15 (5%), respectively
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Augusta State Umverslty partIcIpates In the GeorgIa Defined Contribution Plan (GDCP) whIch IS a smgle-employer defined contribution plan establIshed by the General Assembly of GeorgIa for the purpose ofprovldmg retrrement coverage for State employees who are temporary, seasonal, and parttIme and are not members of a publIc retirement or pensIon system. GDCP IS admmlstered by the Board of Trustees of the Employees' Retrrement System of Georgia
Benefits A member may retire and elect to receIve penodIc payments after attamment ofage 65 The payment Will be based upon mortalIty tables and mterest assumptions to be adopted by the Board ofTrustees If a member has less than $ 3,500 00 credIted to hlslher account, the Board ofTrustees has the option ofreqwrmg a lump sum dIstrIbution to the member in lIeu ofmaking penodiC payments Upon the death of a member, a lump sum dIstrIbution equaling the amount credited to hlslher 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%) of gross salary There are no employer contrIbutions ContrIbution rates are establIshed by State statute Eammgs 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 dunng fiscal year 2002 amounted to $48,350 00 winch represents 7.5% of covered payroll These contrIbutions met the reqUirements of the plan
NOTE 10' RISK MANAGEMENT
Augusta State Umverslty IS a participant In the Board of Regents of the Umverslty System of GeorgIa Health Benefits Plan, winch is a self-Insurance program of health and dental benefits for employees and retIrees of the Umverslty System of GeorgIa Augusta State Umverslty and particIpating employees and retirees pay prenuums to the Health Benefits Plan for t1us health Insurance coverage. The Health Benefits Plan IS mcluded m the finanCial statements ofthe Board of Regents of the Umverslty System of GeorgIa - Adrmmstratlve Central Office All umts of the Umverslty System of GeorgIa share the nsk of loss for claImS of the Health Benefits Plan The
- 26-

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I 0 RISK MANAGEMENT
Health Benefits Plan IS consIdered a self-sustamlng nsk fund that provides health coverage for ItS members up to a maximum lIfetime benefit of$2,000,000 00 per person and dental coverage up to an annual maximum of $1,000 00 per person The Board of Regents has contracted With Blue Cross Blue Shield ofGeorgia to process chums m accordance With the Health Benefits Plan as established by the Board of Regents
The Department of Admmlstratlve Services (DOAS) has the responsibilIty for the State of Georgia ofmaking and carrying out decISIons that wIll mmmuze the adverse effects of aCCidental losses that mvolve State government assets. The State belIeves It IS more economical to manage Its nsks mternally and set aside assets for claim settlement. Accordmgly, DOAS processes claims for nsk of loss to which the State IS exposed, mcludmg general lIabilIty, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' mdemmficatlon LInuted amounts of commercial Insurance are purchased applIcable to property, employee and automobile lIabilIty, fidehty and certain other nsks Augusta State Uruverslty, as an orgaruzatlonal urnt of the Board of Regents of the Umverslty System of Georgia, IS part of the State of Georgia reportmg entity, and as such, IS covered by the State of Georgia nsk management program adnumstered by DOAS. PreIDIums for the nsk management program are charged to the vanous state organizations by DOAS to proVide claims servlcmg and claims payment
A self-msured program of professIOnal lIabilIty for Its employees was establIshed by the Board of Regents of the Umverslty System of Georgia under powers authonzed 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 agamst personal lIabilIty for damages ansmg out of the performance of their duties or 10 any way connected thereWith The program IS admlrustered by DOAS as a SelfInsurance Fund
NOTE 11' CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies Tlus could result m refunds to the grantor agency for any expenditures which are disallowed under grant terms The amount ofexpenditures wluch may be disallowed by the grantor cannot be deterIDIned at thiS time although Augusta State Umverslty expects such amounts, Ifany, to be Immatenal to Its overall finanCial pOSItion.
LItigation, claims and assessments filed against Augusta State Umverslty (an orgaruzatlOnai urnt of the Board of Regents of the Umverslty System of Georgia), If any, are generally conSidered to be actions against the State of Georgia Accordmgly, slgmficant lItigatIOn, claims and assessments pendmg against the State of Georgia are disclosed In the State of Georgia ComprehenSive Annual Fmanclal Report for the fiscal year ended June 30, 2002.

- 27-

AUGUSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 12 POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code ofGeorgIa Annotated SectIon 20-331, the Board of Regents ofthe Umverslty System ofGeorgia has established group health and life Insurance programs for regular employees ofthe Umverslty System ofGeorgIa It IS the pohcyofthe Board ofRegents to perrmt employees ofthe Umverslty System ofGeorgia ehgible for retIrement or that become permanently and totally dIsabled to contInue as members of the group health and hfe Insurance programs Employees who are ehgIble for retIrement or dlsablhty under the cntena estabhshed by the Teachers RetIrement System ofGeorgIa and who have at least ten years ofservIce WIth the Umverslty System of GeorgIa are eligIble for these post-employment health and life Insurance benefits. OrganIzatIonal unitS of the Board of Regents of the Umverslty System of GeorgIa pay the employer portion for group Insurance for affected indiVIduals.
As ofJune 30, 2002, there were 138 employees who had retIred or were dIsabled that wererecelvmg these post-employment health and hfe Insurance benefits. For the year ended June 30, 2002, Augusta State Umverslty recogruzed as Incurred $386,850.80 of expendItures, which was net of $151,705.30 of partICIpant contnbutlons

- 28-

AUGUSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 13 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The Umverslty's operatmg expenses by functIOnal classIficatIon are shown below

Statement of Opcranng Expenses - Natural vs Funcuonal CWslficabons For the J.lscal Year Ended June 30, 2002

Func1.lOna) ClasslflcatlOll

Ham! Classification
SoIanes Faculty Staff
Emp~ Benefits Other Personal Scrvtces Tl'1lvcl ScholarshIps and
Fellowshlp5 UUhbes Supplies and Other
ServJccs 1JepTcctabOfl
Total Opcratms Expenses

instr1JCtJon

BCY"Th

PubliC
5emce

Academic
Support

Student $eryJrn

Insbtutlonal Support

S 12,506,877 64 S
1,24I,S2377 2.973,942.25
80,83590
25.82457 109.164 05
777,404 2\

17,34064 S 18,73949 2,666 84
27,62123

48,18900 141.033 88 35,33778
37516

S 2,572,89731 599,64594
36.13049

S \ ,702,48330 418,43506
26,31325

S 3,Q94,25255 1,342,91232 89,950 00 45,19845

1,089 47 16633

3,43997

3,03133 61,272 53

48.061 80 39,108 10

255,591 98 57,34722

6,231 25

369,05740

655,55513

439,254 00

599,11909

:in S 17 715 872 19 S 73 85' 25 S 597 43319 S J 228 73 S 2673 655 51 S 'iRA 37 161

Haw! ClassJljgbon
Salancs Faculty Staff
Employee Benefits Other Peraonal ServJccs Tl1Ivel Scholarshlp5 and
Fellowships Unhbes Supphes and Other
Scrvtces
Depreclauon
TOblI OpcrabnS Expenses

Plabl Operobons and
Mlmtmang;

FW]ctumaJ CIas$lfiCAum

Scholanh1p5 and Felkmlnm

AtlXlhuy EntgpnK'

Unallocated
DepreclabC!J

TobI' Opcrabb8 Exnen:fe5

5 2.033,13624 5
54\,407 45
1,677 06

2,00800 5 714,654 63
246,69169 84600
24,26280

S 12,572.407 28 11.521.02917 6.16\.03933 90,7%00 242,41434

1.136,93314

2,937,23535

425,01707 26,204 42

3,695,85\ 57 1,433,635 76

669,40001 S 4 J82 553 00

S 2 9J2 24311

1,898,328 78 S J 336005 JQ

5 19M,S9368
S ! 98 593 M

5,414,349 87 \,9&&.59368
54] 129 11799

- 29-

SUPPLEMENTMY INFORMAnON - 31 -

AUGUSTA STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - (NON-GAAP BASIS) RESIDENT INSTRUCTION
YEAR ENDED JUNE 30 2002

SCHEDULE "1"

REVENUES
State Appropnatlons Other Revenues Retained

BUDGET

ACTUAL (1)

VARIANCE FAVORABLE (UNFAVORABLE)

$ 25,733,89500 $ 25,733,89500 $

18,758,12700

17,323,10305

000 -1.435,02395

$ 44.492,022 00 $ 43,056,998 05 $ _ _""-1.::,4:.::3",5,=02,,,3:..:95::::.

EXPENPITURES
Personal services Education, General and Departmental Services Sponsored Opera1Jons
Opera1Jng Expenses Educ:abon, General and Departmental services Sponsored Operations
Capital Outlay SpeClel Funding Inrbabve Office of Mmonty BUSiness Enterpnse

$ 29,359,31300 $ 28,835,675 36 $

389,55900

316,93268

7,114,260 00 6,727,304 00
601,31200 105,27400 195,000 00

7,357,255 10 5,665,077 43
619,43971 97,464 91
195,000 00

523,63764 72,626 32
-242,995 10 1,062,226 57
-18,12771 7,80909 000

$ 44.492 ,022 00 $ 43,086,845 19 $

1~.4::05=,1~7~6=8.:..1

Excess of Revenues over Expendrtures

$

-29,847 14 $

~-2;;:9:'::184~7.:.14;:.

(1) Actuel emounlS were prepared on a Pl99Q'1bed basis of eccounbng that demonstrates compliance WIth budgetary statutes and ragulabons of the State of Gao'llla, which IS a comprehensIVe baSIS of accounbng
other than generally accepted accounbng pnndples

See accompanYJng notes end Independent Accountanfs Combined Report
on RllVlew of BeSlc Financoel StatemenlS and Supplementary Informabon
- 33-

AUGUSTASTATEUNNERSny SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - (NON-GMP BASIS) LOTTERY FOR EDUCATION YEAR ENPED JUNE 30 2002

SCHEDULE "2-

REVENUES State Appropnabons

BUDGET

ACTUAL (1)

VARIANCE FAVORABLE (UNFAVORABLE)

$

317 640 00 $

~Oc::0::::.O

EXPENDITURES Equipment Technology and Construc:bon
Trust Fund Speaal Funding InrtJa1Jves
Excess of Revenues over Expendilures

$ 218.608 00 $ 21860800 S

99.03200

99.03200

$

317.64000 $

$

o00 $

000 000
~O"'OO::::.
.::O.::OO~

(1) Adual amounts were prepared on a prescnbed baSIS of accounbng that demonslrates compliance WIth budgelar1statutes and regulabons of the Sta1ll of Georg,.. which IS a comprehenslV8 b....s of accounbng other then generelly eccep1ed eccounbng pnnaples

See accompanying noles and Independent Acoountanfs Combined Report
on RevIeW of BaSIC Flne",,"1 Sta1llmenls end Supplementary Infonnabon
- 34-

AUGUSTA STATE UNrvERSIIY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30 2002

SCHEDULE "3"

Totals per Annual Supptement

Accruals
June 30. 2002 June 30 2001

Agency Funds Morns. Sandarg. Speannan, VanMeter,

Manlynn Janel I Kalil L Chnstma C

Compensated Absences June 30. 2002 June 30. 2001

Prepaid salanes June 30, 2002
June 30. 2001

Adjustments AkIns. Bamebet. Bloodworth. Bond, Bryant. Chou. Cooks, Cool... EnglISh.
Evans. Hammond. Hobbs.
Howard. Kramer. Matson, Neely. PaweD. Price. Ru:hardson. RJley. Rage",. Stewart. Thornton. TUley Topolokl.
WIvte. Widner,
Williams, Wliaon. Yokeda. Zimmerman.

Maureen J Fred
W~h.mA
Timothy A GIlnl
Frank H
Jasper A Rolfe E WiMlsm M WatterE sarah Stephen H Donald P Kimberly Wemerlll M,chelle L A1anaW
Cha~oIte
Deborah R Lasley D Rebecca L Jacquelyn E Holly J Leslie L RIChanl L David L Sabina C VICIue A GragoryT Tomoe GuyS

see accompanying notes and Indope_nl Accountant's Combtned Report on Ravtew of BaaIC FinanCIal Statements and 5uppIemantary Information
- 35-

SALARIES
$ 24.065181 91 $

TRAVEL
230273 05

8661336 -88.341 44

-15000 -506200
-150 00 -15000

1,007,67057 -96010326

-813,44334 801.37065

8600 7100 28250 20400 2500 50550 85200 36000 60320 26700 8500 34619 1.18800 14000 60320 47040 60320 196 00 140 00 6000 14000 49795 311 50 8500 14000 53376 140 00 14000 1.963 17 57672 54500

$ 24,093,436 45 $ _...:i2.:42~,.:4.1.4~34:..

AUGUSTA STATE UNiVERSITY RECONCILIATION OF PER DIEM AND FEES
YEAR ENPED JUNE 3Q 2002

SCHEDULE "4"

Totals per Annual Supplement

AdJustments

Anderson,

Sandra

E9 1ey,

Lance

Nicholes, Dickenson ETAL

TYPE PAYMENT

FEE AMOUNT

EXPENSE AMOUNT

$ 481,78126 $ 14,03288 $

TOTAL 495,814 14

Expense Expense Fee

-18864

82340 631 50

82340 63150 -188 64

See eccompanyln9 notes end Independent Accoun1enfs Combined Report on ReVlllW of BasiC Flnancla' Sta1ements and Supplemen1ery Infotmabon
- 36-

SECTIONIl AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

AUGUSTA STATE UNIVERSITY AUDlTEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-527-99-0I FA-527-01-01

PrevIOusly Reported CorrectIve ActIOn Implemented PrevIOusly Reported CorrectIve ActIOn Implemented

SECTION ill CURREN[ YEAR FINDINGS AND QUESTIONED COSTS

AUGUSTA STATE UNIVERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER inadequaCIes In Control Over SubSidiary Ledgers FIndIng Control Number FS-527-02-0l
Our exannnatlon Included a reVIew of the procedures utilIzed by Augusta State Uruverslty In
recordIng transactions to the vanous modules compnsIng the GeorgIaFIRSTaccounung system Our
testmg revealed that, at June 30, 2002, the Uruverslty'S general ledger module wd not balance with the SUbSidIary modules. TIus condItion was pnmanly due to errors In postIng SUbSidIary records dunng the conversIon from the old College Uruverslty FInancial Accounting (CUFA) legacy
accountIng system to the new GeorgIaFIRST accounting system and due to transactlons beIng posted
to the general ledger module rather than the appropnate SUbSidiary modules. The Uruverslty did not proVide a reconCIlIatIOn of the general ledger balances to the SUbSidiary records, whIch resulted In extensIve work by the auwtors to Identlfy reconcIlIng Items at June 30, 2002
Management's failure to ensure that subslwary records are reconcIled with the general ledger CaJlSes internal reports to management, generated from the SUbSIdIary modules, to be Inaccurate and rnislead1ng. TIus conwtlon can lead to erroneous deciSIOns by the Umverslty's management and result In Inaccurate reportIng of finanCIal InformatIon
To ensure accurate and tlmely repomng of finanCial Information from subSidiary records, the Umverslty should post transactlons correctly to the subslwary ledgers rather than asJournal entnes In the generaJ ledger The UruVerslty should develop internal accountlng controls and procedures to ensure that reconclhallons of subSidiary ledgers and the generaJ ledger are performed on a regular basis