6A M300 .1<.1 A'a'S ;;(0) I-~Cl:l< > \'; " , , ,( , ,I .-' STATE OF GEORGIA , DEPARTMENT OF AUDITS AND ACCOUNTS ' .' \, , . '- ,( ,I c, .. L -' ,, L ", I , l " ,, " , " ., J,' , J. .,,) I ,\ r ., r, I " ,J " ," " , > AUGUSTA STATE UNIVERSITY , ' j\ l \ . AUGUSTA, GEORGIA 1 ,, ~EPORT ON REVIEW \1 ,. OF THE FINANCIAL STATEMENTS ,; - 'FOR , THE, FISCAL- YEAR , ENDED JUNE 30,' 2002 ' ' \ , ,, . " ..-, , , ~I \' > Russell W. Hinton' state Auditor - ! .... I I' , ,. ,, , " ) " \ ., .." \; 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, r J:)j...~1kL ~~ ~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. -2- 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 -5- 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 -6- 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 -7- 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 - 11 - 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 - 12- 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 - 22- 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: - 23- 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 - 24- 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