Audit report, state of Georgia, Clayton College and State University, Morrow, Georgia year ended June 30, 1997

AUDIT REPORT STATE OF GEORGIA CLAYTON COLLEGE AND STATE UNIVERSITY MORROW, GEORGIA YEAR ENDED JUNE 30, 1997
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CLAYTON COLLEGE AND STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

21

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

23

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

24

2

LOTTERY FOR EDUCATION

27

3 CHANGES IN INVESTMENT IN PLANT

28

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

30

5 RECONCILIATION OF SALARIES AND TRAVEL

32

CLAYTON COLLEGE AND STATE UNIVERSITY - TABLE OF CONTENTS -
SECTIONll CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I .FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
October 24, 1997

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Richard A. Skinner, President Clayton College and State University
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) of Clayton College and State University as of and for the year ended June 30, 1997. These fmancial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these fmancial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the fmancial statements of this departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.

97ARL-62

As disclosed in Note 1 to the financial statements, the University did not report the liability and related exp~nditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $1,105,992.74 as of June 30, 1997, and the net change in fund balance for the year ended Jun(( 30,1997, would be decreased by $179,363.38.
In our opinion, except for the effects on the financial statements of the matters discussed in the third and fourth paragraphs, the fmancial statements referred to above present fairly, in all material respects, the financial position of Clayton College and State University as of June 30, 1997, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibits E through G and Schedules 1 through 5) is presented for purposes of additional analysis and is not a required part of the fmancial statements of Clayton College and State University. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects ofthe matters discussed in the third and fourth paragraphs, such information is fairly presented in all material respects in relation to the fmancial statements taken as a whole.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:jy 97ARL-62

FINANCIAL STATEMENTS - 1-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30,1997

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees Deposits Held in Custody for Others Due to Other Fund Groups Capital Lease Obligations
Total Liabilities
Fund Balances U. S. Government Grants Refundable Institutional Loans - Restricted Endowment Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS UNRESTRICTED RESTRICTED

LOAN FUNDS

$ 1,455,944.62 $

62,671.63 $

327,686.29

779,765.67

255,010.76

20,780.57

719,409.42

31,442.56 28,658.41

$ 2,778,831.66 $ 842,437.30 $=====6.:=!O,=10..0.=.9.7...

$

678,019.05

1,481,386.14

$ 719,409.42

$ 2,159,405.19 $ 719,409.42

$

50,775.04

9,325.93

$ 123,027.88

$

619,426.47

$

619,426.47 $ 123,027.88 $

60,100.97

$ 2,778,831.66 $ 842,437.30 $=====6.:=!O,=10..0.=.9.7....

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

EXHIBIT "A"

ENDOWMENT 'FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$ 610,833.83 $ 866,607.73 $

521,900.16

$

_ _ _ _ _ _ $ 40,595,852.04

82,776.51 $ 3,632,177.04 1,136,110.37 255,010.76 20,780.57 719,409.42
40,595,852.04

$ 610,833.83 $ 866,607.73 $

521,900.16 $ 40,595,852.04 $

82,776.51 $ 46,359,340.20

$ 850,840.55 $

$ 850,840.55 $

$ 610,833.83

$ $ 610,833.83 $

15,767.18 $ 15,767.18 $

4,924.52

$

$ 4,924.52 $

722,630.95 722,630.95 $

60,074.49 $ 1,593,858.61

22,702.02

1,481,386.14 22,702.02
719,409.42 722,630.95

82,776.51 $ 4,539,987.14

$ 39,873,221.09 516,975.64 516,975.64 $ 39,873,221.09

$

50,775.04

9,325.93

610,833.83

39,873,221.09

123,027.88

1,152,169.29

$ 41,819,353.06

$ 610,833.83 $ 866,607.73 $

521,900.16 $ 40,595,852.04 $

82,776.51 $ 46,359,340.20

-3-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30,1997

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Regular Lottery Proceeds Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants. and Contracts Investment Income Endowment Other Realized Gains on Investments Interest on Loans Receivable Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Renewals and Replacements
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Administrative and Collection Costs Expended for Plant Facilities
Capitalized Noncapitalized Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1. 1996
FUND BALANCES JUNE 30. 1997
The notes to the financial statements are an integral part of this statement.
-4-

CURRENT FUNDS UNRESTRICTED RESTRICTED

LOAN FUNDS

$ 26,617,265.90

$ 3.077.847.33 2,739,837.27 48.296.00 550.564.74
20,095.22 $
20,110.51 2,998.38

133.15 1.038.18

$ 26,640,374.79 $ 6,436,640.56 $

1,171.33

$ 25,176,504.25 $ 6,543,017.05 1,372,275.07 10,435.68
17,776.71
398.81 $

1,390.52

$ 26.566,954.84 $ 6,553,452.73 $

1,390.52

$

-86,861.67

-2,055.00

$

-88.916.67

$

-15,496.72 $ -116,812.17 $

-219.19

634,923.19

239,840.05

60,320.16

$

619,426.47 $ 123,027.88 $

60,100.97

EXHIBIT "BOO

ENDOWMENT FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$ 805,941.00 100,000.00

$ 29,085.96

15,055.00 75,876.15 $ 13,600.00

$ 29,085.96 $ 1,010,472.15 $

$ 26,617,265.90

805,941.00

100,000.00

3,077,847.33

2,739,837.27

48,296.00

$ 50,000.00

615,619.74

10,169.13 1,173.27

20,095.22 86,178.43 30,259.23
1,038.18

33,710.51 2,998.38

1,223,904.23 1,223,904.23

992,467.56 238,802.57

992,467.56 238,802.57

11,342.40 $ 2,505,174.36 $ 36,634,261.55

$

0.00

$ 31,719,521.30 1,372,275.07 10,435.68

$

474.95

18,251.66

398.81 1,390.52

992,467.56 $ 4,292.41

238,802.57 42,385.09
$

229,905.81

1,231,270.13 46,677.50
229,905.81

$

0.00 $ 997,234.92 $

281,187.66 $ 229,905.81 $ 34,630,126.48

$

$

$

29,085.96 $

581,747.87

$ 2,055.00
2,055.00 $ 15,292.23 $
474.95

86,861.67

$

0.00

0.00

86,861.67

$

0.00

-182,983.59 $ 2,275,268.55 $ 2,004,135.07

699,959.23 37,597,952.54 39,815,217.99.

$ 610,833.83 $

15,767.18 $

516,975.64 $ 39,873,221.09 $ 41,819,353.06

-5-

CLAYTON COLLEGE AND STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30,1997

EXHIBIT"C"

Net Increase/(Decrease) in Fund Balances

I

$

-15,496.72 $ -116,812.17 $ -132,308,89

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

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Clayton College and State University (formerly Clayton State College) is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying fmancial statements reflect the operations of Clayton College and State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Clayton College and State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Clayton College and State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for fmancial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions of the fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, public service, etc.
RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.
-7-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHlBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
LOAN FUNDS
The fund used to account for resources which have been made available for fInancial loans to students.
ENDOWMENT FUNDS
The fund used to account for gifts that are subject to the restrictions by the donors requiring that the principal be invested in perpetuity and income only be utilized.
PLANT FUNDS
UNEXPENDED - The fund used to account for fmancial resources utilized to acquire or to construct physical properties for institutional purposes.
RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties.
INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value of physical properties belonging to the University less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the University as custodian or fIscal agent for individual students, faculty, staff members, and organizations.
BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the fInancial statements are prepared on the modifIed accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis of accounting is defmed as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to fInance expenditures of the fIscal period.
Contractual obligations for goods and services which have not been received at the end of the fIscal year are recognized as expenditures and liabilities in the accompanying fmanciaI statements. This accounting practicte causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not
-8-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations of the University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of$1,105,992.74 and the related current year expenditure of$179,363.38 have not been reported in the current funds as required by generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the fmancial statements.
To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on.behalf of the University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses.
BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19961997. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The budget allocation and disbursement of these funds is made to the various organizational units by the Administrative Central Office. In addition, the organizational units receive Federal funds and other funds directly and include these funds in the budget filed with the Administrative Central Office.

- 9-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET A comparison of anticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below:

Resident Instruction Operating Expenses - Sponsored Operations

$ 113.171.26

Capital Outlay

$ 234.392.17

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the departmental level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.

ACCOUNTS RECEIVABLE Accounts receivable consist of allotments due from the Board of Regents of the University System of Georgia - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted - average method.

Inventories of goods for resale are valued at cost using the first-in, first-out method.

MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

- 10-

CLAYTON COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES

.

Funds belonging to the State of Georgia cannot be placed in a depository paying interest longer than ten days

without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may

pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia

Annotated Section 50-17-59:

(l) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or ofthe State of Georgia.

(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.

(3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.

(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.

The treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1997, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

- 11 -

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the University or by its agent in the University's name.

Category2 - Amounts collateralized with securities (at market value) held by the pledging fmancial institution's trust department or agent in the University's name.

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

Carrying Amount

Bank Balances

Risk Categories

2

3

Cash Deposits

$ 2 506 730 39 $ 3 586.326 17 $ 200 000 00 $====lo!!=!.o~o $ 3 386.326 17

CATEGORIZATION OF INVESTMENTS Investments are summarized as described below:

Type of Investment

Carrying Amount

Market Value

Board of Regents Short-Term Investment Fund Total Return Fund
State Investment Pool

$ 301,759.89 $ 301,445.66 592,483.83 792,826.24 225.482.93 225.482.93

Total Investments

$ 1.119,726.65 $ 1.319,754.83

Funds invested in an investment pool managed by another governmental entity are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool.

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 1997:

- 12-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"D"

NOTE 3: INVESTMENT IN PLANT

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 491,871.16 24,406,393.82 4,357,956.48 7,927,334.80 3.412,295.78

Total Investment in Plant

$40.595.852.04

NOTE 4: CAPITAL LEASES

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

As of June 30, 1997, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30

1998 1999 2000 2001

$ 299,454.24 299,454.24 198,145.23 2,863.45

Total Future Minimum Lease Payments

$ 799,917.16

Less: Amounts Representing Interest

77,286.21

Present Value of Future Minimum Lease Payments

$ 722.630.95

NOTE 5: RISK MANAGEMENT

Clayton College and State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the audit report of the Board of Regents of the University System of Georgia - Administrative Central Office. All units of the University System of Georgia share the risk of loss for claims of the Health

- 13 -

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 5: RISK MANAGEMENT
Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $1 ,000,000.00 per person and dental coverage up to an annual maximum of$I,OOO.OO per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents.
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board ofRegents ofthe University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 6: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights ofthe State of Georgia subject only to the claims ofthe State's general creditors. Participants' rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account for each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.
A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999, all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan will be converted effective July 1, 1998.
- 14-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHlBIT"D"

NOTE 7: RETIREMENTPLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Clayton College and State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer public employee retirement system (PERS) established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia.
TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years of creditable service, or (2) has at least 25 years of creditable service. For those members with 30 years of service or those age 60 with at least ten years of service, normal retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of 1/12 of7% for each month the member is below age 60, or by 7% for each year or fraction thereof by which the member has less than 30 years of service. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
Funding Policy Employees of the University who are covered by TRS are required to pay 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1997, the employer contribution rate was 11.81% for covered employees. In addition, the University contributed 4.24% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. The interest rate assumption (rate of return on investments) was 7.50%. The University's payroll for the year ended June 30, 1997, for employees covered by TRS was $11,644,112.94. The University's total payroll for all employees was $17,193,393.75.
Total contributions to the plan made during fiscal year 1997 amounted to $2,091,065.48, of which $1,508,858.50 was made by the University and $582,206.98 was made by employees. These contributions represented 12.96% (University) and 5% (employees) of covered payroll.

- 15 -

CLAYTON COLLEGE AND STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 7: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Funding Policy Total contributions from all employers to TRS for the year ended June 30,1997, were $652,928,555.00. The University's contribution for the year ended June 30, 1997, of$I,508,858.50 was actuarially determined and represented .2310% of total contributions made by all participating employers.
Actuarial and Trend Information Actuarial and historical trend information is presented in the TRS June 30, 1997, financial report which can be obtained through TRS.
REGENTS RETIREMENT PLAN
Plan Description The State of Georgia provides optional pension benefits for eligible faculty and principal administrators through a defined contribution plan. In a defmed contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings.
Funding Policy State legislation requires that prior to January 1, 1997, the employer contribute 4% of the participating employee's earnable compensation, and on and after January 1, 1997, an amount equal to the normal cost contribution determined by the TRS Board of Trustees. Since January 1, 1999, the employer contribution rate was 7.42%. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. The University's payroll for employees covered by the Regents Retirement Plan for the year ended June 30, 1997, was $3,153,002.46. The University's total payroll for all employees was $17,193,393.75.
The University and the covered employees made the required contributions of $186,263.13 (6%) and $157,655.53 (5%), respectively.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Clayton College and State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and part-time arid are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

- 16-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "D"

NOTE 7: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. Ifa member has less than $ 3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia issues a fmancial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The University's payroll for the year ended June 30, 1997, for employees covered by GDCP was $1,548,189.21. The University's total payroll for all employees was $17,193,393.75.
Total contributions made by employees during fiscal year 1997 amounted to $116,115.86 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 8: LEAVE POLICIES
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
NOTE 9: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position.
- 17 -

CLAYTON COLLEGE AND STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE9: CONTINGENCffiS

Litigation, claims and assessments filed against Clayton College and State University (an organizational unit ofthe Board of Regents ofthe University System of Georgia), ifany, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.

NOTE 10: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System of Georgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insuranceprograms. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years of service with the University System of Georgia are eligible for these postemployment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals.

As of June 30, 1997, there were 42 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1997, Clayton College and State University recognized as incurred $87,513.55 of expenditures, which was net of $27,650.87 of participant contributions.

NOTE 11: ENROLLMENT

The equivalent full-time student enrollment of Clayton College and State University was as follows:

Regular Term Fall Quarter, 1996 Winter Quarter, 1997 Spring Quarter, 1997

3,216 3,200 3,029

Average

Summer School, 1996

- 18 -

SUPPLEMENTARY INFORMAnON - 19-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINING BALANCE SHEET
CURRENT FUNDS - UNRESTRICTED JUNE 30,1997

EXHIBIT"E"

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups
Total Assets

RESIDENT

LOTIERYFOR AUXILIARY

STUDENT

INSTRUCTION EDUCATION ENTERPRISES ACTIVITIES

TOTAL

$ 828,581.38 $ 291,977.71 72,796.08 18,185.37 719A09.42

50,937.93 $ 15,254.00

453,602.53 $ 20,400.58 182,214.68

122,822.78 $ 54.00
2,595.20

1,455,944.62 327,686.29 255,010.76 20,780.57 719,409.42

$ 1,930,949.96 $

66,191.93 $ 656,217.79 $ 125,471.98 $ 2,778,831.66

LIABILITIES AND FUND BALANCES

Liabilities Accounts Payable Deferred Revenue Tuition and Fees

$ 594,194.54 $ 1,242,608.70

Total Liabilities

$ 1,836,803.24 $

Fund Balances Unrestricted

94,146.72

65,827.13 $ 65,827.13 $

17,997.38

$ 678,019.05

193,981.00 $ 44,796.44 1,481,386.14

211,978.38 $ 44,796.44 $ 2,159,405.19

364.80

444,239.41

80,675.54

619,426.47

Total Liabilities and Fund Balances $ 1,930,949.96 $

66,191.93 $ 656,217.79 $ 125,471.98 $ 2,778,831.66

See notes to the financial statements.

- 20-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30,1997

EXHIBIT"F"

RESIDENT LOTTERY FOR AUXILIARY INSTRUCTION EDUCATION ENTERPRISES

STUDENT ACTIVITIES

TOTAL

REV~NUES AND OTHER ADDITIONS

Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided

$ 24,517,008,96 $
19,486.66 2,711,59

334,500,00 $ 1,426,896.14 $ 338,860.80 $ 26,617,265,90

512,85 277,20

111.00 9.59

20,110,51 2,998,38

Total Revenues and Other Additions

$ 24,539,207.21 $ 334,500,00 $ 1,427,686.19 $ 338,981.39 $ 26,640,374.79

EXPENDITURES AND OTHER DEDUCTIONS

Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable

$ 24,514,685.95 $
17,776,71 236.04

334,500.00

$ 327,318,30 $ 25,176,504,25

$ 1,372,275,07

1,372,275,07

151.97

10.80

17,776.71 398.81

Total Expenditures and Other Deductions

$ 24,532,698,70 $ 334,500,00 $ 1,372,427.04 $ 327,329.10 $ 26,566,954.84

TRANSFERS BETWEEN FUNDS

Nonmandatory Renewals and Replacements Capital Projects

$

-86,861,67

-2,055.00

$

-86,861.67

-2,055.00

Total Transfers Between Funds

$

-88,916.67

$

-88,916.67

Net Increase/(Decrease) for the Year

$

6,508.51 $

0.00 $

-33,657.52 $ 11,652.29 $

-15,496.72

FUND BALANCES JULY 1, 1996

87,638.21

364.80

477,896.93

69,023.25

634,923.19

FUND BALANCES JUNE 30, 1997

$

94,146.72 $

364,80 $ 444,239.41 $ 80,675.54 $ 619,426.47

See notes to the financial statements.

- 21 -

THIS PAGE LEFT BLANK

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30,1997

EXHIBIT"G"

RESIDENT

LOTIERYFOR

AUXILIARY

INSTRUCTION EDUCATION ENTERPRISES

STUDENT ACTIVITIES

TOTAL

REVENUES

State Appropriations Tuition and Fees Federal Grants and Contracts Sales and Services of Educational ActiVities Sales and Servir;:es of Auxiliary Enterprises Other Sources

$ 14,590,150,00 $ 6,813,907.44 10,638,68 2,946,369,97
155,942.87

334,500,00 $

$
1,423,835.13 3,061.01

$ 280,415,90
58,444.90

14,924,650,00 7,094,323.34
10,638.68 2,946,369.97 1,423,835,13
217,448.78

Total Revenues

$ 24,517,008,96 $ 334,500,00 $ 1,426,896.14 $ 338,860.80 $ 26,617,265.90

EXPENDITURES

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

$ 11,782,751,73 $ 499,213,37
2,857,882.90 1,418,658.23 5,155,582.61 2,562,670.11
237,927,00

69,275.60 130,724,79 134,499.61
$

$ 11,852,027,33 499,213,37
2,988,607.69 $ 327,318.30 1,745,976.53
5,290,082,22 2,562,670.11
237,927.00

43,532,32 283,675.72 786,500.01 258,567.02

43,532.32 283,675.72 786,500,01 258,567.02

Total Expenditures

$ 24,514,685.95 $ 334,500,00 $ 1,372,275.07 $ 327,318,30 $ 26,548,779.32

OTHER TRANSFERS AND ADDITIONS/ (DEDUCTIONS)

Transfers for Renewals and Replacements

Transfers for Capital Projects

Prior Period Adjustments (Net)

$

Remittances to the Board of Regents

of the University System of Georgia

Prior Year's Unrestricted Fund Balance

(Surplus)

21,962.21 -17,776.71

$

-86,861.67

-2,055.00

638.08 $

$ 109.79

-86,861,67 -2,055.00 22,710.08

-17,776,71

Total Other Transfers and Additions/(Deductions)

$

4,185.50

$

-88,278.59 $

109.79 $ -83,983.30

Net Increase/(Decrease) in Fund Balances

$

6,508,51 $

0.00 $

-33,657.52 $ 11,652.29 $ -15,496.72

See notes to the financial statements.

- 23-

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30.1997

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 14.590,150.00

$

9,926,858.96 $ 6,543,017.05

805,941.00
90,931.15 $ _ _--:.:10:..,.1:.=6~9.~13=-

$ 24,517,008.96 $ 6,543.017.05 $ 896,872.15 $ _ _-..;..;10;.:.,.1;.,.;;,6,.;:.;9.,.;.13;..

EXPENDITURES

Personal Services:

Education. General and Departmental Services $ 19,104,422.86

Sponsored Operations

$ 1,601.674.79

Operating Expenses:

Education. General and Departmental Services

5.293,621.36

Sponsored Operations

4,941.342.26

Capital Outlay

$

Special Funding Initiative

116,641.73

896,760.51 $

281.187.66

$ 24,514,685.95 $ 6,543,017.05 $

896,760.51 $ _ _-=2~81,;.:,.;.;18:.:..7.;,;:.6:.;:..6

Excess of Revenues over Expenditures

$

2.323.01 $

0.00 $

111.64 $ .........--..2..7.1. .-,.0.1..,8,;;;.5.3...

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

See notes to the financial statements.

-24 -

SCHEDULE "1"

TOTAL

ADJUSTMENTS

TOTAL

(1)

(Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 15,396,091.00 16,570,976.29 $

$ 15,396,091.00 $ 15,396,091.00 $ 35,146.53 16,606,122.82 16,609,637.00

0.00 -3,514.18

$ 31,967,067.29 $

35,146.53 $ 32,002,213.82 $ 32,005,728.00 $

-. ;.:3,. ;;.,51.;. ;4.;. ;.1.;;. 8

$ 19,104,422.86 1,601,674.79
5,293,621.36 $ 4,941,342.26 1,177,948.17
116,641.73

$ 19,104,422.86 $ 19,146,498.00 $ 1,601,674.79 1,702,679.00

-237,927.00

5,055,694.36 4,941,342.26 1,177,948.17
116,641.73

5,268,119.00 4,828,171.00
943,556.00 116,705.00

42,075.14 101,004.21
212,424.64 -113,171.26 -234,392.17
63.27

$ 32,235,651.17 $ -237,927.00 $ 31,997,724.17 $ 32,005,728.00 $ _ _....;;.:8,.;;.;00:;.;;3.;.;;.8.::.,3

$ -268,583.88 $ 273,073.53 $ _ _.4.'..;,;48.9...6..5..

$ _ _....o.l4,.4.8.9.,;;;;.6.5..

- 25-

THIS PAGE LEFT BLAHK

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30,1997

SCHEDULE "2"

REVENUES State Appropriations

CURRENT FUNDS PLANT FUNDS

TOTAL

UNRESTRICTED UNEXPENDED (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

334,500,00 $ 100,000,00 $ 434,500,00 $ 434,500.00 $

0.00

EXPENDITURES

Equipment, Technology and Construction

Trust Fund

$

269,000,00

$ 269,000.00 $ 269,000.00 $

0,00

Special Funding Initiatives

65,500,00 $ 99,999.46

165,499.46 165,500.00

0.54

$

334,500,00 $ 99,999.46 $ 434,499.46 $ 434,500.00 $

0,54

Excess of Revenues over Expenditures

$

0.00 $

0.54 $

0.54

$

0.54

See notes to the financial statements.

- 27-

CLAYTON COLLEGE AND STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT YEAR ENDED JUNE 30, 1997

Land BUildings Improvements Other Than Buildings Equipment Library Books and Collections

BALANCE JULY 1, 1996

CURRENT FUNDS UNRESTRICTED RESTRICTED

$ 483,726.16

23,535,752.30

4,273,741.14

6,458,318.10 $

895,964.67 $ 142,053.04

3,226.409.26

$ 37,977,946.96 $ 1,081,851.19 $ 142,053.04

SUMMARY OF INVESTMENT
College Capital Leases

$ 37,597,952.54 $
379,994.42

1,081,851.19 $

142,053.04

$ 37,977,946.96 $ 1,081,851.19 $ 142,053.04

SUMMARY OF RESTRICTED EXPENDITURES
Equipment Purchases Inventory Less: Georgia Department of Technical and Audit Education Expenditures

$ 192,409.47 -50,356.43
$ 142,053.04

See notes to the financial statements.

- 28-

SCHEDULE "3"

ADDITIONS PLANT FUNDS
RENEWALS AND UNEXPENDED REPLACEMENTS

$

8,145.00

843,719.09 $

26,922.43

84,215.34

56,388.13

211,880.14 $

CAPITAL LEASES

PRIVATE GIFTS

DEDUCTIONS DISPOSALS/ DELETIONS/ ADJUSTMENTS

BALANCE JUNE 30, 1997

$ 491,871.16

24,406,393.82

4,357,956.48

608,151.31 $ 50,000.00 $

495,420.59

7,927,334.80

3,412,295.78

$ 992,467.56 $

238,802.57 $

608,151.31 $ 50,000.00 $

495,420.59 $ 40,595,852.04

$ 992,467.56 $

238,802.57

------$

$ 608,151.31

50,000.00 $

229,905.81 $ 39,873,221.09

265,514.78

722,630.95

$ 992,467.56 $

238,802.57 $

608,151.31 $ 50,000.00 $

495,420.59 $ 40,595,852.04

- 29-

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FUND BALANCES
CURRENT FUNDS AND PLANT FUNDS JUNE 30, 1997

$

94,146.72 $

364,80 $ 444,239.41 $===80=,6=7=5=,54=

See notes to the financial statements.

- 30-

SCHEDULE "4"

RESTRICTED

PLANT FUNDS

UNEXPENDED

LOTTERY FOR RENEWALS AND

REGULAR

EDUCATION REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 39,873,221.09 $ 39,873,221.09

$ 123,027.88

$ 123,027.88

$

15,766.64

_____ $

$

15,766.64 $

$ 123,027.88 $

15,766.64 $

$

516,975.64

$

364.80

51,719.13

248,836.50

57,001.96

516,975.64

234,193.86

3,025.00

-"0.:.:.54-"0.54 $ _ _.:.5.:,.=16:.t.:,9:.:.7.:.5.;=64..:.

40,051.86 0.54
$ 1,152,169.29

0.54 $

516,975.64 $ 39,873,221.09 $ 41,148,418.26

- 31 -

CLAYTON COLLEGE AND STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 1997

SCHEDULE "5"

Totals per Annual Supplement

Adjustments

Shared Services on Jointly Staffed Personnel

Atlanta Metropolitan College

Martin,

Tichina

Georgia State University

Townslee, Janet C.

University of Georgia

Hager,

Jerri

SALARIES
$ 17,078,572.45 $

TRAVEL 207,761.30

-448.00 136,277.30 -21,008.00

Totals per Report

$ 17,193,393.75 $ 207,761.30

DISTRIBUTION BY FUND
CURRENT FUNDS Unrestricted Resident Instruction Regular Special Funding Initiative Auxiliary Enterprises Student Activities Restricted Resident Instruction

$ 15,152,447.09 $ 28,113.38
588,719.71 48,142.54
1,375,971.03

153,786.44 7,404.82
22,641.00 2,463.95
21,465.09

$ 17,193,393.75 $ 207,761.30

See notes to the financial statements.

- 32-

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPE NDITURESILIABILITIESIDISBURSEMENTS Overpayment of Hope Program Awards Questioned Cost: $440.09 Finding Control Number FS-528-97-01
For the year under review, a sample oftwenty-five (25) student financial aid files was selected to determine iffinancial aid was properly calculated and awarded to eligible students. The items sampled contained HOPE financial aid disbursements of $10,002.00 out of a HQPE population of $1,880,191.00. Our examination revealed that two students received overpayments of HOPE funds totaling $440.09. This condition occurred because ofmiscalculations ofgrant awards and management's failure to review grant awards before disbursing funds.
Management should ensure that student financial aid awards are properly reviewed and approved prior to disbursement. The University should contact the Georgia Student Finance Commission regarding resolution of this finding.
GENERAL LEDGER Clearing Account Balance Not Supported by Detail Listing Finding Control Number FS-528-97-02
For the year under review, the University could not provide adequate supporting documentation for a balance sheet clearing account which had an accounts receivable balance of $62,091.61. This account balance resulted from an interface between the University's Banner Student Registration System and the University's accounting system. Management was unable to produce a subsidiary listing from the Banner Student Registration System supporting the balance recorded on the accounting system's general ledger.
The University should implement procedures to ensure that appropriate detailed subsidiary records are generated from the Banner Student Registration System that support the balances recorded on the general ledger.
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-528-97-03
For the year under review, an equipment inventory sample of one hundred (lOO) randomly selected items was utilized to test the accuracy and validity of the University's equipment inventory records. The results of our testing disclosed the following:
(1) Four (4) items had been surplused but were not removed from the inventory listing.
(2) Three (3) computers were destroyed while being repaired/upgraded but were not removed from the inventory records.
- 1-

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
I
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-528-97-03
(3) One (1) item had been destroyed due to water damage but had not been removed from the inventory records.
These deficiencies occurred because ofmanagement's failure to adequately monitor the subsidiary equipment inventory records. The University should establish appropriate procedures to strengthen internal accounting controls and to ensure that assets are safeguarded against loss from unauthorized use or disposition.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $1,743.00 Finding Control Number FA-528-97-01
For the year under review, a sample of twenty-five (25) student financial aid files was selected to determine if financial aid was properly calculated and awarded to eligible students. The items sampled contained Federal financial aid disbursements of $31,596.00 out of a Federal Student Financial Aid population of $1,665,678.00. Our examination revealed that three students received Federal fmancial aid overpayments totaling $1,743.00. A projection of these monetary errors to the total Federal Student Financial Aid population resulted in likely questioned cost in excess of$10,000.00.
One overpayment of $1,420.00 occurred because management failed to use the updated family contribution when calculating the award for the student. Two other overpayments totaling $323.00 occurred because management disbursed funds in excess of approved grant awards.
Management should ensure that student financial aid awards are properly reviewed and approved prior to disbursement. The University should contact the U. S. Department of Education regarding resolution of this finding.
Federal Programs/Awards Affected:
Student FinancialAid Cluster Program U. S. Department of Education Pell Grant Program (CFDA 84.063)
-2-

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGffiILITY SPECIAL TESTS AND PROVISIONS Weakness in Internal Control Structure for Student Financial Assistance Programs Student Financial Aid Cluster Program Finding Control Number FA-528-97-02
For the year under review, our tests ofthe internal control structure for administering the Student Financial Assistance Programs revealed weaknesses in the system of internal controls based upon the standards in 34 CFR 668.16 which require that the University administer the Student Financial Assistance Programs with adequate checks and balances in its system of internal controls.
These conditions resulted from management's failure to establish adequate administrative procedures for initial determination and subsequent revision of grant awards prior to disbursing funds. Appropriate procedures and controls should be established by the University to ensure that the Student Financial Assistance Programs are in compliance with the applicable rules and regulations.
REPORTING Incorrect Student Payment Summary Report Student Financial Aid Cluster Program Finding Control Number FA-528-97-03
For the year under review, the U. S. Department of Education Student Payment Summary (SPS) report indicated that the University incurred $1,587,244.00 in Federal Pell Grant Program expenditures. This amount represented the University's final authorized amount of the Federal Pell Grant Program award for fiscal year 1997. However, the University actually incurreda total of$I,589,742.00 in fiscal year 1997 Pell Grant Program expenditures. In order to be reimbursed for the excess Pell Grant expenditures, the University, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then institute an upward adjustment of the fiscal year 1997 authorized amount in order to make the funds available to the University.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U. S. Department of Education Pell Grant Program (CFDA 84.063)
-3-

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS SPE CIAL TESTS AND PROVISIONS Exit Counseling Not Conducted Student Financial Aid Cluster Program Finding Control Number FA-528-97-04 For the year under review, an examination of eleven loan recipients identified three loan recipients who should have received exit counseling. For these three recipients, no documentation was available to verify that the required exit counseling had been conducted. Federal Regulation (34 CFR 682.604) requires institutions to conduct and maintain documentation of exit counseling. This condition occurred because management failed to provide exit counseling to the students. The University should ensure that all students requiring exit counseling are properly identified and that exit counseling is conducted as required by Federal regulations. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Family Education Loan Program (CFDA 84.032)
-4-