Audit report, state of Georgia, Clayton College and State University, Morrow, Georgia year ended June 30, 1998

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AUDIT REPORT STATE OF GEORGIA CLAYTON COLLEGE AND STATE UNNERSITY MORROW, GEORGIA
YEAR millED JUNE 30, 1998
'-------- - - - - - - - -- - - - - - - ----- ------- --~~----
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 !NFORMATION

EXlllBITS

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

22

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

23

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

25

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

26

2

LOTTERY FOR EDUCATION

29

3 CHANGES IN INVESTMENT IN PLANT

30

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

32

5 RECONCILIATION OF SALARIES AND TRAVEL

34

6 RECONCILIATION OF PER DIEM AND FEES

35

CLAYTON COLLEGE AND STATE UNIVERSITY - TABLE OF CONTENTS -
SECTIONn AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION ill 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
January 19, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members ofthe 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 ftnancial statements (Exhibits A through D) of Clayton College and State University as of and for the year ended June 30, 1998. These ftnancial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these ftnancial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the ftnancial 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 signiftcant estimates made by management, as well as evaluating the overall ftnancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues, requires disclosure of certain matters regarding the year 2000 issue. Clayton College and State University
has included such disclosures in the Notes to the Financial Statements. Because ofthe unprecedented nature
ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support the University's disclosures with respect to the year 2000 issue made in the Notes to the Financial Statements. Further, we do not provide assurance that Clayton College and State University is or will be year 2000 ready, that Clayton College and State University's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Clayton College and State University does business will be year 2000 ready.
98ARL-62A

As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its fmancial 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 financial statements ofthis departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.
As disclosed in Note 1 to the fmancial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $1,126,916.69 as of June 30, 1998, and the net change in fund balance for the year ended June 30, 1998, would be decreased by $20,923.95.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures, and except for . the effects on the financial statements ofthe matters discussed in the fourth and fifth paragraphs, the financial , statements referred to above present fairly, in all material respects, the financial position of Clayton College . and State University as of June 30, 1998, 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 6) is presented for purposes ofadditional analysis and is not a required part of the financial statements of Clayton College and State University. Such information has been subjected to the auditing procedures applied in the audit of the
_rfinancial statements and, in our opinion, except for the effects of such adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, such information is fairly J?!,S(~ented in all material respects in relation to the financial statements taken as a whole.
CLV:jb 98ARL-62A

FINANCIAL STATEMENTS ...~ ~ . .~ """'-.~
- 1-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 1998

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 Student Deposits 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

$

2.419.082.38 $

67.936.21 $

517,458.20

548.021.04

251.993.43

277.037.84

390,034.98

8,083.55 26.796.88

$

3.855.606.83 $

615.957.25 $ _......,;34~.8=8_0._43_

$

1.231.308.08

6,521.35

1,964.115.15

$ 390,034.98

$

3,201,944.58 $ 390,034.98

$

$ 225,922.27

$

653,662.25

$

653.662.25 $ 225.922.27 $

22,554.50 12.325.93
34,880.43

$

3,855.606.83 $ 615.957.25 $ _ ......3...4...8.=8.0...4..3...

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)

$ 964,604.68 $ 400,648.51 $

608,839.56

$

1,909.20

_ _ _ _ _ _ $ 53.950,000.50

92,242.00 $

4,561,436.89 1,094,185.32
251,993.43 277,037.84 390,034.98 53,950,000.50

$ 964,604.68 $ 402,557.71 $

608,839.56 $ 53,950,000.50 $

92,242.00 $ 60,524,688.96

-3-

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30, 1998

REVENUES AND OTHER ADDITIONS
Unrestricted Cunent Fund Revenues Slate Appropriations
Regular Federal Grants and Contracts Slate Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
")
Endowment Other Net Increase in Fair Value of Investments Interest on Loans Receivable Adjustments Prior Years' ExpendituresiAccounts Payable Prior Years' Checks Voided Expended for Plant Facilities Cunent Funds Plant Funds
Unexpended Renewals and Replacements Georgia Slate Financing and Investment Commission
Tolal Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Refund to Grantors 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 DisposalslDeletionsiAdjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Tolal Transfers Between Funds
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1.1997 (Reslated -See Note 1)
FUND BALANCES JUNE 30. 1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

32,979,945.16

$

3,398,192.13

3,3n,967.99

18,002.04

1,297,340.32 $

25,189.59

204.80 19,401.95

3,000.00
118.09 636.23

$

32,999,551.91 $

8,118,692.07 $

$

31,285,023.57 $

7,978,557.57

1,540,008.90

31,729.25

$

24,285.22 3,009.73

3,510.86

3,754.32 28,000.00
974.86

$

32,852,327.42 $

8,013,797.68 $

28,974.86

$

-96,157.47

-16,726.50

$

-112,883.97

.' $

34,340.52 $

102,894.39 $

-25,220.54

619,321.73

123,027.88

60,100.97

$

653,662.25 $

225.922.27 $

34,880.43

The notes to the financial slatements are an integral part of this statement -4-

EXHIBIT"B"

ENDOWMENT FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

$

153,428.44

$

153,428.44 $

662,840.00 46,914.24 144,244.52 $
7,073.81
861,072.57 $

$ 11,283.24
372.25 1,600.00
13,255.49 $

$
146,250.00
3,482,673.35 823,218.11 27,323.39 269,558.25
4,749,023.10 $

32,979,945.16
662,840.00 3,398,192.13 3,3n,967.99
18,002.04 1,493,504.56
25,189.59 155,645.85 153,800.69
636.23
8,878.61 19,401.95
3,482,673.35
823,218.11 27,323.39 269,558.25
46,896,n7.90

$

0.00

$

39,263,581.14

1,540,008.90

31,729.25

28,000.00

$

15,767.18

40,052.40

166.00 $

963.78

4,139.51 4,485.72

823,218.11 47,307.85

27,323.39 18,662.38
$

360,117.11

850,541.50 65,970.23 360,117.11

$

0.00 $

886,459.14 $

46,949.55 $

360,117.11 $

42,188,625.76

<.

$

$

$

153,428.44 $

811,176.24

$

984,604.68 $

$ 16,726.50
16,726.50 $ -8,660.07 $ 15,767.18

96,157.47
96,157.47 62,463.41 $ 516,766.15

$
$ 4,388,905.99 $ 39,873,221.09

0.00 0.00
0.00 4,708,152.14 42,019,381.24

7,107.11 $

579,229.56 $

44,262,127.08 $

46,727,533.38

-5-

CLAYTON COLLEGE AND STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES. EXPENDITURES.
AND OTHER CHANGES
YEAR ENDED JUNE 3D. 1998

EXHIBIT"C"

Net Increase/{Decrease) in Fund Balances

$

34.340.52 $

102.894.39 $ -...........1..37....2.3.4...-.9.1...

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

CLAYTON COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Clayton College and State University 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 financial 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 financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the 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 fmancial 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 ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
the UNRESTRICTED - The fund used to account for those economic resources over which 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, 1998

EXHIBIT"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 financial 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 ofphysical 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, staffmembers, and organizations.
BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis ofaccounting, which is materially the same as the accrual basis ofaccounting applicable to colleges and universities prescribed in the American Institute ofCertified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on generallong-tenn debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance "expenditures of the fiscal period. ..
Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion ofcontracts for goods and services. The recognition ofencumbrances as expenditures and liabilities is in conformity with
-8-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally.accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations 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 $1,126,916.69 and the net current year expenditures of $20,923.95 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 ofthe financial statements.
To the extent that Current Funds and Plant Funds are used to ftnance 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 behalfofthe University. Donated ftxed 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 fmancial 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 ofrevenues and expenses.
RESTATEMENT OF PRIOR YEAR FUND BALANCE In ftscal year 1998, Clayton College and State University implemented GASB Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools". The state~ent requires certain investments to be reported at fair value rather thmi at cost. As a result, the beginning fund balance of the Current Funds - Unrestricted has been decreased by $104.74, the beginning fund balance of the Endowment Funds has been increased by $200,342.41 and the beginning fund balance of the Plant FundsRenewals and Replacements has been decreased by $209.49 to implement this change in accounting principle.

-9-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1998

EXIllBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET
The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units ofthe University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19971998. The appropriated budget covers currentfunds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the College by the Administrative Central Office. In addition, the College receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

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

Resident Instruction Personal Services Education, General and Departmental Services

$ 74,117.31

Operating Expenses Education, General and Departmental Services

$ 47,738.67

Lottery for Education Equipment, Technology and Construction Trust Fund

$

364.80

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 fmancial 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.

- 10-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998

EXlllBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt ofgoods and services that will benefit periods subsequent to the balance sheet date.
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated fmancial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in fmancial 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.
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 asurety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates 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 ofthe 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 Natioiuil Mortgage Association.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

- 11 -

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXIllBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 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, 1998, are categorized below in order to provide infonnation about the extent to which such deposits are exposed to custodial credit risk:

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

Category 2 - Amounts collateralized with securities (at fair value) held by the pledging fmancial institution's trust department or agent in the University's name.

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

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 3 066.894 56 $ 5.950293,8] $ 200,OQO 00 $ 21 350.00 $ 5 728.943 81

CATEGORIZATION OF INVESTMENTS Investments are summarized as described below:

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

Carrying Amount
$ 301,363.59 947,955.71 238.303.03
$ 1.487.622.33

- 12-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS 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, 1998:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 640,501.10 25,090,606.02 4,435,780.48 20,122,001.36 3,661,111.54

Total Investment in Plant

$ 53,950,000.50

NOTE 4: CAPITAL LEASES

Clayton College and State University acquires computers 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. Ifrenewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly of Georgia are considered noncancellable for fmancial reporting purposes.

As of June 30, 1998, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30

1999 2000 2001 2002

$ 3,044,876.88
3,044,876~88
3,044,876.88 1,776,178.18

Total Future Minimum Lease Payments

$ 10,910',808.82

Less: Amounts Representing Interest

1,222,935.40

Present Value of Future Minimum Lease Payments

$ 9,687,873.42

- 13-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT"D"

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 ofhealth 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 ofthe University System of Georgia share the risk of loss for claims of the Health

')

Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health

coverage for its members up to a maximum lifetime benefit of $1 ,000,000.00 per person and dental coverage

up to an annual maximum of$l,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 ofGeorgia ofmaking 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 of Regents 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 ofcompensation 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 ofGeorgia subject only to the claims

- 14-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998

EXHIBIT"D"

NOTE 6: DEFERRED COMPENSATION PLAN

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, 1998.

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 was converted effective July 1, 1998.

NOTE 7: RETIREMENT PLANS

;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 defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department ofAudits and Accounts.

Funding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1998, the employer contribution rate was 11.81% for covered employees. In addition, the University contributed 3.91 % to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 1,651,152.32 $ 1,508,858.50 $ 1,369',590.28

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it

- 15 -

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHlBIT"D"

NOTE 7: RETrnEMENTPLANS

REGENTS RETIREMENT PLAN

Plan Description

may purchase annuity contracts for the purpose ofproviding retirement and death benefits for eligible faculty

and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment

earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms

'>

ofthe annuity contracts.

Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State of Georgia. The employer contributes 7.75% of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

The University and the covered employees made the required contributions of $281,620.07 (7.75%) and $186,980.87 (5%), respectively.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description Clayton College and State University participates in the Georgia Defmed Contribution Plan (GDCP) which is a single-employer defmed contribution plan established by the General Assembly of Georgia for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

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 of Trustees. 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 inlieu 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.

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.

- 16-

CLAYTON COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXIllBIT "D"

NOTE 7: RETIREMENTPLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 1998 amounted to $122,926.58 which represents 7.5% of covered payroll. These contributions met the requirements ofthe 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- Basisof Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Effective July 1, 1998, certain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.
NOTE 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 ofexpenditures 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.
Litigation, claims and assessments filed against Clayton College and State University (an organizational unit ofthe Board of Regents ofthe University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1998.
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 of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of
- 17 -

CLAYTON COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1998

EXHlBIT"D"

NOTE 10: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Georgia and who have at least ten years of service with the University System ofGeorgia 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, 1998, there were 50 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1998, Clayton College and State University recognized as incurred $96,960.13 of expenditures, which was net of $31,428.98 of participant contributions.
NOTE 11: YEAR 2000 SYSTEMS READINESS
The year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the University's operations as early as calendar year 1999. The University has identified computer systems and other electronic equipment that may be affected by the year 2000 issue and are necessary to conducting University operations. The following stages have been identified as necessary to implement year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue.
Assessment Stage - The actual process ofidentifying all systems and individual components ofsystems to check for compliance.
Remediation Stage - The time when changes are made to systems and equipment.
validationffesting Stage - The process of ensuring that the changes made to systems and equipment
will produce a year 2000 compliant system.
It will be necessary for the University to progress through all four ofthese stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.
The following finaIicial systems utilized by the University are supported by the Board ofRegents, University System of Georgia. The Board intends to remediate all systems which it maintains for use by its member institutions.
The College and University Fund Accounting System is in the remediation stage and final testing is scheduled for April, 1999.
The Regents Budget Reporting System and Property Inventory System are beyond the validation/testing stage and management considers them year 2000 compliant.
- 18 -

CLAYTON COLLEGE AND STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 11: YEAR 2000 SYSTEMS READINESS

The Regents Payroll/Personnel System is in the remediation stage with validation and testing scheduled for completion in July, 1999.

The Banner Student Infonnation System is supported by SCT Banner, Inc. Their Banner2000 product is year 2000 compliant. All institutions whose systems are supported by the Board of Regents are scheduled to install Banner2000 by May 16, 1999.

The Clayton College and State University's (CCSU) Y2K Task Force, a group representing each critical functional department, has been working on identifying, designing solutions, and developing Y2K conversion strategies. The task force has completed an inventory of 45% of computer systems and other electronic .equipment that may be affected by the year 2000. The anticipated date for completing the inventory, ;assessment, and remediation of computer systems and other electronic equipment is March 31, 1999.

Because of the unprecedented nature ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully detenninable until year 2000 and thereafter. Management cannot assure that the University is or will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the University does business will be year 2000 ready.

NOTE 12: ENROLLMENT

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

Regular Tenn Fall Quarter, 1997 Winter Quarter, 1998 Spring Quarter, 1998

3,338 3,217 2,992

Average

Summer School, 1997

- 19-

THIS PAGE LEFT BLANK

SUPPLEMENTARY INFORMAnON - 21 -

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINING BALANCE SHEET
CURRENT FUNDS - UNRESTRICTED JUNE 30.1998

EXHIBIT"E"

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

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 1,815,717.93 $ 477,792.25 66,575.23 272,292.75 390,034.98

44,049.08 $

460,381.95 $ 36,453.75 185,418.20 3,014.44

98,933.42 $ 3,212.20
1,730.65

2,419,082.38 517,458.20 251,993,43 277,037.84 390,034.98

Total Assets

$ 3,022,413.14 $

44,049.08 $

685,268.34 $ 103,876.27 $ 3,855,606.83

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Student Deposits Deferred Revenue Tuition and Fees
Total Liabilities
Fund Balances Unrestricted

$ 1,169,525.32 $ q34,879.39
$ 2,904,404.71 $ 118,008.43

44,049.08 $ 44,049.08 $

15,561.68 $ 6,521.35
186,224.02
208,307.05 $

2,172.00 $ 1,231,308.08 6,521.35

43,011.74

1,964,115.15

45,183.74 $ 3,201,944.58

0.00

476,961.29

58,692.53

653,662.25

Total Liabilities and Fund Balances

$ 3,022,413.14 $

44,049.08 $

685,268.34 $ 103,876.27 $ 3,855,606.83

See notes to the financial statements.

-22 -

CLAYTON COLLEGE AND STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 1998

EXHIBIT"P

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and Generel Expenditures Auxiliary Enterprises Expenditures
Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Trensfers Between Funds
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1. 1997

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 30,063,533.52 $
121,95 19,345.69
$ 30,083,001,16 $

888,696,00 $ 888,696,00 $

1,685,818,95 $
82.85 6,26
1,685,908.06 $

341,896,69 $ 32,979,945.16

50.00

204,80 19,401.95

341,946.69 $ 32,999,551.91

$ 30,032,326.38 $

889,060,80 $

$ 1,540,008.90

363,636.39 $

31,285,023.57 1,540,008.90

24,285.22 2,527.85

240.94

240.94

24,285,22 3,009.73

$ 30,059,139.45 $

889,060.80 $ 1,540,249.84 $

363,8n.33 $ 32,852,327.42

$

23,861.71 $

94,146,72

$
$ -364.80 $ 364.80

-96,157.47 -16,726.50 -112,883.97 32,n4,25 $ 444,187.04

$
$ -21,930,64 $ 80,623.17

-96,157.47 -16,726,50 -112,883.97 34,340,52 619,321.73

FUND BALANCES JUNE 30.1998

$

118,008.43 $

0,00 $

476,961.29 $

58,692.53 $

653,662,25

See notes to the financial statements.

-23-

THIS PAGE LEFT BLANK

See notes to the financial statements.

- 25

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 1998

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$

16,337,137.00

13,726,396.52 $

$ .:.7,.::.97:,.:8:..:,5::;:5;:.,7.:.::5.:.-7

662,840.00 191,158.76 $

.:..11:..;,6::;:5;::;5.:.:.49:;..

$

30,063,533.52 $

7,978,557.57 $

'~
EXPENDITURES

Personal Services:

Education, General and Departmental Services

$

Sponsored Operations

Operating Expenses:

Education, General and Departmental services

Sponsored Operations

. Capital Outlay

Special Funding Initiative

21,079,245,31 $
8,829,957.07
123,124,00

1,644 ,360.51
6,334,197.06 $

$

30,032,326,38 $

7,978,557.57 $

853,998,76 $

11,655.49

870,525.96 $

45,985.77

870,525,96 $

45,985.77

Excess of Revenues over Expenditures

$

31,207.14 $

0.00 $

-16,527,20 $===-34~,3==3=0.=28=

(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.

-26-

SCHEDULE "1"

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

16.999.9n.OO

$

16,999.977.00 $ 16.999.977.00 $

21.907.768.34 $

-182.536.62

21,725.231.72

22.105,509.00

0.00 -380.277.28

$

38.907.745.34 $

-182.536.62 $

38.725.208.72 $ 39.105.486.00 $

...;.3.;..8.0...2. _77_._28_

$

21.079.245.31

1.644.360.51

$

21.079.245.31 $ 21.005.128.00 $

1.644.360.51

1.759.082.00

8.829.957.07 $ 6.334.197.06
916.511.73 123.124.00

-233.593.40

8.596.363.67 6.334.197.06
916.511.73 123.124.00

8,548.625.00 6.467.596.00 1.201.931.00
123.124.00

-74,117.31 114.721.49
-47,738.67 133,398.94 285,419.27
0.00

$

38.927,395.68 $

-233.593.40 $

38,693,802.28 $ 39.105.486.00 $

411.683.72

$

-19.650.34 $

51.056.78 $ ===;;;.31,.;.4;;;0=6.=44=

$===;;;.31=,4=0=6.=44=

-27 -

THIS PAGE LEFT BLAHK

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30.1998

SCHEDULE "2"

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

888,696.00 $ 888,696.00 $

0;,,;.,0.;...;0;..-

EXPENDITURES
Equipment, Technology and Construction Trust Fund
Special Funding Initiatives

$

712,364.80 $ 712,000.00 $

176,696.00

176,696.00

$

889,060.80 $ 888,696.00 $

-364.80 0.00
-_3_64_.8_0_

Excess of Revenues over Expenditures

$====-=364==:=.8==0

$====-=3=64=.8=0,=

See notes to the financial statements.

- 29-

CLAYTON COLLEGE AND STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT YEAR ENDED JUNE 30, 1998

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

BALANCE JULY 1,1997

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT UNEXPENDED

$

491,871.16

$

2,379.94

24,406,393.82

414,653.95

4,357,956.48

77,824.00

7,927,334.80 $ 2,665,904.71 $

567,952.88

328,360.22

3.412,295.78

248,815.76

$ 40,595,852.04 $ 2,914.720.47 $

567,952.88 $

8.23.,2.1.,8.1.1..

SUMMARY OF INVESTMENT
College Capital Leases

$ 39,873,221.09 $ 2,914,720.47 $ 722,630.95

567,952.88 $

823,218.11

$ 40,595,852.04 $ 2,914,720.47 $

567,952.88 $ _.....8..2.3.,2_1.8....1...1..

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

$

604,033.77

-36,080.89

$

567,952.88

See notes to the financial statements.

-30-

SCHEDULE "3"

ADDITIONS
FUNDS RENEWALS AND REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

269,558.25

CAPITAL LEASES
$

$

27,323.39

$ 10,700,000.00

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30,1998

146,250.00

$

640,501.10

25,090,606.02

4,435,780.48

$ 2,094,874.64

20,122,001.36

3,661,111.54

$

27,323.39 $

269,558.25 $ 10,700,000.00 $

146,250.00 $ 2,094,874.64 $ ....====5..3.,;;;;,9=50.,0;;,;.0.0...5..0...

$

27,323.39 $

269,558.25

$

146,250.00 $

360,117.11 $

44,262,127.08

_ _ _ _ _ _ $ 10,700,000.00

1,734,757.53

9,687,873.42

$

27,323.39 $

269,558.25 $ 10,700,000.00 $

146,250.00 $ 2,094,874.64 $ _....5.-.3.,9.-5.0.,0.0..0.5..0..

- 31 -

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FUND BALANCES
CURRENT FUNDS AND PLANT FUNDS JUNE 30. 1998

NET INVESTMENT IN PLANT Investment in Plant Facilities
RESTRICTED Designated for Subsequent Years' Expenditures
UNRESTRICTED Designated For Computer Replacements For Intercollegiate Athletics For Inventory Reserve For Parking For Renewals and Replacements Reserve For Subsequent Years' Expenditures For Uncollectible Accounts Surplus Regular Lottery for Education

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTIERY FOR

AUXILIARY

EDUCATION

ENTERPRISES

STUDENT ACTIVITIES

$

31,050.00

66,836.50

3,025.00
17.096.93 _____ $ $ 118.008.43 $

$

61.314.94

185.000.00

109.291.20

121,355.15 $

58.692.53

--'O~.O,."O:_
0.00 $

476.961.29 $ _ _....:5::::8;,.::.6;:::92:::;.5,.,,3:,..

$ 118.008.43 $

0.00 $

476.961.29 $ ......===5=8=.6=92;;;;.5;;;03=

See notes to the financial statements.

- 32-

SCHEDULE "4"

RESTRICTED

PLANT FUNDS

UNEXPENDED

LOTIERY FOR RENEWALS AND

REGULAR

EDUCATION

REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 44,262,127.08 $ 44,262,127.08

$ 225,922.27

$ _--::;2=25"",,9:o::2=2.::.27~

$

7,107.11

$

$

7,107.11 $

$

225,922.27 $

7,107.11 $

$

579,229.56

$

31,050.00

61,314.94

251,836.50

109,291.20

579,229.56

180,047.68

3,025.00

0.00 0.00 $

579,229.56

24,204.04 0.00
$ 1,239,998.92

0.00$

579,229.56 $ 44,262,127.08 $ 45,728,048.27

-33-

CLAYTON COLLEGE AND STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

Totals per Annual Supplement

Adjustments

Shared Services on Jointly Staffed Personnel

Atlanta Metropolitan College

Barton,

Patricia

Dalton College

Barton, Patricia

Georgia Institute of Technology

').

Hampikian, Greg

Georgia State University

Garrison, Kathy

Kennesaw State University

Aldag,

Karl

University of Georgia

Hager,

Jerri

Other

Bolton,

Christopher

Rios,

Judy L.

Barlow,

James

Finger,

Anthonio

Samson,

Linda

SALARIES $ 19,056,404.70 $

TRAVEL 216,990.41

-1,711.64 -918.93
-5,754.24 -1,500,00
200.00 -22,161.00
9.50
-500.00

-18.25 141.95 634.60

$ 19,024,068.39 $====2=17i::!:,7=4;,;;:8=.7.1...

See notes to the financial statements.

- 34-

Totals per Annual Supplement
Adjustments Bar1ow, James Finger, Anthonlo

CLAYTON COLLEGE AND STATE UNIVERSITY RECONCILIATION OF PER DIEM AND FEES YEAR ENDED JUNE 30,1998

SCHEDULE "6"

TYPE PAYMENT
Reimbursable Expense Reimbursable Expense

FEE AMOUNT

EXPENSE AMOUNT

$

1,549,921.53 $

17,102.14 $

TOTAL 1,567,023.67

-141.95 -634.60

-141.95 -634.60

$

1,549,921.53 $

16,325.59 $ ==.;o1,~56~6~,2;;;:;47.;.;..:.:12=

See notes to the financial statements.

- 35-

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

CLAYTON COLLEGE AND STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-528-97-01 FS-528-97-02 FS-528-97-03

Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL LEDGER Clearing Account Balance Not Supported by Detail Listing Finding Control Number: FS-528-97-02

During fiscal year 1998, a new report format was. implemented in an attempt to document the clearing account balance. However, this report proved to be insufficient in providing a total detail of student receivables. As ofJune 30, 1998, a balance of $26,964.45 remains in this account which cannot be documented. During fiscal year 1999, a more extensive report will be developed which will enable the University to provide a'detailed subsidiary ledger.

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-528-97-03

During fiscal year 1998, sufficient resources were not assigned to resolve this finding. A complete physical inventory will be taken during fiscal year 1999 and equipment records will be adjusted based on the results of this inventory.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-528-97-01 FA-528-97-02 FA-528-97-03 FA-528-97-04

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Imple~e,nted

SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS

CLAYTON COLLEGE AND STATE UNIVERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-528-98-01
At June 30, 1998, there was an unidentified variance of$2,281.65 between the general ledger and the bank statement for the University's operating account. This condition occurred because management did not ensure that all reconciling items were identified.
The University should implement appropriate procedures to ensure that bank statements are properly reconciled to the accounting records.
,REVENUEffiECEIVABLESffiECEWTS Clearing Account Balance Not Supported by Detail Listing Finding Control Number: FS-528-98-02
The University could not provide adequate supporting documentation for a balance sheet clearing account which had an accounts receivable balance of $26,964.45 at June 30, 1998. 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-528-98-03
For the year under review, an equipment inventory sample of all individually significant items and four hundred (400) randomly selected items was utilized to test the accuracy and validity of the University's equipment inventory records. The results of our testing procedures disclosed the following deficiencies:
(1) Eighteen (18) items could not be located.
(2) Thirty-nine (39) items were located in areas other than those indicated on th~. equipment inventory records. (Additional procedures revealed three (3) other equipment items not at the location as shown on the inventory records.)
(3) Twenty-five (25) computers included in deletions per the University's "Changes in Investment in Plant" schedule were not removed from the equipment inventory records.
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