Georgia Perimeter College, Decatur, Georgia, report on review of the financial statements for the fiscal year ended June 30, 2002

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oF -,STATE OF 1GEORGIA
- oEPARTM'ENT Auo1Ts AND AccouNTs

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GEORGIA PERIMETER COLLEGE

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G- EORGIA

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REPORT ON REVIEW

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, -OF THE-FINANCIAL STATEMENTS

.FOR THE.FISCAL YEAR ENDED JUNE"Jo.:2002

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Russell W. Hinton '''

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State Auditor
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GEORGIA PERIMETER COLLEGE - TABLE OF CONfENTS -

SECTION!

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

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BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

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B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

12

C STATEMENT OF CASH FLOWS

13

D NOTES TO THE FINANCIAL STATEMENTS

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SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULESOFREVENUESANDEXPENDITURESCOMPAREDTO

BUDGET - (NON-GAAP BASIS)

RESIDENT INSTRUCTION

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LOTTERY FOR EDUCATION

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3 RECONCILIATION OF SALARIES AND TRAVEL

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SECTION II CURREN f YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Ru,~H.1. W. HINTON
~ TATE AUDITOR
14041 656-217

DEPARTMENT OF AUDITS AND ACCOUNTS
254 W.i~hmgton Street, SW Suit(' 214 AtlJnta, Gcorg1J 30314-8400
February 19, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly of Georg1a Members of the Board of Regents of the Umverslly System of Georgia
and Honorable Jacquelyn M. Belcher, President Georg1a Penmeter College
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have reviewed the accompanymg baste financial statements (Exh1b1ts A through D) of Georgia Penmeter College, an organ1zattonal umt of the State ofGeorg1a, as of and for the year ended June 30. 2002, m accordance with Statements on Standards for Accountmg and Review Services issued by the Amencan Institute of Certified Pubhc Accountants All mformatlon included m these financial statements 1s the representation of the management of Georgia Penmeter College
A review consists pnnc1pally ofmqumes ofCollege personnel and analytical procedures applied to financial data It 1s substantially less m scope than an audit m accordance with aud1tmg standards generally accepted m the Umted States of Amenca, the obJect:lvc ofwh1ch 1s the expression of an opm1on regardmg the financial statements taken as a whole Accordmgly, we do not express such an opm10n
Based on our review, we are not aware of any matenal mod1ficat1ons that should be made to the accompanymg fmanc1al statements m order for them to be m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca
As descnbed m Note 1, Georgia Penmeter College adopted the prov1s10ns of Governmental Accountmg Standards Board (GASB) Statement No 35, Basic Financial Statemems - and Management's D1scuss1011 and Analysis - for Publ,c Colleges and Umversllles, as amended by GASB Statement No 37, Basic Financial Statements - and Management's D1scuss1on and Ana(vs1s for State and Local Governments, and GASB Statement No 38, Certain Financial Statements Note Disclosures, as of July 1, 2001, to implement a new financial reportmg model
02ARL-66

Management's D1scuss10n and Analysis 1s not a reqmred part ofthe basic financial statements but 1s supplementary informallon required by the GASB. We have apphed certain hm1ted procedures, which consisted pnnc1pally ofmqwnes of management regarding the methods ofmeasurement and presentation oft1ns supplementary information, and we are not aware ofany matenal modifications that should be made thereto.

Our review was made for the purpose of expressing hm1ted assurance that there are no matenal modifications that should be made to the financial statements in order for them to be in conformity with accounting pnnc1ples generally accepted in the Umted States of Amenca The accompanying supplementary information (Schedules 1 through 3) 1s presented for add1t10nal analysis purposes Such mformal!on has been subJected to the inqumes and analyt1cal procedures apphed m the review of the financial statements, and we are not aware of any matenal mod1ficat10ns that should be made to such data

Respectfully submitted,

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RWH.as 02ARL-66

State Auditor

REQUIRED SUPPLEMENTARY INFORMATION
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GEORGIA PERIMETER COLLEGE
Management's Discussion and Analysis

Introduction

Georgia Penmeter College 1s one of the 34 mst1tut10ns of the Umvers1ty System of Georgia. The College has six convenient locations along the maJor access comdors of metropohtan Atlanta Georgia Penmeter College was founded by the Dekalb County Board of Education m I958 It became a College m 1964 Georgia Penmeter College 1s the largest two-year College and the thJTd largest 1nst1tut1on m the Umvers1ty System of Georgia The College continues to grow as shown by the companson numbers that follow

Faculty

Students

FY2002 FY2001 FY2000

328

15,372

312

13,708

325

14,091

Overview ofthe Financial Statements and Financial Analysis

Georgia Penmeter College 1s proud to present its financial statements for fiscal year 2002 The emphasis ofd1scuss1ons about these statements will be on current year data There are three financial statements presented the Statement of Net Assets; the Statement of Revenues, Expenses and Changes m Net Assets, and, the Statement of Cash Flows Th.ts d1scuss1on and analysis of the College's financial statements provides an overview of its financial activities for the year Georgia Penmeter College has elected to not restate pnor penods for purposes ofprov1dmg the comparative data for this Management's D1scuss1on and Analysts However, m future years, when pnor penod information 1s available, a comparative analysis will be presented.

Statement ofNet Assets

The Statement ofNet Assets presents the assets, hab1ht1es, and net assets ofthe College as ofthe end of the fiscal year The Statement of Net Assets 1s a pomt oftime financial statement The purpose of the Statement ofNet Assets 1s to present to the readers ofthe financial statements a fiscal snapshot of Georgia Penmeter College The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), L1ab1ht1es (current and non-current), and Net Assets (assets minus hab1ht1es) The difference between current and non-current assets will be discussed in the notes to the financial statements.

From the data presented, readers of the Statement of Net Assets arc able to determmc the assets available to continue the operations ofthe inst1tut1on They are also able to determine how much the institution owes vendors, investors and lendmg institutions

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Finally, the Statement ofNet Assets provides a picture ofthe net assets (assets minus hab1ht1es) and theu availab1hty for expenditure by the institution. Net assets are d1v1ded into three maJor categones The first category, invested in capital assets, net ofdebt, proVJdes the institution's cqwty in property, plant and eqwpment owned by the institution The next asset category 1s restncted net assets, wluch 1s d1v1ded into two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources 1s only available for investment purposes Expendable restncted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restnctlons on the use of the assets. The final category 1s unrestncted net assets. Unrestncted assets are available to the institution for any lawful purpose of the mstltutlon

Statement of Net Assets, Condensed (thousands of dollars)

Assets Current Assets Capital Assets, Net Other Assets

$ 19,826 90,622 66

Total Assets

$110,514

Liabilities Current Liab1hhes Non-Current L1ab1hlles

$ 10,991 I 5,997

Total Liabilities

$ 26,988

Net Assets Invested in Capital Assets, Net of Debt Restnctcd - Nonexpendable Restncted - Expendable Capital ProJects Unrestncted

$ 75,143 39
291 1,286 6 767

Total Net Assets Statement ofRevenues, Expenses and Changes in Net Assets

$ 83.526

Changes in total net assets as presented on the Statement of Net Assets are based on the act1v1ty presented in the Statement of Revenues, Expenses and Changes in Net Assets The purpose of the statement 1s to present the revenues received by the inshtutlon, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gams and losses received or spent by the inslltut10n Generally speaking operating revenues are received for prov1dmg goods and services to the vanous customers and const1tuenc1es of the inslltut1on Operating expenses are those expenses paid to acqmre or produce the goods and services provided in return for the operating revenues, and to carry out the m1ss10n of the institution

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Nonopcratmg revenues arc revenues received for wluch goods and serY1ces are not provided For example state appropnatlons are nonoperatmg because they are provided by the Legislature to the mstltutlon without the Legislature directly rece1vmg commensurate goods and services for those revenues

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

Operatmg Revenues Operatmg Expenses

S 34,951 84,771

Operatmg Loss

$ -49,820

Nonoperatmg Revenues and Expenses

49.063

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

S -757

Other Revenues, Expenses, Gams or Losses

6,624

Increase m Net Assets

$ 5,867

Net Assets at Begmmng of Year, as Ongmally Reported

$150,041

Cumulative Effect of Changes m Accountmg Pnnc1ple

-72,382

Net Assets at Begmnmg of Year Restated

$ 77,659

Net Assets at End of Year

$ 83.526

The Statement of Revenues, Expenses and Changes m Net Assets reflects a positive year with an mcreasc m the net assets at the end of the year. Some highlights of the mforrnatlon presented on the Statement of Revenues, Expenses and Changes m Net Assets are as follows

Nongovernmental grants and contracts decreased nommally from the pnor year This 1s pnmanly a result of the decrease m one grant that had been spent for eqmpment

The compensation and employee benefits category mcreased by approximately $5,053,000 The mcrease reflects a pay raise for the employees ofthe mst1tullon of approximately three percent with the associated fnnge benefits The mcrease also reflects an mcreased cost ofhealth insurance for the employees of the 1ns1Itu1Ion As well as an mcrease m both the number of part-time faculty used dunng summer semester because of mcrcased enrollment and an mcrease m part-lime faculty pay

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Ullhlles mcreased by approximately $255,000 dunng the past year The mcrease was pnmanly associated with the add1t10n of two new fac1ht1es, the Learmng Resource Center on the Dunwoody Campus (occup1ed at the end of fiscal year 2001) and the Gwmnett Umvers1ty Center that opened m November of2001 Under nonoperatmg revenues (expenses) state appropnallons mcreased by approxunately $1,448,474 00 While 11 appears that the mst1tullon rcce1ved a substanllal amount of new money from the state, given the mandatory cost mereases of vanous categones of expenses, the College actually had a relatively flat fundmg year with all thmgs considered. The cumulallve effects of changes m accountmg pnnc1ples are the result of the College adoptmg deprec1at1on on capital assets and recogmllon of compensated absences
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Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002

Operatmg Revenue Tmtion-and Fees

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Grants and Contracts

Rents and Royalties

Sales and Services of Educational Departments

Aux1hary

Other

Total Operatmg Revenue

Nonoperatmg Revenue State Appropnatlons Investment Income Other

Total Nonoperatlng Revenue

Total Revenues

Expenses (thousands of dollars) For The Year Ended June 30, 2002

Operatmg Expenses Instruction Pubhc Service Academic Support Student Services Institutional Support Plant Operations and Mamtenance Scholarships and Fellowships Aux1hary Enterpnses
Total Operatmg Expenses
Nonoperatlng Expenses Interest Expense (Capital Assets)
Total Expenses

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$ 21,996 I 0,683 48 53 1,810 360
$ 34.950
$ 49,211 263 98
$ 49.572
$ 84.522
$ 35,352 88
8,125 7,703 13,663 11,866 6,310 1.664 $ 84,771
509
$ 85.280

Statement ofCash Flows

The final statement presented by Georgia Penmcter College 1s the Statement of Cash Flows The Statement of Cash Flows presents detailed mformatlon about the cash act1V1ty of the mst1tut10n dunng the year. The statement 1s divided mto five parts The first part deals with operatmg cash flows and shows the net cash used by the operatmg act1v1t1es of the mst1tut1on The second section reflects cash flows from non-capital financmg act1V1t1es This section reflects the cash received and spent for nonoperatmg, non-mvestmg, and non-capital financmgpurposes The third section reflects the cash flows from mvestmg act1v1t1es and shows the purchases, proceeds, and mterest received from mvestmg activities The fourth section deals with cash flows from capital and related financmg act1v1t1es Tlus sect10n deals with the cash used for the acqms1t1on and construct10n of capital and related items The fifth section reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets

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

Cash Provided (Used) By Operatmg Act1v1tles Non-Capital Fmancmg Actlvltles Investmg Act1v1tles Capital and Related Fmancmg Activities

$ -50,107 49,384 118 -2,697

Net Change m Cash Cash, Begmmng of Year

S -3,302 9,858

Cash, End of Year

$ 6.551;

Capital Assets

Georgia Penmetcr College completed construction of the Gwmnett Umvers1ty Center bmldmg m fiscal year 2002

For add1t1onal mformat1on concemmg Capital Assets, see Notes 1,5, 7, 8, and 9 m the notes to the financial statements

Economic Outlook

The adm1mstrat1on 1s not aware of any currently known facts dec1s1ons, or conditions that are expected to have a s1gmficant effect on the financial pos1t1on or results of operations dunng this fiscal year beyond those unknown vanatlons havmg a global effect on virtually all types ofbusmess operations. The College's overall financial position 1s strong The College ant1c1pated the current fiscal year will be much hke last and will mamtam a close watch over resources to mamtam the College's ab1hty to react to unknown mtemal and external issues

Jacquelyn M Belcher, President Georgia Penmeter College
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BASIC FINANCIAL STATEMENTS -9 -

GEORGIA PERIMETER COLLEGE
STATEMENT OF NET ASSETS
JUNE 30 2002
~
Current Assets Cash and Cash EqUTValents ShortTenn Investments Accounts Receivable Net Federal Fcnanaal Assistance Other Prepaid ttems Inventories
Total Current Assets
Nonament Assets Cash end Cash Equrvatents Investments Notes ReatlVSble, Net Capital Assets, Net (See Note 5/
Total Noncurrent Assets
Totel Assets
LIABILITIES
Current UatxlltJes Comracts Payable Salanes Payable PayroD Wllhhold1ngs Accounts Payable Deferred Revenue Funds Hold for Others Capital Leases Compensated Absences
Total Current l.Jabdrties
Noncurrent l.Jablhbe5 Capital Leases Compensated Absences
Total NonCJrrent l.Jab1htles
Total Liab1trtJes
NET ASSETS
Invested m Capital Assets Net of Related Debt Restncted for
Nonexpendable Expendable Unrestnded
Total Net Assets
See Independent Accountant's Combmed Report on Review of Basic Fmancaal Statements and Supplementary Information
The notes to the finanaal statements are an integral part of this statement
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EXHIBIT"A"

s

6,540,029 35

6,026,657 87

1,667,799 85 4 908,594 59
501,447 28 181 691 30

$ 19,826,220 24

$

16,338 39

33 812 42

15,11099

90,622,41!1 76

s 90,687,743 56

$ 110 513 963 80

s

74,954 97

204,369 73

245,981 78

2,575,269 38

5 772 210 98

492,776 88

366 233 28

1 259 177 58

$ 10,990,974 58

$ 15,113,130 98 884 026 63
s 15 997 157 61 s 26,988,13219

s 75,143,117 50
38 740 22 1,576,590 33 6 767 383 56

s 83,525,831 61

GEORGIA PERIMETER COLLEGE STATEMENT QF REVENUES ExeENSES AND CHANGES IN NET ASSETS
YEAR ENPEP JUNE 30 2002

EXHIBIT "B"

OPERATING REVENUES
Student Tulbon and Fees Lesa Scholarstup Allowances
Grants and Contntcts Federal State
Nongoyemmantal
-Rents and Royalt1n
Sales and SeMCeS of Educabclllal Departments AuXl~ary Enterpnaes
Food SeMCeS Intercollegiate Athletics Other Orgamzabons Other Operabng Revenuea
Tola.I Operabng Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Bensflts Other Panone.I SeMCeS Travel Scholarships and Fellowstups Ubhbes Supphea and Other Sel'VICeS Depreciation
Total Operabng Expenses
Operabng Income (LOIS)
NONOPERATING REVENUES (EXPENSES)
Stata Appropnabon.s Interest and Other Investment Income lnteroat Expense (Cap,tal Assets) Other Nonoperal.Jng Revenues
Net Nonoperabng Revenues
Income Before Other Revenues Expenses, Gems or Losses
Capital Grants and Gifts State
lncreaae/(Decrease) 1n Net Alaeta
NetAaHta Net Assets Begmmng or Year as Ongmally Reported Cumutative Effect of Changes m Accounting Pnnaple
Net Aaaeta 8eg1M1ng of Year R&Stated
Net Assets. Encl of Year
See Independent Accountant's Combined Report on Review of Bask: Flnanclal Statements end Supplementary Information
The notes to the finenaal statements ere an integral part of this statement 12

s 25 308 172 91
.3 309 430 01
10,423,345 21 239,800 24 18 971 OS 48 090 00 52 527 91
810 960 02 192815
849 905 70 147 099 36
360 124 es
s 34 950 495 38

s 21 395 918 69
25 098 389 68 9 927 804 30 151,753 39 477,109 00 7 279 851 13 2 817,367 09 14,639 143 47 2 983 681 83
s 84 n1 018 58
s -49 820 523 19

s 4921138482
263,239 53 509,416 57
98 271 23

s 49 063 479 01

s

757,04-4 18

6 624 337 73
s 5 867 293 55
s 150 040 704 06
.72 382 166 00
s 77 658 538 06

s 83 525 831 61

GEORGIA PERIMETER COLL.EGE STATEMENT OE CASH FLOWS YEAR ENDED JUNE 30 2002

CASH FLOWS FROM OPERATING ACTMTIES TUlbon and Fees GrantaMd~ Sain and SaMc:H of Educabonal DepartrnMm
Payments to Suppien, PoymontatoEm-
Payments for Scholarshlp1 and Febnl'up:s
-~ Loans LUued to Studants and Employees Calac:bon of Loans to Students and Ernplo)'N1 Au~ Enterprise Cha,ves
Food Servk::H lntercoleglate Atttlebca Other Organlutlon Other Receipts (Payments)

Not Cuh Pr<Mded (UNd) by ()pemno Aclivrt>eS

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
SlataApprnp""1>cna
IYJenc'f Funds TranMICbona
Other Nouope,abng Recelpta

Not Cuh F - l'nMdod (Uoed) by -

Fmanang ActMbeo

CASH FLOWS FROM CAPfTAL ANO RELATED FINANCING ACTMTIES Caprtal Granta and Gifts RltCelYed Purchue of Capital Auetl Pnnapal Paid on Caprtal Debt and Lease Interest Paid on Capital Debi and Leue

Net Cah Provided (Used) by Capital and Relatad Fmanang ActMtla

CASH FLOWS FROM INVESTING ACTMTIES lntarest on Investments Pa.chauoflnvetU'l'lenta

Net Cash Provided (Used) by tnvffbng lv::bvdles

Nat lncrtt,H&'(O.C,UN) u, Cuh

Caah and Caah Equrvalentl - June 30 2001 Leu Short-Tenn Investments

CUh and Cash Equivalents - s.gtnnmg ol Year

Cash and Cuh EquMtlenb - End ol Year

RECONCILIATION OF OPERATING LOSS TO NET CASH PROvtDED (USED) BY OPERATING ACTMTIES
Opsallng Income (Lou) Ad,Justmianta to ReconCN Net Income (Lou) to Net Cuh
Prov- (UNd) by ()pmatlng - -
Depredat,on
,-_--Change 1n Aa9eb and L&abfllbel Accooot1 RecetV&bea Net
Notn Recervabla Net Account3Peyab6e Salann Payable Pay,olDeferred Rewnue
Compenaated Abaences

Net Cuh Pr<Mded (Uoed) by 0 - AdMtoH
See bidepa. .dent Accountant' Combined Report on R...,.. of Bnlc Financial Statements end Supplementary lnformat:Jc:.i The notes to the ftnanaal atateme11t:s .n an Integral part of lhl tatement.
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EXH1B1T"C"

$ 22 643 8,87 82 g 904 400 26 !52,527 91
-27 166 534 38 --48 523,58096
-7 279 851 13 -43 376 75 32,790 33
810 980 02 19281!5
64990570 147 099 36 -3737112 50
$ -50 106 BM 17

$ 49 211 384 82 74 135 91
ea 211 23
$ 49 383 791 96

$ 6 687 OHi 37 -8 385 387 48 -510 998 00 -507 887 50
$ -2 697 234 59

s

283 239 53

-144 !589 28

$

11865025

$ -3 301 748 55

$ 15 773 997 30 -5 915 881 01

$ 9,858,116 29

I 615561387 74

s -49 820 523 19
2aa3661 SJ
-5 020 on 02
25 864 14 -66,893 85 -10 5158 42 489 728 28
6 S50 93 240 638 89 951,178 35 143 481 69
$ -SO 106 958 17

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia Penmeter College serves the state, and national commurutles by prov1dmg its students with academic mstructlon that advances fundamental knowledge, and by d1ssemmatmg knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Georgia Penmeter College 1s one oftlurty-four (34) State supported member mst1tut1ons of higher education m Georgia which compnse the Uruvers1ty System ofGeorgia, an organizational urut ofthe State ofGeorgia. The accompanymg financial statements reflect the operations ofGeorgia Penmeter College as a separate reportmg entity.
The Board of Regents has constltulional authonty to govern, control and manage the Umvers1ty System of Georgia This authonty mcludes but 1s not hm1ted to the power to designate management, the ab1hty to s1gn1ficantly mfluence operations, the authonty to control mst1tut10ns' budgets, the power to determmc allotments of State funds to member mslitut10ns and the authonty to prescnbe accountmg systems and adm1rustratlve pohc1es for member 1nst1tulions Georgia Penmetcr College docs not have authonty to retam unexpended State appropnatlons (surplus) for any given fiscal year Accordmgly, Georgia Penmeter College 1s considered an organ1zat1onal urut ofthe Board ofRegents of the Umvers1ty System of Georgia rcportmg entity for financial reportmg purposes because of the s1gruficance ofils legal, operational, and financial relationships With the Board ofRegents as defined m Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accountmg and Fmanc1al Reportmg Standards
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Financial Statements and Management D1scusswn and Analysisfor State and Local Governments This was followed m November 1999 by GASB Statement No 35, Basic Financial Statements and Management's D1scusswn and Ana(vs1s for Puhlzc Colleges and Unzvers1/les The State of Georgia 1s required to implement GASB Statement No 34 as of and forthe year ended June 30, 2002 As an organ1zat1onal unit of the State of Georgia, the College 1s also reqmred lo adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 The financial statement presentation reqmred by GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 provides a comprehensive, entity-wide perspective of the College's assets, hab1ht1es, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective previously rcqmred
The College has elected to not restate its 2001 financial statements to conform with the new financial statement presentation, therefore comparative financial mformatlon will not be presented for fiscal year 2002 S1gn1ficant accountmg changes made m order to comply with the new reqmrements mclude (I) adoption ofdepreciation on capital assets, and (2) recogn1t1on ofcompensated absences

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION Generally Accepted Accountmg Pnnc1ples (GAAP) requrres that the reportmg of summer school revenues and expenses be between fiscal years rather than m one fiscal year Due to the lack of matenahty, Institutions ofthe Umvers1ty System ofGeorgia will contmue to report summer revenues and expenses m the year m which the predommate activity takes place
BASIS OF ACCOUNTING For financial reportmg purposes, the College 1s considered a special-purpose government engaged only m busmess-type activities Accordmgly, the College's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accountmg, except as noted m the precedmg paragraphs Under the accrual basis, revenues are recogmzed when earned, and expenses are recorded when an obhgat1on has been mcurred All s1gmficant mtra-collcge transactJons have been ehmmated.
The College has the optwn to apply all Fmancial Accountmg Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption ofGASB Statement No 34, the College was also reqwred to make certam changes m accountmg pnnc1ples, specifically (I) adopllon ofdepreciallon on capital assets, and (2) recordmg of compensated absences GASB Statement No 34 requ1res certam summer semester revenues be recogmzed between fiscal years rather than the fiscal year m which the semester was predommantly conducted The Umvers1ty System of Georgia has chosen to contmue to record summer revenue m the year m which the semester was predommantly conducted Net assets at July I, 2001 were reduced by $72,382,166 00 for the cumulauve effect of these changes
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Eqmvalents consist ofpetty cash, demand deposits and lime deposits m authonzed financial mstJtutlons, and cash management pools that have the general charactenst1cs of demand deposit accounts
INVESTMENTS The College accounts for its mvestments at fan value m accordance with GASB Statement No 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools Changes m unrealized gam (loss) on the carrymg value ofmvestrnents are reported as a component of mvestment mcomc m the statements of revenues, expenses, and changes m net assets
ACCOUNTS RECEIVABLE Accounts receivable consists oftmllon and fee charges to students and auxiliary enterpnse services provided to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude amounts due from the Federal governrnent, state and local
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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTS RECEIVABLE governments, or pnvate sources, m connection with reimbursement ofallowable expenditures made pursuant to the College's grant and contracts Accounts receivable are recorded net of estimated uncollect1ble amounts
INVENTORIES Consumable supplies are earned at the lower of cost or market on a weighted-average basis
NON-CURRENT CASH AND INVESTMENTS Cash and mvestrnents that are externally restricted and cannot be used to pay current liab1lilles are class1 fied as non-current assets m the statements of net assets
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqms1t1on, or fa1r market value at the date of donal!on m the case of gifts For equipment, the College's cap1talizat1on policy includes all items with a umt cost of $5,000 00 or more, and an esl!mated useful life of greater than one year Renoval!ons to bmldmgs, infrastructure, and land improvements that exceed $ I 00,000 00 and s1gruficantly mcrease the value or extend the useful life of the structure are capitalized Routme repairs and maintenance are charged to operal!ng expense m the year m which the expense was mcurred. Depreciation 1s computed usmg the straight-line method over the esl!mated useful lives of the assets, generally 40 to 60 years for bmldmgs, 20 to 25 years for mfrastructure and land improvements, IO years for library books, and 3 to 7 years for eqmpment.
To obtain the total picture of plant add1t1ons m the Umvers1ty System, 1t 1s necessary to look at the acl!v1t1es of the Georgia State Financmg and Investment Comm1ss1on (GSFIC) - an orgarnzauon that 1s external to the System GSFIC issues bonds for and on behalf ofthe State ofGeorgia, pursuant to powers granted to 1t in the Consl!tut10n ofthe State ofGeorgia and the Act creatmg the GSFIC The bonds so issued conslltute d1rect and general obligal!ons of the State of Georgia, to the payment of which the full faith, credit and taxmg power of the State are pledged
Effecl!ve July I, 2001, the GSFIC retains construcl!on in progress on therr books throughout the construct10n penod and transfers the ent1re proJect to Georgia Penmeter College when complete For the year ended June 30, 2002, GSFIC transferred capital add11ions valued at $6,624,337 73 to Georgia Penmetcr College The balance of construcl!on in progress retained by GSFIC totaled $19,802,755 80 at June 30, 2002
DEFERRED REVENUES Deferred revenues include amounts received for 1mt10n and fees and certain auxiliary act1v111es pnor to the end of the fiscal year but related to the subsequent accounting penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned

- 17 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPENSATED ABSENCES Employee vacatton pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable m the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Georgia Penmeter College had accrued hab1hty for compensated absences m the amount of $1,999,722.52 as of July I, 2001 For Fiscal Year 2002, $1,402,659 26 was earned in compensated absences and employees were paid $1,259,177.57, for a net mcrease of$143,48l.69
NON-CURRENT LIABILITIES Non-current hab1ht1es mclude (I) hab1ht1es that will not be paid w1tlun the next fiscal year; (2) capital lease obhgat1ons With contractual matunt1es greater than one year, and (3) other hab1httes that, although payable w1thm one year, are to be paid from funds that are classified as non-current assets
NET ASSETS The College's net assets are classified as follows
Invested m capital assets, net of related debt Tlus represents the College's total mvestrnent m capital assets, net of outstandmg debt obhgat10ns related to those capital assets. To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgat1ons" as used m this defimt1on does not mclude debt of the GSFIC as discussed above )
Restricted net assets - nonexpendable Nonexpendable restncted net assets consist of endowment and s1m1lar type funds m which donors or other outside sources have stipulated, as a condition ofthe gift mstrument, that the pnnc1pal 1s to be mamtamed mv1olate and m perpetmty, and mvested for the purpose of producmg present and future mcome, which may either be expended or added to pnnc1pal The College may accumulate as much ofthe annual net mcome ofan mst1tut10nal fund as 1s prudent under the standard estabhshed by Code Section 44-15-7 of Annotated Code of Georgia
Restricted net assets - expendable Restncted expendable net assets mclude resources m which the College 1s legally or contractually obligated to spend resources m accordance with restnctlons imposed by external th1Td parties
Unrestricted net assets Unrcstncted net assets represent resources denved from student tuition and fees, state appropnatlons, and sales and services of educattonal departments and aux1hary enterpnses These resources are used for transact10ns relatmg to the educational and general operations of the College, and may be used at the discretion of the govemmg board to meet current expenses for those purposes, except for unexpended state appropriations (deficit) of$6,l 83 12 Tlus

- 18 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS deficit will be funded by the Board ofRegents ofthe Uruvers1ty System ofGeorgia - Adm1mstrat1ve Central Office These resources also include auxiliary enterpnses, which are substantially selfsupporting act1V1ties that provide services for students, faculty and staff
When an expense 1s incurred that can be paid using either restncted or unrestncted resources, the College's pohcy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources.
INCOME TAXES Georgia Penmeter College, as a pohttcal subd1V1s1on of the State of Georgia, 1s excluded from Federal income taxes under Sect10n 115(1) of the Internal Revenue Code, as amended
CLASSIFICATION OF REVENUES The College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes m Net Assets according to the followmg cntena
Operating revenues. Operating revenues mclude acttv1ttes that have the charactenstlcs ofexchange transactions, such as (1) student tmtlon and fees, net ofscholarslnp allowances, (2) sales and services of aux1hary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnations, and (4) mterest on instttutlonal student loans
Non-operating revenues Non-operatmg revenues mclude activ1t1es that have the charactensucs of non-exchange transactions, such as gifts and contnbut1ons, and other revenue sources that are defined as non-operating revenues by GASB No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entitles That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropnatlons and mvestment mcome
SCHOLARSHIP ALLOWANCES Student tu11Ion and fee revenues, and certam other revenues from students, are reported at gross with a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses and Changes m Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the College, and the amount that 1s paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operating or nonoperating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tmtlon and fees and other student charges, the College has recorded contra revenue for scholarship allowances

- 19 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EOUNALENTS, OTHER DEPOSITS, AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State of Georgia (and thus Georgia Penmeter College) cannot be placed ma depository paytng mterest longer than ten days without the depository prov1dmg a surety bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more of the followmg secuntles as enumerated m the Official Code of Georgia Annotated Section 50-17-59
I Bonds, bill, certificates of mdebtedness, notes, or other direct obligations ofthe Urutcd States or of the State of Georgia
2 Bonds, bills, certificates of mdebtedness, notes, or other obligations of the counties or muruc1paht1es of the State of Georgia
3 Bonds of any pubhc authonty created by the laws ofthe State of Georgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for this purpose
4 Industnal revenue bonds and bonds of development authontles created by the laws of the State of Georgia
5 Bonds, bills, certificates of mdebtedness, notes, or other obhgat10ns of a subs1d1ary corporation ofthe Uruted States government, winch are fully guardllteed by the Uruted States government both as to pnnc1pal and mterest, or debt obhgatlons 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 Assoc1allon
6 Guarantee or msurance ofaccounts provided by the Federal Deposit Insurance Corporation
As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es which allow agencies ofthe State ofGeorgia (and thus Georgia Penmeter College), the option of exemptmg demand deposits from the collateral reqmrements
The Treasurer ofthe Board of Regents 1s responsible for all details relative to funuslung the reqmred depository protection for all umts of the Umvers1ty System of Georgia
CATEGORIZATION OF DEPOSITS The College's cash deposits are catcgonzcd by nsk as follows
Category I - Amounts covered by depository msurance or collatcrahzed with secuntles (at fau value) held by the College or by its agent m the College's name
Category 2 - Amounts collaterahzed with secunlles (at fa.tr value) held by the pledging financial mslltut1on's trust department or agent m the College's name
- 20 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 2: CASH AND CASH EQUIVALENTS, OTHER DEPOSITS. AND INVESTMENTS

CATEGORIZATION OF DEPOSITS Category 3 - Amounts collaterahzed with secuntles (at fa1r value) held by the pledgmg financial
mstJtutJon, or by its trust department or agent but not m the College's name, and amounts uncollaterahzed

Cash Deposits as of June 30, 2002 are as follows

Cash Deposits

Carrymg
Amount

Bank
Balances

s 6 524 367 74 s.3.os2 79s 60 s

Rrnl Catesooes

2

l

38 838 04 s_ __.o...,oo.,. s2on 957 5.6

CATEGORIZATION OF INVESTMENTS At June 30, 2002, the College's total mvestments of$6,060,470 29 consisted entirely offunds m the State Investment Pool adrmmstered by the State of Georgia Office ofTreasury and Fiscal Services which are not required to be categonzed smce the College does not own any specific 1dent1fiable secuntJes m the pool

NOTE 3 ACCOUNTS RECEIVABLE

Accounts receivable consisted of the followmg at June 30, 2002

Student Tuition and Fees Aux1hary Enterpnscs and Other Operatmg Act1v1!Jes Federal, State, and Pnvate Funds

$ 280,036 75 4,643,844 40 1,684,991.38

$ 6,608,872 53

Less Allowance for Doubtful Accounts

32,478 09

Net Accounts Receivable NOTE 4 INVENTORIES

$ 6.576.394,44

Inventones consisted of the followmg at June 30, 2002

Physical Plant

$ 181,691.30

- 21 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 5 CAPITAL ASSETS

The balance at July I, 2001 was adjusted for accountmg changes required m unplementmg GASB Statements 34 and 35 as disclosed m Note I. Followmg are the changes m capital assets for the year ended June 30, 2002

AdJusted Balance Jyly I, 200)

Addinoo~

Reduction~

Balance
lYa, JQ, ioo2

Capital Assets, Not Being Depreciated Land and Land Improvements ConstruCllon Work-In-Progress

s 4,220,775 73 222 s 1.srn25~ 92

s 4,220,775 73
I 5162~599

Total Capital Assets Not Being Depreciated

s 4 222 775,73 s 1,516 255 99

$ 5,737 Q3 I 72

Capital Assets, Being Depreciated
Bu1ldmg and Bu1ldmg Improvements Fac1hhcs and Other Improvements Equipment Capital Leases (Bu1ldmgs) Library Collcct1ons

S 81,183,36400 s 6,449,337 73

3,639,170 00 9,422,096 65

175,000 00
89,494 65 s

000 15,602,864 32

I0,612 JW22

2JQ,254 06

SJQ4,B~3 762 65 s ;l2,Sl6,95Q 76 s

$ 87,632,701 73 3,814,17000
80,538 29 9,431,053 01 15,602,864 32
9Q36I 22 12,732,032 06
17Q.~99 29 s1i1,212 s21 12

Less Accumulated Deprccultlon Bu1ldmg and Bu1ldmg Improvements Fac1ht1cs and Other Improvements Equipment Capital Leases (Bu1ldmgs) Library Collcct1ons

S 23,280,247 10 S 2,171,713 62 5,316,028 82 0 00
8,753 522 22

1,237,760 79 116,175 85
1,040,304 68 s 151,694 51 437,746 00

S 39,521,568 54 s i,263 661,63 s

S 24,518,007 89 2,287,889 47
80,538 29 6,275,795 21 151,694 51
9Q,36J QQ 9 I00,984 00
170,822 29 s 42,33!! FI QB

Total Capital Assets, Bcmg Depreciated,

Net

S 65,34i !Bl II $ I9 543J6B 93 s

Capital Assets, Net

s 69 562 2S6 &4 s 21 059 524 92 s

000 s ~.BBS 45Q Q4
000 S 90 622 481 76

NOTE6 DEFERRED REVENUE

Deferred revenue consisted of the followmg at June 30, 2002

Prepaid Tmt1on and Fees Other Deferred Revenue

$5,701,227 40 70 983 58

Totals

$ 51772,210198

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 7 LONG-TERM LIABILITIES

Long-term hab1hty activity for the year ended June 30, 2002, was as follows

Leases Lease Obhgat1ons
Other L1ab1ht1es Compensmed Absences
Total Long-Tenn Obhgat1ons

Balance
July I, 2001
s 397,652 24
1,999 722 52
s 2 397 37416

Add1t19ns
$ 15,602,864 32
I 402 659.26 SJ1005 523 58

Reduct100s
s 521.152 30
I 259,177 57 $ l.za.2J29 87

Balance
lune 30. 2002
$ 15,479,364 26
2,143,204 21 S..l],62i 568 47

Current
Ponon
s 366,233 28
I 259,177 58
s L625 410 86

NOTES SIGNIFICANT COMMITMENTS

Georgia Penmeter College had s1gmficant unearned, outstandmg, eonstruct1on or renovation contracts executed m the amount of$456,973.28 as ofJune 30, 2002 This amount 1s not reflected m the accompanymg basic financial statements.

NOTE 9 LEASE OBLIGATIONS

CAPITAL LEASES Capital leases are generally payable m mstallments rangmg from monthly to annually and have terms expmng m vanous years between 2003 and 2024. Expenses for bmldmgs acquired through capital leases for fiscal year 2002 were $679,200 00 of which $464,524 19 represented mterest. Total pnnc1pal paid on capital leases for bmldmgs was $214,675 81 for the fiscal year ended June 30, 2002 Interest rate 1s 5. 15 percent. The followmg 1s a summary of the carrymg values ofbmldmgs held under capital lease at June 30, 2002

Bmldmgs

$15.45),)69.81

Certain capital leases provide for renewal and/or purchase opt10ns Generally purchase options at bargam pnces of one dollar are exercisable at the expiration of the lease terms.

Georgia Perimeter College also has various capital leases for equipment with an outstandmg balance at June 30, 2002 m the amount of$91,175 76

OPERATING LEASES Georgia Penmeter College has entered mto certam agreements to lease bu1ldmgs wluch are classified as operatmg leases (leases on assets not recorded on the balance sheet) These leases generally contam prov1s1ons that, at the exp1rahon date of the onginal term of the lease, the College has the option ofrenewmg the lease on a year-to-year basis Future mm1mum lease payments for operatmg leases as ofJune 30, 2002 are hsted below. Amounts are mcluded only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised

- 23 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 9 LEASE OBLIGATIONS

OPERATING LEASES

Fiscal Year Endmg June 30

2003

$ 344,005.86

Expenses for rental of bwldmgs under operatmg leases for the year ended June 30, 2002, totaled
$1,017,722.52

SUMMARY OF LEASE OBLIGATION Future comrmtments for capital leases were as follows:

Year Endmg June 30 2003 2004 2005 2006 2007 2008 through 2012 2013 through 2017 2018 through 2022 2023 through 2024

$ 1,154,926 96 1,069,800 00 1,057,300 00 1,054,800 00 1.154,800.00 5,974,000 00 6,574,000 00 6,854,250.00 959.260 00

Total Mm1mum Lease Payments

$25,853,136 96

Less Interest

10.373.772.70

Pnnc1pal Outstandmg

$ l 5,479.364,26

NOTE 10 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia Penmeter College part:tc1pates m the Teachers Retrrement System ofGeorgia (TRS), a costshanng mulhple-employer defined benefit pension plan estabhshed by the General Assembly of Georgia for the purpose of prov1dmg retirement allowances and other benefits for teachers of the

- 24-

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE IO RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description State of Georgia TRS proVJdes service retirement, d1sab1htyretlrement, and survivor's benefits for its members m accordance with State statute The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts

Funding Policy Employees of Georgia Penmeter College who are covered by TRS are reqmred by State statute to contnbute 5% oftheir gross earnmgs to TRS Georgia Penmeter College makes monthly employer contnbutlons to TRS at rates adopted by the TRS Board of Trustees m accordance with State statute and as advised by their mdependent actuary For fiscal year 2002, the employer contnbutlon rate was 9 24% for covered employees Employer contnbutlons for the current fiscal year and the precedmg two fiscal years are as follows

Fiscal Year

Percentage Contnbuted

Reqmred Contnbut1on

2002 2001 2000

100% 100% 100%

$ 2.417,427.87 $3,017,446 02 $ 2,978,389.32

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a smgle-employer defined contnbut1on plan, 1s an optional retrrement plan estabhshed and adrmmstered by the Board of Regents of the Umvers1ty System of Georgia, under which 1t may purchase annmty contracts for the purpose of prov1dmg retirement and death benefits for ehgtble faculty and pnnctpal admm1strators Benefits depend solely on amounts contnbuted to the plan plus mvestment earnmgs Benefits are payable to part1c1patmg employees or their benefic1anes m accordance with the terms of the annuity contracts

Funding Policy Member contnbutlon reqmrements are established by the Board of Trustees of the Teachers Retirement System Employer contnbutlons are estabhshed by statute and may be amended only by the General Assembly of the State of Georgia The employer contnbutes 9.62% ofthe part1c1patmg employee's earnable compensation Employees contnbute 5% of their earnablc compensation Amounts attnbutable to all plan contnbuttons are fully vested and non-forfe1table at all times

- 25 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 10: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Polley Georgia Penmeter College and the covered employees made the required contnbullons of $1,021,420.63 (9 62%) and $542,081.79 (5%), respectively
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Georgia Penmeter College parl!c1pates m the Georgia Defined Contnbul!on Plan (GDCP) winch 1s a smgle-employer defined contnbution plan established by the General Assembly of Georgia for the purpose ofprov1dmg retirement coverage for State employees who are temporary, seasonal, and partlime and are not members of a pubhc retirement or pension system GDCP 1s adm1mstered by the Board of Trustees of the Employees' Retirement System of Georgia
Benefits A member may retire and elect to receive penod1c payments after attamment ofage 65. The payment will be based upon mortality tables and mterest assumptions to be adopted by the Board ofTrustees
If a member has less than$ 3,500 00 credited to his/her account, the Board ofTrustees has the option
ofreqwnng a lump sum d1stnbut1on to the member m heu ofmakmg penod1c payments Upon the death ofa member, a lump sum chstnbullon equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit proV1s1ons are estabhshed by State statute.
Contributions and Vesting Member contnbul!ons are seven and one-halfpercent (7 5%) of gross salary There are no employer contnbul!ons Contnbul!on rates are established by State statute. Earnmgs are credited to each member's account m a manner established by the Board of Trustees Upon termmat1on of employment, the amount of the member's account 1s refundable upon request by the member
Total contnbul!ons made by employees dunng fiscal year 2002 amounted to $514,553.36 which represents 7.5% of covered payroll. These contnbut10ns met the reqwrcments of the plan
NOTE 11 RISK MANAGEMENT
Georgia Penmetcr College 1s a part1c1pant m the Board of Regents of the Umvers1ty System of Georgia Health Benefits Plan, which 1s a self-msurance program of health and dental benefits for employees and retirees of the Umvers1ty System of Georgia Georgia Penmeter College and part1c1patmg employees and retirees pay premiums to the Health Benefits Plan for this health msurance coverage. The Health Benefits Plan 1s mcluded m the financial statements ofthe Board of Regents of the Umvers1ty System of Georgia - Admmistral!ve Central Office. All unils of the Umvers1ty System of Georgia share the nsk of loss for claims of the Health Benefits Plan The
- 26 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 11 RISK MANAGEMENT
Health Benefits Plan 1s considered a self-sustammg nsk fund that provides health coverage for its members up to a maximum h fet1me benefit of$2,000,000 00 per person and dental coverage up to an annual maximum of$1,000 00 per person The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process clrums m accordance with the Health Benefits Plan as established by the Board of Regents
The Department of Admm1strat1ve Services (DOAS) has the respons1b1llty for the State of Georgia of makmg and carrymg out dec1s1ons that will mm1m1ze the adverse effects of accidental losses that mvolve State government assets The State believes 1t 1s more economical to manage its nsks mtemally and set aside assets for claim settlement Accordmgly, DOAS processes claims for nsk of loss to which the State 1s exposed, mcludmg general hab1llty, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' mdemmficat1on L1m1ted runounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certam other nsks. Georgia Penmeter College, as an orgamzatlonal umt of the Board of Regents of the Umvers1ty System of Georgia, 1s part of the State of Georgia reportmg entity, and as such, 1s covered by the State of Georgia nsk management progrrun adm1mstered by DOAS Premiums for the nsk management progrrun are charged to the vanous state organizations by DOAS to provide clrums serv1cmg and clrums payment
A self-msured progrrun of professional liability for its employees was established by the Board of Regents of the Umvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Section 45-9-1. The progrrun msures the employees to the extent that they arc not immune from liability agamst personal liability for drunages ansmg out of the performance of their duties or m any way connected therewith The progrrun 1s adm1mstered by DOAS as a SelfInsurance Fund
NOTE 12 CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies This could result m refunds to the grantor agency for any expenditures which are disallowed under grant terms The runount of expenditures which may be disallowed by the grantor cannot be determmed at this time although Georgia Penmeter College expects such runounts, 1fany, to be 1mmatenal to its overall financial pos1t10n
L1t1gat1on, claims and assessments filed agamst Georgia Penmeter College (an orgamzat10nal urut of the Board of Regents of the Umvers1ty System of Georgia), 1f any, are generally considered to be act10ns agamst the State of Georgia Accordmgly, s1gmficant ht1gat1on, claims and assessments pendmg agamst the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmanc1al Report for the fiscal year ended June 30, 2002

- 27 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I 3 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board of Regents of the Uruversity System ofGeorgia has established group health and life msurance programs for regular employees ofthe Umvers1ty System ofGeorgia It 1s the policy ofthe Board ofRegents to perrrut employees of the Umvers1ty System of Georgia ehg1ble for retirement or that become permanently and totally disabled to continue as members of the group health and life msurance programs Employees who are ehg1ble for retirement or d1sab1hty under the cntena
estabhshed by the Teachers Retirement System of Georgia and who have at least ten years ofservice
with the University System of Georgia are eligible for these post-employment health and hfe insurance benefits. Organ1zat1onal umts of the Board of Regents of the Uruvers1ty System of Georgia pay the employer portion for group insurance for affected ind1v1duals
As of June 30, 2002, there were 173 employees who had retired or were disabled that were receiving these post-employment health and 186 retirees with life insurance benefits. For the year ended June 30, 2002, Georgia Penmeter College recogmzed as incurred $600,731.70 ofexpenses, which was net of$229,777 46 ofpart1c1pant contnbut1ons

- 28 -

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 14 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The College's operating expenses by functtonal classification are shown below

StateTTlC'11t of Operahng l=.xpcnses - Natural vs Funcnonal Classdicanons I or the flSCal Year Ended June 30, 2002

functional Class1fiLauon

r,.-anual Qas.51fica11on

lnstructmn

Pubhc
N:rncc

A1..00Cm1c
Support

~tudcnl
Servwes

Insutubonal Support

Salanes Faculty ~taff
Fmploycc BcncfiLs Other Personal Serv~ Travel Schobrsh1ps and
FcTiowshrps 1Jt1hucs Supplies and Other
SCTVlCCS
Dcprcc1at1on
Total Operatmg CxpcnSCl!I

$ 21,376,83 I 52 3,828,557 5g $ 4,774,408 43
177,491 19
582,555 54
4,439,799 97
172641&
S,1D5l l85+Ci6; s

67,412 22 16,597 89
977 60

$ 14,112 17 5,25 I ,80S SB 985,064 90
71,807 04

$

I 175 00

4,997 21\404

1,029,451 70

60,412 44

$

J,800 00

7,105 756 JO

2,168,627 OJ

15l,75J 39

125,083 34

372 68

217,91992

128,JI I 74 103,766 06

654,126 61 356,91799

2.391 70
!F752Q2

1,069,951 01
513 98S 06
$ fl 12464868

1,304,978 11
77 671 17
$ 7 703052.26

2,944,580 99 _____&ill.1:!
s~

NahJral Qass1fica11on
Salan<s I-acuity Staff
Employee: BcnefiLs Other Personal Sen,ces I ravel O:,chobrshrps and
Fcnowsh1ps
UhhhCS
~upphes and Other
SCl'VICCS
Dqttc1atton
TotaJOpcraungI:.xpcnses

Plant
Operations and
Mamtenancc

E1.1or.tJ90i!;I !::l~~lfi!.iUI~

ScOOlarsh1ps
and Fcltowshnn

Aux1hary
Entemn~

lotal
Opcratmg
Expenses

s 3,409,414 47 834,874 74 15,158 38

S 21,395,918 69
s 338,156 49 25,098,389 68

118,779 61

9,927,804 JO

l5l,75J 39

26,179 01

477,109 00

s 6,309,480 OJ
1,529,299 74

187,932 75 26,535 16

7,279,851 13 2,817,367 09

),912,33104 2,165,399 83
s ll ~~!2~20

s ~ J!l2 ~D OJ

965,110 65
1350 QO
s l ,~1~1.fil

14,639,143 47
2,983 68) 83
s~

- 29 -

SUPPLEMENTARY INFORMATION - 31-

GEORGIA PERIMETER COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - CNON-GAAP BASIS} RESIDENT INSTRUCTION
YEAR ENDED JUNE 30 2002

SCHEDULE "1"

REVENUES
State Appropnabons Other Revenues Retained

. - BUDGET - ACTUAL (1)

VARIANCEFAVORABLE "(UNFAVORABLE)

$ 48,907,596 00 $ 48,907,596 00 $

44,982,126 00

35,699,286 06

000 -9,282,839 94

$ 9318891722 00 $ 84,606,882 06 $ _ _..,:9"',2:::8:.:2,=,8::::39::...::.94.:.

EXPENDITURES
Personal Services Educabon, General and Departmental Services Sponsored Operabons
Operabng Expenses Educabon, General and Departmental Serv<;es Sponsored Operations
Capital Outlay Special Funding lmtlabve

$ 55,553,334 00 $ 55,233,114 36 $

358,96000

352,158 65

17,247,187 00 16,641,040 00 4,003,226 00
85 975 00

16,450,364 24 10,367,379 50 3,909,026 22
85 974 90

320,219 64 6,801 35
796,822 76 6,273,660 50
94,199 78 010

s $ 93889122 oo

86,398,011 87 s_ __;7c.c,4.:.:9:..:1.c:,7-=04-'--'1"-3

Excess of Revenues over Expenditures

$ -1 791 135 81 s____1;.,7;,;9;.:1~1.;;:3.;;:5.;;:8.;,.1

(1) Actual amounts Yo<lre prepared on a prescnbed basis of accounting that demonstrates compliance wrth budgetary statutas and regulabons of Iha Stata of Georgia, which 1s a comprehensive basis of accounting other than generally accepted accounbng pnnciples

See accompanying notes and Independent Accountant's Combined Report on Review of Basie Financial Statements and Supplementary lnformabon
- 33-

GEORGIA PERIMETER COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - !NON-GAAP BASIS\ LOTTERY FOR EDUCATION
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

REVENUES State Appropnabons
EXPENDITURES Equipment, Technology and Construct10n
Trust Fund Spec1al Funding lnrt1at1ves

BUDGET

ACTUAL(1)

VARIANCEFAVORABLE (UNFAVORABLE)

- - - - - - - $

3691832 00 $ 369,832 00 $

000

$ 270,800 00 S 270,799 35 $

065

99,032 00

99,032 00

000

$

369,832 00 S 369,83135 $ _ _ _ _--'--0.;c..65"-

Excess of Revenues over Expenditures

$

065 $===~=0,;;;65_

(1) Actual amounts were prepared on a prescnbed basis of accounbng that demonstrates compliance wrth budgetary statutes and regulations of the State of Georgia, which 1s a comprehensive basis of accounting other than generally accepted accounbng pnnciples

See accompanying notes and Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnformabon
- 34 -

GEORGIA PERIMETER COLLEGE
RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 2002

SCHEDULE "3"

Totals per Annual Supplement
Accruals June 30, 2002 June 30, 2001
Prepaid Items June 30. 2002 June 30, 2001
Compensated Absences June 30, 2002 June 30, 2001
AdJustments Shared Services on Jointly Staffed Personnel Kennesaw State University Shinholster, Shiela

SALARIES $ 46,491,674 71 $

TRAVEL 477,109 00

204,369 73 -197,818 80

-400,832 25 262,829 62

1,990,900 33 -1,857,614 97

80000 $ 46,494 308 37 $ ~=4;;;7.;.7.,;1.;;;09;;,;00;;.;;,,.

See accompanying notes and Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnformat10n
- 35 -

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Balance Sheet Accounts Not Supported by Detailed L1stmgs Fmdmg Control Number FS-0571-02-01
For the year under review, the College could not provide dctaI!ed documental!on for certain student receivable, payable and Banner cash cleanng general ledger accounts These accounts were supported by mformation proVJded from the Banner Student Registration System (Banner System) and had a net undocumented balance of $217,379 56
These problems resulted from mterfaces between the College's Banner System module and the College's GeorgiaF,rsl accountmg system. The College was unable to provide adequate detailed records from the Banner System to support the balances recorded on the GeorgiaF,rst accountmg system's general ledger.
The College should work with the Board of Regents Adrmmstral!ve Central Office to develop procedures necessary to ensure that subs1d1ary records can be produced from the Banner System that will support mformal!on reported m the College's general ledger.