Georgia Perimeter College, Decatur, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
I
GEORGIA PERIMETER COLLEGE DECATUR, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Russell W. Hinton State Auditor

GEORGIA PERIMETER COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENT OF CASH FLOWS

4

D NOTES TO THE FINANCIAL STATEMENTS

6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET - (NON-GAAP BASIS) BUDGET FUND

24

2 BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

25

3 RECONCILIATION OF SALARIES AND TRAVEL

27

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 29, 2006

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Anthony S. Tricoli, President Georgia Perimeter College
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of Georgia Perimeter College, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2006. These financial statements are the responsibility ofthe Georgia Perimeter College's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1, the financial statements of Georgia Perimeter College are intended to present the financial position and changes in financial position and cash flows ofonly that portion of the business-type activities ofthe State of Georgia that is attributable to the transactions of Georgia Perimeter College. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America.

06ARL-62

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Georgia Perimeter College as ofJune 30, 2006, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Management's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of Georgia Perimeter College taken as a whole. The accompanying supplementary information (Schedules 1 through 3) is presented for purposes ofadditional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
...,__..~~ W . ~
Rusell W. Hinton, CPA, CGFM State Auditor
RWH:as 06ARL-62

REQUIRED SUPPLEMENTARY INFORMATION

GEORGIA PERIMETER COLLEGE
Management's Discussion and Analysis

Introduction

Georgia Perimeter College is one of the 35 institutions of the University System of Georgia. The College has six convenient locations along the major access corridors of metropolitan Atlanta. Georgia Perimeter College was founded by the DeKalb County Board of Education in 1958. It became a College in 1964. Georgia Perimeter College is the largest two-year college and the third largest institution in the University System of Georgia. The institution continues to grow as shown by the comparison numbers that follow.

Faculty

Students

FY2006 FY2005 FY2004

378

20,461

373

20,316

347

18,986

Overview ofthe Financial Statements and Financial Analysis

Georgia Perimeter College is proud to present its financial statements for fiscal year 2006. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets and the Statement of Cash Flows. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2005 and fiscal year 2006.

Statement ofNet Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Perimeter College. The Statement of Net Assets presents end-of-year data concerning Assets (current and noncurrent), Liabilities (current and noncurrent), and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will be discussed in the Notes to the Financial Statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's

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equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into three categories, nonexpendable, expendable and capital projects. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted 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 restrictions on the use of the assets. Restricted Capital Projects are available for capital expenditures by the institution. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

June 30. 2006

June 30. 2005

Assets Current Assets Capital Assets, Net Other Assets

$ 19,672,355.86 83,444,623.02 1,047,837.85

$ 17,428,226.61 112,671,450.84 1,052,358.50.

Total Assets

$104.164.816.73 $131,152,035.95

Liabilities Current Liabilities Noncurrent Liabilities

$ 10,431,828.31 1,335,565.96

$ 9,705,528.34 16,563,496.64

Total Liabilities

$ 11,767,394.27 $ 26.269.024.98

Net Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Restricted - Capital Projects Unrestricted

$ 83,444,623.02 31,338.39 141,959.59
1,000,215.54 7,779,285.92

$ 96,752,986.30 31,338.39 177,753.72
1,000,215.54 6,920,717.02

Total Net Assets

$ 92,397,422.46 $104,883,010.97

The total assets of the institution decreased by $26,987,219.22. A review of the Statement ofNet Assets will reveal that the decrease was primarily due to a decrease of $29,226,827.82 of investment in plant, net of accumulated depreciation. This decrease primarily reflects the transfer of significant assets from the Lawrenceville Campus of the Gwinnett University Center to Georgia Gwinnett College, which was approved by the Board of Regents to be a separate state college. Georgia Perimeter College has been serving as the administrative service agent for Georgia Gwinnett College and is currently working with College administration on the transition plan. Georgia Perimeter College will be completely phased out of the Georgia Gwinnett College operations by fiscal year 2009.

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The total liabilities for the year decreased by $14,501,630.71. The combination of the decrease in total assets of $26,987,219.22 and the decrease in total liabilities of $14,501,630.71 yields a decrease in total net assets of $12,485,588.51. The decrease in total net assets is primarily in the category of invested in capital assets, net of debt in the amount of$13,308,363.28.

Statement ofRevenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2006

June 30, 2005

Operating Revenues Operating Expenses

$ 55,489,607.07 112,231,460.94

$ 53,003,086.44 112,224,040.64

Operating Loss

$ -56,741,853.87 $ -59,220,954.20

Nonoperating Revenues and Expenses

58,847,661.23

58,172,848.30

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

$ 2,105,807.36 $ -1,048,105.90

Other Revenues, Expenses, Gains or Losses

6,689,784.30

3,145,435.29

Special Item

-21,281, 180.17

Increase (Decrease) in Net Assets

$ -12,485,588.51 $ 2,097,329.39

Net Assets at Beginning of Year

104,883,0 I 0.97

102,785,681.58

Net Assets at End of Year

$ 92,397,422.46 $104,883.010.97

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in operating revenues. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

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Revenue By Source For The Years Ended June 30, 2006 and June 30, 2005

Operating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Rents and Royalties Auxiliary Other
Total Operating Revenue
Nonoperating Revenue State Appropriations Gifts Investment Income Other
Total Nonoperating Revenue
Capital Grants and Gifts State
Total Revenues

June 30, 2006

June 30, 2005

$ 32,156,781.47 17,676,682.12
1,626,854.32 59,390.62
2,547,257.48 1,422,641.06
$ 55,489,607.07

$ 31,384,983.89 17,037,331.52
1,835,848.17 62,402.83
2,367,963.00 314,557.03
$ 53,003,086.44

$ 57,466,393.13 296,494.70 701,231.50 383,541.90
$ 58,847,661.23

$ 57,796,322.18 981,034.76 280,552.90 -55,973.32
$ 59,001,936.52

$ 6,689,784.30 $121 !027!052.60

$ 3,145,435.29 $115!1502458.25

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Expenses (By Functional Classification) For The Years Ended June 30, 2006 and June 30, 2005

June 30, 2006

June 30, 2005

Operating Expenses Instruction Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Depreciation

$ 40,725,889.46 -36.10
9,809,292.98 11,429,124.74 18,904,074.17 11,633,107.15 15,146,915.21 2,038,178.44 2,544,914.89

$ 40,530,748.22 814. 71
9,692,714.11 10,384,398.59 20,100,201.54 11,489,473.58 15,037,945.33 2,389,337.93
2,598,406.63

Total Operating Expenses

$112,231,460.94 $112,224,040.64

Nonoperating Expenses Interest Expense (Capital Assets)

829,088.22

Total Expenses

$112,231,460.94 $113,053,128.86

Grants and contracts revenue continued to grow during the year with an increase of $787,516.55 in State grants awarded. Other operating revenues increased significantly as a result of contractual services revenue from Georgia Gwinnett College for public safety and plant services. The increase in instruction and academic support is due to an increase in staffing and purchase of supplies and materials. The elimination of interest expense for Capital Assets is due to the transfer of a capital lease to the Georgia Gwinnett College.

Utilities decreased by $555,947.18 during the fiscal year. While utility rates increased during the fiscal year, this decrease in cost is due primarily to the decrease in building space transferred to the Georgia Gwinnett College.

Under nonoperating revenues state appropriations decreased by $329,929.05. The reduction was due to Georgia Gwinnett College's state appropriations being shown as part of Georgia Perimeter College's appropriations in fiscal year 2005 and not in fiscal year 2006. In fiscal year 2006, Georgia Gwinnett College's state appropriations were no longer considered to be a part of Georgia Perimeter College.

Statement of Cash Flows

The final statement presented by the Georgia Perimeter College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes.

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The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for. the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2006 and June 30, 2005, Condensed

June 30. 2006

June 30. 2005

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -53,922,599.63 57,848,247.18 -5,191,641.28 701,231.50

$ -52,852,515.51 59,167,558.46 -3,978,863.24 280,552.90

Net Change in Cash Cash, Beginning of Year

$ -564,762.23 15.027.278.64

$ 2,616,732.61 12.410.546.03

Cash, End of Year

$ 14,462,516.41 $ 15,027,278.64

Capital Assets

The College completed renovation and repair projects to the Clarkston Fine Arts building as well as exterior door access projects at the Decatur campus. The $684,115.71 for these projects was funded by the Georgia State Financing and Investment Commission (GSFIC). Other construction funded by the GSFIC included $6,005,668.59 for the renovation of the B Building on the Dunwoody Campus, and ongoing construction of the Student Center on the Clarkston Campus.

Georgia Perimeter College also transferred $37,147,254.71 in capital assets (net of accumulated depreciation) to Georgia Gwinnett College during the fiscal year. This transfer is part of the ongoing transition of the Gwinnett University Center Lawrenceville Campus to the Georgia Gwinnett College, approved as a new state college in June of 2005.

For additional information concerning Capital Assets, see Notes 1 and 6 in the Notes to the Financial Statements.

Long-Term Liabilities

Georgia Perimeter College had Long-Term Liabilities of $3,016,608.44 of which $1,681,042.48 was reflected as current liability at June 30, 2006.

For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements.

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Economic Outlook The College is responding to the increasing higher education needs of the Newton and Rockdale County areas by establishing a Newton Campus which is expected to open in the summer of 2007. Enrollment is projected at 3,000 students in the fall of 2007. Once this facility opens, Georgia Perimeter College will close the Rockdale Center as enrollment has outgrown the facilities available. The University System administration is working closely with Georgia Perimeter College on the transition of students, administrative operations and financial resources to the Georgia Gwinnett College. Georgia Perimeter College will be completely phased out of Georgia Gwinnett College's operations by fiscal year 2009. The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. With the exception of the transition of the Lawrenceville Campus to Georgia Gwinnett College, Georgia Perimeter College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the ability to react to unknown internal and external issues.
Anthony S. Tricoli, President Georgia Perimeter College
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BASIC FINANCIAL STATEMENTS - 1-

GEORGIA PERIMETER COLLEGE STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Notes Receivable (Note 5) Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deferred Revenue (Note 7) Other Liabilities Funds Held for Others Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Capital Projects Unrestricted
Total Net Assets
The notes to the financial statements are an integral part of this statement. -2-

EXHIBIT"A"

$ 13,419,551.89
16,614.41
2,292,422.24 3,785,095.22
152,581.70 6,090.40
$ 19,672,355.86

$

1,042,964.52

4,873.33

83,444,623.02

$ 84,492,460.87

$ 104,164,816.73

$

2,584,900.70

564,558.27

71,311.48

4,350,812.15

375,587.93

803,615.30

1,681,042.48

$ 10,431,828.31

1,335,565.96
$ 11,767,394.27

$ 83,444,623.02
31,338.39 141,959.59 1,000,215.54 7,779,285.92

$ 92,397,422.46

GEORGIA PERIMETER COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2006

EXHIBIT"B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises
Bookstore Food Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Gifts Interest and Other Investment Income Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Special Item (See Note 15)
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

$ 37,866,938.40 -5,710,156.93
16,245,547.29 1,009,727.33 421,407.50 1,626,854.32 59,390.62
935,628.00 9,501.15
1,236,971.16 365,157.17
1,422,641.06
$ 55,489,607.07

$ 27,935,668.78 33,695,878.00 14,371,215.11 703,350.41 10,501,092.81 3,183,760.12 17,903,184.31 3,937,311.40
$ 112,231,460.94
$ -56,741,853.87

$ 57,466,393.13 296,494.70 701,231.50 383,541.90

$ 58,847,661.23

$

2,105,807.36

6,689,784.30 -21,281,180.17 $ -12,485,588.51 104,883,010.97

$ 92,397,422.46

The notes to the financial statements are an integral part of this statement. -3-

GEORGIA PERIMETER COLLEGE STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Bookstore Food Services Intercollegiate Athletics Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT"C"

$ 33,247,737.18 15,291,852.70 1,557,530.47 -35,763,897.30 -61,048,251.27 -10,501,092.81 -39,547.82 43,363.07
388,461.00 9,501.15
1,747,682.20 448,322.93 695,738.87
$ -53,922,599.63

$ 57,466,393.13 8,118.98
373,735.07
$ 57,848,247.18

$ -5, 191,641.28

$ _ _ _7_01~,2_3_1_.5_0

$

-564,762.23

15,027,278.64

$ 14,462,516.41

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GEORGIA PERIMETER COLLEGE STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2006
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT"C"
$ -56,741,853.87
3,937,311.40 -2,828,656.29
14,757.68 5,007.13 3,815.25
884,696.30 504,129.61
62,708.26 235,484.90
$ -53,922,599.63
$ -6,689,784.30

The notes to the financial statements are an integral part of this statement. -5-

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia Perimeter College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
REPORTING ENTITY Georgia Perimeter College is one of thirty-five (35) 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 Georgia Perimeter College 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. Georgia Perimeter College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Perimeter College 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 (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
Legally separate, tax exempt organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential component units of the State. See Note 16 for additional information.
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-college transactions have been eliminated.
The College has the option to apply all Financial Accounting 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.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool.
SHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 days - 13 months. This would include certificates of deposits or other time restricted investments with original maturities of six months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
ACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grant and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
INVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
NONCURRENT CASH Cash that is externally restricted and cannot be used to pay current liabilities is classified as noncurrent assets in the Statement of Net Assets.
CAPITAL ASSETS Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000.00 or more, and an estimated useful life of greater than one year.
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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS Renovations to buildings, infrastructure, and land improvements that exceed $100,000.00 and significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
Effective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to Georgia Perimeter College when complete. For the year ended June 30, 2006, GSFIC transferred $6,689,784.30 for capital additions to Georgia Perimeter College.
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
COMPENSATED ABSENCES Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses and Changes in Net Assets. Georgia Perimeter College had accrued liability for compensated absences in the amount of $2,781,123.54 as of July 1, 2005. For fiscal year 2006, $2,222,910.20 was earned in compensated absences and employees were paid $1,987,425.30, for a net increase of $235,484.90. The ending balance as of June 30, 2006 in accrued liability for compensated absences was $3,016,608.44.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NONCURRENT LIABILITIES Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; and (2) other liabilities that, although payable within 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 in capital assets, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2006

Restricted - E & G and Other Organized Activities Federal Loans Institutional Loans Quasi-Endowments

$ -10,692.37 17,542.67
123,698.70 11,410.59

Total Restricted Expendable

$ 141!959.59

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NET ASSETS Restricted net assets - expendable - Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $387,310.76. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

June 30. 2006

R&RReserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

$ 56,320.28 6,340,993.62
203,000.00
1. 178,972.02

Total Unrestricted Net Assets

$ 7,779,285.92

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

INCOME TAXES Georgia Perimeter College, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.

CLASSIFICATION OF REVENUES The College has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as ( 1) student tuition and fees, net of scholarship allowances,

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
SCHOLARSHIP ALLOWANCES Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the College, and the amount that is 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 tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

DEPOSITS 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.

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

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.

At June 30, 2006, the carrying value of deposits was $11,624,928.40 and the bank balance was $13,183,887.23. Of the College's deposits, $13,064,473.25 was uninsured. Of these uninsured deposits, $13,064,473.25 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.

INVESTMENTS At June 30, 2006, the carrying value of the College's investments was $2,822,202.42, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:

Investment Pools Only

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

$ 2,822,202.42

Georgia Perimeter College maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS The College's investments as of June 30, 2006 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

$ 2,822,202.42

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 24 days.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Georgia Fund 1 pool was rated AAA by Standard and Poor's.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"D"

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2006.

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Other

$ 1,615,095.24 568,683.74
2,292,422.24 2,688,246.32

Less Allowance for Doubtful Accounts

$ 7,164,447.54 1,086,930.08

Net Accounts Receivable

$ 6!077,517.46

NOTE 4: INVENTORIES

Inventories consisted of the following at June 30, 2006.

Physical Plant

$ 152,581.70

NOTE 5: NOTES/LOANS RECEIVABLE

Notes/Loans Receivable consisted of the following at June 30, 2006:

Institutional Loans NOTE 6: CAPITAL ASSETS

$===='4!==87="3=.3==3

Following are the changes in capital assets for the year ended June 30, 2006:

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE6: CAPITAL ASSETS

Beginning Balance Jul:i:: 1, 2005

Special Item Transfer

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress

$ 4,420,775.73 1,507,635.43

$ -850,827.25

Total Capital Assets Not Being Depreciated

$ 5,928,411.16 $ -850,827 .25

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

$112,047,712.98
4,776,345.03 11,428,277.29 17,279,804.07 12,425,263.08

$ -19,727,623.33
-1,171,577.10 -17,279,804.07
-789 079.00

Total Assets Being Depreciated

$157,957,402.45 $ -38,968,083.50

Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

$ 30,348,765.38 2,363,295.69 7,426,033.91 992,657.79 I 0,083,610.00

$ -986,381.17
-516,866.08 -991,557.79 -176,851.00

Total Accumulated Depreciation

$ 51,214,362.77 $ -2,671,656.04

Total Capital Assets, Being Depreciated, Net

$106,743,039.68 $ -36,296,427.46

Capital Assets, Net

$) 12 67145084 $ -37 147,254 71

NOTE 7: DEFERRED REVENUE

Additions

Reductions

$

0.00

$ 9,047,282.21

$ 9,047,282.21 $

0.00

$ 14,400.00

8,579.00 2,218,02 I. 79 $ 799,330.03

593,142.58

226,971.00

$ 2,834,143.37 $ 1,026,301.03

$ 2,482,818.76

98,418.01

1,010,815.63 $ 774,542.74

1,100.00

345,259.00

226,971.00

$ 3,937,3 I 1.40 $ 1,002,613.74

$ -1,103,168.03 $ $ 7,944 114.18 $

23,687.29 23 687 29

Ending Balance June 30, 2006
$ 4,420,775.73 9,704,090.39
$ 14,124,866.I2
$ 92,334,489.65 4,784,924.03 11,675,391.95 0.00 12,002,355.66
$120,797,161.29
$ 31,845,202.97 2,461,713.70 7,145,440.72 0.00 10,025,047.00
$ 51,477,404.39
$ 69,319,756.90 $ 83 444 623 02

Deferred revenue consisted of the following at June 30, 2006.

Prepaid Tuition and Fees Other Deferred Revenue

$ 3,888,958.06 461,854.09

Totals

$ 4,350,812.15

NOTE 8: LONG-TERM LIABILITIES

Long-term liability activity for the year ended June 30, 2006 was as follows:

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 8: LONG-TERM LIABILITIES

Beginning Balance July I, 2005

Special Item
Transfer

Additions

Reductions

Ending Balance June 30, 2006

Current Portion

Leases Lease Obligations

$15,866,074.54 $-15,866,074.54

$

0.00 $

0.00

Other Liabilities Compensated Absences 2,781,123.54 - - - - $2,222,910.20 $1,987,425.30 3,016,608.44 1,681,042.48

Total Long-Term Obligations

$18,647,198.08 $-15.866,074.54 $2.222.910.20 $1,987,425.30 $ 3,016,608 44 $1.681 042.48

NOTE 9: SIGNIFICANT COMMITMENTS

Georgia Perimeter College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $2,199,333.41 as of June 30, 2006. This amount is not reflected in the accompanying basic financial statements.

NOTE 10: LEASE OBLIGATIONS

Georgia Perimeter College transferred the capital lease obligations for the acquisition of real property to Georgia Gwinnett College as of July 1, 2005.

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia Perimeter College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Perimeter College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Perimeter College 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 2006, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$ 3,043,707.59 $ 2,875,100.63 $ 2,714,400.40

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. 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 of the annuity contracts.

Funding Policy Georgia Perimeter College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State Statute and as advised by their independent actuary. For fiscal year 2006, the employer contribution was 9.65% of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Georgia Perimeter College and the covered employees made the required contributions of $1,594,022.59 (9.65%) and $824,286.37 (5%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Georgia Perimeter College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing 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. If a member has less than $ 3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions 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.
Total contributions made by employees during fiscal year 2006 amounted to $677,190.05 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 12: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options - a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Perimeter College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 12: RISK MANAGEMENT
The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, two fully insured HMO healthcare plan options are also offered to System employees.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Georgia Perimeter College, as an organizational unit of the Board of Regents of the 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 13: 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 that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Perimeter College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Perimeter College (an organizational unit of the Board of Regents of the 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, 2006.
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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the 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 of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment 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. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
As of June 30, 2006, there were 250 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2006, Georgia Perimeter College recognized as incurred $1,046,139.29 of expenditures, which was net of $341,405.00 of participant contributions.
NOTE 15: SPECIAL ITEM TRANSFERS
Due to the creation of Georgia Gwinnett College by the Board of Regents of the University System of Georgia, all assets and associated liabilities for the Gwinnett University Center were transferred to Georgia Gwinnett College as of July 1, 2005. These assets and associated liabilities were transferred from Georgia Perimeter College, who acted as custodian for the Gwinnett University Center. The total assets and liabilities transferred were $21,281,180.17. This transfer of assets and liabilities is noted as a Special Item Transfer on the Statement of Revenues, Expenses and Changes in Net Assets. See Notes 6 and 8 for additional information.
NOTE 16: AFFILIATED ORGANIZATIONS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, Georgia Perimeter College Foundation has been determined to be a legally separate, tax exempt organization whose activities primarily support Georgia Perimeter College, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, Georgia Perimeter College has not included financial activity for Georgia Perimeter College Foundation in these financial statements.

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GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "D"

NOTE 17: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The College's operating expenses by functional classification for fiscal year 2006 are shown below:

Natural Classification
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and
Fellowships Utilities Supplies and Other
Services Depreciation
Total Operating Expenses

Instruction

Functional Classification

Public Service

Academic Su1mort

Student Services

Institutional Sui;mort

$27,593,947.60 5,676,427.57 6,540,696.79
315,500.50
-5,574,989.27 I05,973.55 $
5,981,225.55 87 107.17
$ 40 725 889 46 $

$ 11,300.00 6,784,373.16 I ,3 I9,641.83

$ 23,999.28 $ 305,321.90

7,081, I08.88

9,352,88 I .46

1,6 I2,122.52

3,549,087.68

86,724.05

13 I ,881.29

I 10,765.49

-36.10

13,500.00 66,209.00

183,632.48 50,215.36

397,037.65 336,264.17

987,315.83 540 229.11

2,337,877.39 8 287.54

4,433,185.25 419 530.57

-36.10 $ 9,809 292 98 $ I 1,429,124 74 $ 18 904 074 ]7

Natural Classification
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and
Fellowships Utilities Supplies and Other
Services Depreciation
Total Operating Expenses

Plant Operations and Maintenance

Functional Classification

Scholarships and Fellowshigs

Auxiliary Entergrises

Unallocated Degreciation

Total Operating Expenses

$ 4,249,565.59 1,244,843.43 -93,813.96 20,845.72

$

1,100.00

55I,521.34

104,822.86

93,813.96

37,633.36

$ 27,935,668.78 33,695,878.00 I4,371,215.11 0.00 703,350.41

$15,146,915.21 2,613,339.23

334,996.74 11,794.91

10,501,092.81 3,183,760.12

3,282,076.51 316,250.63

88 I,503.78 20 991.49 $ 2,544,914.89

17,903, I 84.31 3,937,311.40

$ 11,633,10:Z IS $15,146 915 21 $ 2,038,178 44 $ 2,544,914 89 $liU31,46Q 94

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SUPPLEMENTARY INFORMATION - 23 -

GEORGIA PERIMETER COLLEGE BALANCE SHEET - (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted Funds Uncollectible Accounts Receivable Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$ 10,172,114.97 2,593,058.44 2,018,487.82 3,296.40 165,926.69
$ 14,952,884.32

$

549,666.82

6,749,209.51

3,271,857.13

-626.76

$ 10,570,106.70

$

1,000,215.54

71,786.38

154,541.28

1,559,909.97

-15,938.09

1,065,951.78

159,000.00

387,310.76

$

4,382,777.62

$ ==14=,9=5=2=,8=8=4=.3=2

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
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GEORGIA PERIMETER COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

REVENUES
State Appropriations State General Funds
Federal Funds Other Funds
Total Revenues
EXPENDITURES
Public Service/Special Funding Initiatives Teaching
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Unreserved Fund Balance (Surplus) Returned
to Office of Treasury and Fiscal Services Year Ended June 30, 2005
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 57,544,398.00 $ 57,544,398.00 $

18,500,000.00

17,909,746.38

43,344,758.00

48,985,338.93

$ 119,389,156.00 $ 124,439,483.31 $

0.00 -590,253.62 5,640,580.93
5,050,327.31

$

21,847.00 $

21,847.00 $

119,367,309.00

122,397,788.99

$ 119,389,156.00 $ 122,419,635.99 $

$

0.00 $

2,019,847.32 $

0.00 -3,030,479.99
-3,030,479.99
2,019,847.32

2,299,973.26 78,004.87

62,957.04

-78 004.87

$

4,382,777.62

SUMMARY OF FUND BALANCE
Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Sponsored Funds Uncollectible Account Receivable Inventory
Total Reserved
Unreserved Surplus

$

1,000,215.54

71,786.38

154,541.28

1,559,909.97

-15,938.09

1,065,951.78

159,000.00

$

3,995,466.86

387,310.76

Total Fund Balance

$ ==4='=38=2,.;7,=7=7=62=

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
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GEORGIA PERIMETER COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

Totals per Annual Supplement

Accruals June 30, 2006 June 30, 2005

Compensated Absences June 30, 2006 June 30, 2005

Adjustments Salaries paid by Georgia Perimeter on behalf of Georgia Gwinnett College

Lawsuit Settlement

Shared Services on Jointly Staffed Personnel

Board of Regents of the University System of Georgia

Rogers,

Michael

Watts,

Rob

Clayton State University

Cerva,

Linda

Georgia Institute of Technology

DeJesus, Victor

Gordon College

Meadows, Danny

University of Georgia

Parks,

Rodney

Unidentified Variance

SALARIES

TRAVEL

$ 61,639,096.98 $ 703,350.41

564,558.27 -316,389.18

2,802,237.29 -2,583,486.80

-657,414.96 -17,918.10

2,100.00 161,600.04
7,884.42 12,900.00
5,600.00 6,300.00 4,478.82

$ 61,631,546.78 $ ==7=0=3e=,3=50=.4=1=

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SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Finding Control Number: FS-571-06-01

Condition:

Our examination ofthe College included a review ofgeneral controls related to their financial information systems. We noted weaknesses in internal controls which we consider relevant to the College's financial statements for the fiscal year ended June 30, 2006.

Criteria:

Policies and procedures should be in place to reasonably mitigate the risk of loss, manipulation, or corruption of data due to internal or external threats.

Questioned Cost: NIA

Information:

Weaknesses in internal control over financial information systems were identified at the College.

Cause:

Management did not implement proper policies or controls over risk assessments or access to their financial information systems.

Effect:

Without satisfactory controls in place, losses, changes or misuses ofdata could occur and possibly not be detected.

Recommendation:

Management should perform a complete risk assessment to identify internal and external threats that could cause loss, manipulation, or corruption of data maintained in the financial information system. Policies and procedures should be developed and implemented to address the weaknesses.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ELIGIBILITY Students Failed to Maintain Satisfactory Academic Progress Student Financial Aid Cluster Program Finding Control Number: FA-571-06-01

Condition:

Two students tested received Title IV funds and did not maintain satisfactory academic progress in accordance with Federal requirements.

Criteria:

Provision included in 34 CFR sections 668.32 and 668.34 provide the compliance requirements for maintaining satisfactory academic progress in order to receive student financial aid.

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GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ELIGIBILITY Students Failed to Maintain Satisfactory Academic Progress Student Financial Aid Cluster Program Finding Control Number: FA-571-06-01

Questioned Cost:

Questioned Costs of $10,923.02 were identified for students who received student financial aid and did not maintain satisfactory academic progress. The projection of questioned costs was $1,928,795.98 for students who received student financial aid and did not maintain satisfactory academic progress.

Information:

A test of forty one students who received student financial aid was performed to determine ifthey had met satisfactory academic progress. Our examination revealed that two students received student financial aid and did not maintain satisfactory academic progress in accordance with Federal requirements.

Cause:

The College student financial aid personnel did not properly monitor the satisfactory academic progress of these two students to ensure that proper academic progress was made in order to be eligible to receive student financial aid funds.

Effect:

Without properly monitoring the satisfactory academic progress ofall students receiving financial aid, the College places itself in a position they are not in compliance with the Federal requirements.

Recommendation:

The College student financial aid personnel must at the end of each academic year monitor the academic progress ofeach student receiving student financial aid to ensure that Federal requirements are met. The College should contact the grantor agencies regarding resolution of this finding.

SPECIAL TESTS AND PROVISIONS Students Failed to Provide Adequate Documentation Student Financial Aid Cluster Program Finding Control Number: FA-571-06-02

Condition:

The student financial aid files for five students that were selected for verification testing did not contain evidence that a signed tax return by the filer or preparer was submitted to the Financial Aid Office for review.

Criteria:

Provision included in 34 CFR sections 668.51, 668.54, 668.56 and 668.57 provide the compliance requirements for verifying information by Institutions for students who receive financial aid and what documentation is acceptable.

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GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Students Failed to Provide Adequate Documentation Student Financial Aid Cluster Program Finding Control Number: FA-571-06-02

Questioned Cost: NIA

Information:

Fourteen student files were selected that were verified by the College to determine if the College properly verified the information that was submitted to them. Our examination revealed that five student files did not contain the proper tax return documentation for verification purposes.

Cause:

The College student financial aid personnel did not properly examine the tax return documentation to ensure that all signatures were on the document as required.

Effect:

Without properly verifying the information in the selected student files the College places itself in a position they are not in compliance with the Federal requirements.

Recommendation: The College student financial aid personnel must properly verify that the information in the selected student files is accurate and complete to ensure that Federal requirements are met.

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