Georgia Perimeter College, Decatur, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2010

GEORGIA PERIMETER COLLEGE
DECATUR, GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
JUNE 30,2010

1 Audits and Accounts

Russell W.Hinton

SME.

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I I

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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 STATEMENTOFNETASSETS B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS C STATEMENTOFCASHFLOWS D NOTES TO THE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUND
3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING
SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
4 RECONCILIATION OF SALARIES AND TRAVEL
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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
January 2 6 , 2 0 1 1

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, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2010. These financial statements are the responsibility of the 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 of America. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of College's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 of only that portion of the business-typeactivities of the 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 of the State of Georgia, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Georgia Perimeter College as of June 30, 2010, 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 part of the basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this 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 1through 4) is presented for purposes of additional 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,
~ d s s e lWl . Hinton, CPA, CGFM State Auditor

REQUIRED SUPPLEMENTARY INFORMATION

GEORGIA PERIMETER COLLEGE
Management's Discussion and Analysis

Introduction
Georgia Perimeter College is one of the 35 institutions of higher education of the University System of Georgia. The College has four campuses and other sites conveniently located along the major access corridors of metropolitan Atlanta. Georgia Perimeter College was founded by the DeKalb County Board of Education in 1958 and later 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. Georgia Perimeter College enrolls more freshmen, has more students transferring to other colleges and universities, and offers more online courses than any other institution in the state. The institution continues to grow as shown by the comparison numbers that follow.

Faculty

Students (Headcount)

Students (FTE)

Fiscal Year 2010 Fiscal Year 2009 Fiscal Year 2008

Overview of the FinancialStatementsand FinancialAnalysis
Georgia Perimeter College is proud to present its financial statements for fiscal year 2010. 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 2010 and fiscal year 2009.

Statement of Net 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 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. 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 30,2010

June 30,2009

Assets Current Assets Capital Assets, Net Other Assets

Total Assets

Liabilities Current Liabilities Noncurrent Liabilities

Total Liabilities

Net Assets

Invested in Capital Assets, Net of Debt $ 81,631,170

Restricted - Nonexpendable

29,449

Restricted - Expendable

354,971

Restricted - Capital Projects

398,388

Unrestricted

8,968,032

Total Net Assets

$ 84,864,069 31,338
451,022 1,000,216 11,105,026

The total assets of the institution increased by $7,689,707. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $13,262,496 in the category of Capital Assets, Net. This increase offset decreases in other Asset categories.
The total liabilities for the year increased by $13,759,368. The combination of the increase in total assets of $7,689,707 and the increase in total liabilities of $13,759,368 yields a decrease in total net assets of $6,069,661. The decrease in total net assets is primarily in the category of lnvested in Capital Assets, Net of Debt, in the amount of $3,232,899. Unrestricted Net Assets also decreased by $2,136,994.
Statement of Revenues, 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 t o 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 t o 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 30,2010

June 30,2009

Operating Revenues Operating Expenses

Operating Loss

$ -107,223,146

$ -93,394,526

Nonoperating Revenues and Expenses

99,572,421

86,328,613

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

$ -7,650,725

$ -7,065,913

Other Revenues, Expenses, Gains or Losses

1,581,064

211,423

Increase (Decrease) in Net Assets

$ -6,069,661

$ -6,854,490

Net Assets at Beginningof Year, as Originally Reported

$ 97,451,671

$ 104,835,320

Prior Year Adjustments

Net Assets at Beginningof Year, Restated $ 97,451,671

$ 104,306,161

Net Assets at End of Year

The Statement of Revenues, Expenses and Changes in Net Assets reflects a decrease in net assets at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

Revenue by Source For the Years Ended June 30,2010 and June 30,2009

June 30.2010

Operating Revenue

Tuition and Fees

$

Grants and Contracts

Sales and Services of Educational Departments

Auxiliary

Other

48,707,712 2,714,527 633,423 8,387,735 1,253,396

Total Operating Revenue

$ 61,696,793

Nonoperating Revenue State Appropriations Federal Stimulus - Stabilization Funds Grants and Contracts Investment Income Other
Total Nonoperating Revenue

$ 46,853,579 9,658,973
46,938,334 79,643

Capital Grants and Gifts State
Total Revenues

June 30.2009

Expenses (By Functional Classification) For the Years Ended June 30,2010 and June 30,2009
June 30,2010
Operating Expenses Instruction Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises
Total Operating Expenses
Nonoperating Expenses lnterest Expense (CapitalAssets) Other NonoperatingExpense
Total Expenses

June 30,2009

Operating revenues increased by $9,182,972 in fiscal 2010. Although Tuition and Fees included an 8%increase. revenues decreased in Grants and Contracts as well as Sales and Services.

Nonoperating revenues increased by $15,350,292 for the year primarily due to an increase of $18,697,870 in Federal Grants and Contracts revenue. This increase offset other decreases, including a reduction of $12,163,151 in State Appropriations.

The compensation and employee benefits category increased by $9,387,237 and primarily affected the Instruction, Academic Support, and Institutional Support categories. The increase reflects the addition of part time and full time faculty members, merit increases and an increased cost of health insurance for the employees of the institution.

Statement of CashFlows
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. 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 30,2010, and 2009, Condensed

June 30,2010

June 30,2009

Cash Provided (Used) By: Operating Activities Noncapital FinancingActivities Capital and Related FinancingActivities Investing Activities
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

$ -105,417,147 102,439,192 -5,420,450 79,643

$ -87,749,999 89,541,093 -4,586,052 201,903

Clapitat Assets
Major repairs and renovations funded by the GSFlC included $145,680 for thermal window replacements at the Decatur campus as well as over $1.0 million for HVAC replacements, restroom renovations and elevator repairs. Projected funding by GSFlC for fiscal year 2 0 1 1 will be approximately the same.
During fiscal year 2010 the College added one new building on the Newton campus and renovated a building on the Clarkston campus through capital lease arrangements with the Georgia Perimeter College Foundation, Inc. The present value of these capital leases is $15.8 million.

For additional information concerning Capital Assets, see Notes 1,6, 8 and 1 0 in the Notes to the Financial Statements.
Long- Term Liabilities
Georgia Perimeter College had Long-Term Liabilities of $84,521,335 of which $2,921,869 was reflected as current liability at June 30, 2010.
For additional information concerning Long-Term Liabilities, see Notes 1and 8 in the Notes to the Financial Statements.
Economic Outlook
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. Even with decreasing appropriation funding, the College was able to generate a modest increase in both Operating and Nonoperating Revenue. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Anthony S. Tricoli, President Georgia Perimeter College

BASIC FINANCIAL STATEMENTS

GEORGIA PERIMETER COLLEGE STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable,Net (Note3) FederalFinancial Assistance Other Inventories(Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Notes Receivable Capital Assets, Net (Note6)
Total NoncurrentAssets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deferred Revenue(Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Capital Projects Unrestricted
Total Net Assets
The notesto the financial statements are an integral part of this statement.
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EXHIBIT " A

GEORGIA PERIMETER COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDEDJUNE 30,2010
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services of Educational Departments Rents and Royalties Auxiliaty Enterprises
Bookstore Food Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Sewices Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations
Federal Stimulus - Stabilization Funds
Grants and Contracts Federal
lnterest and Other Investment Income lnterest Expense Other Nonoperating Revenues (Expenses)
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Increase (Decrease)in Net Assets
Net Assets - Beginningof Year
Net Assets - End of Year
The notes to the financial statements are an integral part of this statement.
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EXHIBIT "B"

GEORGIA PERIMWER COLLEGE STATEMENT OF CASH FLOWS YEAR ENDEDJUNE 30.2010
CASH FLOWS FROM OPERATING ACTIVITIES Tuit~onand Fees Grants and Contracts Sales and Services of Educational Departments Paymentsto Suppliers Paymentsto Employees Paymentsfor Scholarshipsand Fellowships Loans issued to Students and Employees Auxiliary EnterpriseCharges: Bookstore Food Services Intercollegiate Athletics Other Organlzaoons Other Receipts (Payments)
Net Cash Provided (Used) by Operating Actlvities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Federal Stimulus -Stabrllzation Funds Agency Funds Transact~ons Gifts and Grants Receivedfor Other than Capital Purposes
Net Cash Flows Provlded (Used)by NoncapltalFlnanclngActlvltles
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Recelved Purchases of Capital Assets Principal Pald on Capltal Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related FinancingActlvlhes
CASH FLOWS FROM INVESTING ACTIVITIES lnterest on Investments
Net Increase (Decrease) In Cash
Cash and Cash Equivalents - Beglnnlngof Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating lnwme (Loss) Adjustmentsto Reconcile Operating Incometo Net Cash
Provlded (Used) by Operating Activities Depreciation Change In Assets and Liabilities: Acwunts Reoeivable.Net lnventorles Prepaid Items Notes Receivable Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Prov~ded(Used) by OperatingActivities
NONCASH ACTIVITY Flxed Assets Acquired by IncurringCapital Lease Obligations Change In Accrued lnterest Payable Affecting lnterest Paid
The notes to the financial Statements are an integral part of this statement.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "D"

Note 1. Summary of Sgnifiwnt 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 unexpendedState 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 Accountingand Financial Re~ortinSgtandards.
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 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 and cash flows.
New Accounting Pronouncements In fiscal year 2010, Georgia Perimeter College adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for IntangibleAsset% The provisions of this Statement generally required retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, Georgia Perimeter College adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 2.
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.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBrr "D"

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 lnvestments Short-Term lnvestments consist of investments of 9 0 days - 1 3 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.
lnvestments lnvestments include financial instruments with terms in excess of 1 3 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The College accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Assets.
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 grants 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.
Noncurrent Cash and lnvestments Cash and investments that are externally restricted and cannot be used to pay current liabilities are 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 or more, and an estimated useful life of greater than one year. Renovationsto buildings, infrastructure, and land improvements that exceed $100,000 and/or 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, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software is computed using the straight-line method over the estimated useful lives of the assets, generally 4 0 to 6 0 years for buildings, 20 to 25 years for infrastructure and land improvements, 1 0 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.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBlT "D"

To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financingand Investment Commission (GSFIC) - a n 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.
For projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2010, GSFIC did not transfer any 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 compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. Georgia Perimeter College had accrued liability for compensated absences in the amount of $3,415,766 as of July 1,2009. For fiscal year 2010, $2,828,181 was earned in compensated absences and employees were paid $2,503,499, for a net increase of $324,682. The ending balance as of June 30, 2010, in accrued liability for compensated absences was $3,740,448.
Noncurrent Liabilities Noncurrent liabilities include (1)liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent 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.
Restrided net assets - noneupendable: 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.
Restrided 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.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "D"

Expendable Restricted Net Assets include the following:

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

272,827 17,54 1 53,192

Total Restricted Expendable
Restrided 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 assek: 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 $582,866.81. Unexpended state appropriations must be refunded to the Board of Regents of the UniversitySystem 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.
R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

Total Unrestricted Net Assets

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 Revenuesand Expenses The Statement of Revenues, Expenses and Changes in Net Assets classify fiscal year activity as operating and nonoperating according to the following criteria:
Operating Revenues Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3)sales and services.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "D"

Nonoperating Revenues Nonoperating revenue includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenue 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.
Operating Expenses Operating expense includes activities that have the characteristics of exchange transactions.
Nonoperating Expenses Nonoperating expense includes activities that have the characteristics of nonexchange transactions, such as capital financing costs and costs related to investment activity.
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. Deposit3 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.
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 MortgageAssociation.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBrr "D"

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, 2010, the carrying value of deposits was $9,257,426 and the bank balance was $11,452,448. Of the College's deposits, $11,431,391 were uninsured. Of these uninsured deposits, $11,431,391 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, 2010, the carrying value of the College's investments was $3,146,459, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Office of Treasury and Fiscal Services investment pools as follows:

lnvestment Pools

Office of Treasury and FiscalServices

Georgia Fund 1

$

3,146,459

The Georgia Fund 1lnvestment 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 lnvestment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1lnvestment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 4 1 days.
lnterest Rate Risk lnterest 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 Oualitv Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2010:

Student Tuition and Fees Auxiliary Enterprises and Other OperatingActivities Federal FinancialAssistance Other

$ 1,657,114 228,398
8,685,906 6,402,691

EXHIBIT "D"

Less Allowance for Doubtful Accounts
Net Accounts Receivable
Note 4. Inventories
Inventories consisted of the following at June 30, 2010:
Physical Plant
Note 5. Notes/L oans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2010. The Program provides for cancellation of a loan at rates of 10%to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U. S. Department of Education. The College has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2010, the allowance for uncollectible loans was $0.

GEORGIA PERIMITER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

Note 6. Capita/ Assets Following are the changes in capital assets for the year ended June 30,2010:

Beginning Balance July 1,2009

Additions

Reductions

Ending Balance June 30.2010

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

$

4,420,776 $

2,221,467

601,828 1,269,898 $

$ 212,036

5,022,604 3,279,329

Total Capital Assets, Not Being Depreciated $

6,642,243 $

1,871,726 $

212,036 $

8,301,933

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

$

106,450.277

10,096,134

13,263,907 $

63,777.563

13,392,604

0

$
1,697,631 15,802.945
548,671 5,800

2,387,385 $ 141,080
2.239.153
409,015 5,800

104,062,892 9,955,054
12.722.385 79,580,508 13,532,260
0

Total Assets Being Depreciated

$

206,980,485 $

18,055,047 $

5,182.433 $

219,853,099

Less: Accumulated Depreciation:

Buildingand Building Improvements

$

39,501,296 $

Facilities and Other Improvements

2,731,695

Equipment

9,404,065

Capital Leases

2,279,899

Library Collections

10,556,212

2,738,691 $ 89,455
1,321,028 1,475,295
535,927

2,315,957 $ 141,080
2,024,536
409,015

39,924,030 2,680,070 8,700,557 3,755,194 10,683,124

Total Accumulated Depreciation

$

64,473,167 $

6,160,396 $

4,890,588 $

65,742,975

Total Capital Assets, Being Depreciated, Net $

142.507.318 $

11,894,651 $

291,845 $

154,110,124

Capital Assets. Net

Note 7. Deferred Revenue Deferred revenue consisted of the following at June 30,2010:
Prepaid Tuition and Fees Other Deferred Revenue
Totals

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "D"

Note 8. Long- Term Liabilities Long-Term liability activity for the year ended June 30, 2010, was as follows:

Beginning Balance July 1,2009

Additions

Reductions

Ending Balance June 30,2010

Current Portion

Lease Lease Obligation

$ 64,285,492$ 16,943,161$

447,766 $ 80,780,887$

904.750

Other Liabilities Compensated Absences

3,415,766

2,828,181

2,503,499

3,740,448

2,017,119

Total Long-Term Obligations $ 67,701,258$ 19,771,342$ 2,951,265$ 84,521,335$ 2,921,869

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $1,418,189 as of June 30, 2010. This amount is not reflected in the accompanying basic financial statements.
Note lo. Lease Obligations
Georgia Perimeter College had eight capital leases as of June 30, 2010.

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in fiscal year 2035. Expenditures for fiscal year 2010 were $4.1 million of which $3.67 million represented interest and $29,430 represented executory costs. lnterest expense included $1,140,217 of accrued interest which was added to the lease principal. Total principal paid on capital leases was $0.4 million for the fiscal year ended June 30, 2010. lnterest rates range from 4.83 percent to 7.58 percent. The following is a summary of the carrying values of assets held under capital lease at June 30,2010:

Land
Buildings

Total Assets Held Under Capital Lease

$ 75,825,314

In June 2007, the College entered into a capital lease at $22.7 million for an Academic Building on the Newton campus for a period of 29 years. The lease expires in May 2035 and has an outstanding principal balance of $21.97 million as of June 30, 2010.
In August 2008, the College entered into a capital lease at $8.4 million for a Parking Deck on the Dunwoody campus for a period of 27 years. The lease expires in June 2035 and has an outstanding principal balance of $8.96 million as of June 30, 2010.
Also in August 2008, the College entered into a capital lease at $8.3 million for a Parking Deck on the Clarkston campus for a period of 27 years. The lease expires in June 2035 and has an outstanding principal balance of $8.8 million as of June 30, 2010.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBlT "D"

In March 2009, the College entered into a capital lease at $6.0 million for a Student Success Center on the Clarkston campus for a period of 26 years. The lease expires in June 2035 and has an outstanding principal balance of $6.21 million as of June 30,2010.
In April 2009, the College entered into a capital lease at $9.4 million for a Student Success Center on the Dunwoody campus for a period of 26 years. The lease expires in June 2035 and has an outstanding principal balance of $9.63 million as of June 30, 2010.
In May 2009, the College entered into a capital lease at $9.0 million for a Student Success Center on the Decatur campus for a period of 26 years. The lease expires in June 2035 and has an outstanding principal balance of $9.23 million as of June 30, 2010.
In August 2009, the College entered into a capital lease at $12.8 million for a Student Success Center on the Newton campus for a period of 2 6 years. The lease expires in June 2035 and has an outstanding principal balance of $12.88 million as of June 30, 2010.
In September 2009, the College entered into a capital lease at $3.0 million for an International Center on the Clarkston campus for a period of 2 6 years. The lease expires in June 2035 and has an outstanding principal balance of $3.1 million as of June 30, 2010.
OPERATING LEASES Georgia Perimeter College had no operating leases having remaining terms of more than one year at June 30,2010.
FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) as of June 30, 2010, were as follows:

Real Property and
Equipment Capital Leases

Year EndingJune 30: 2011 2012 2013 2014 2015 2016 - 2020 2021 - 2025 2026 - 2030 2031 - 2035

Total Minimum Lease Payments

$ 144,647,023

Less: Interest

63,866,136

Principal Outstanding

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "D"

Georgia Perimeter College's expense for rental of real property and equipment under operating leases was $520,289 in fiscal year 2010.

Note 11. Retimment Plans Teachers Retirement System of Georgia

Plan Description Georgia Perimeter College participates in the Teachers Retirement System of Georgia (TRS), a costsharing 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 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the precedingtwo fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

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. 47-21-1 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 TIM-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 2010, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable t o all plan contributions are fully vested and nonforfeitable at all times.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL VATEMENTS
JUNE 30, 2010

EXHIBIT "D"

Georgia Perimeter College and the covered employees made the required contributions of $1,101,230 (9.24%)and $2,035,066 (5%),respectively.
AIG-VALIC, American Century, Fidelity, and TIM-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
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 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 2010 amounted to $741,582 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 selfinsured 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. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 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, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "D"

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 30,2010.
Note 14, Post-EmploymentBenefits Other ThanPension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees 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.

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "DM

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2009 and 2010 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2010, there were 308 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2010, Georgia Perimeter College recognized as incurred $1,173,086 of expenditures, which was net of $554,798 of participant contributions.

Note 15. Natural Classifi~tionswith Functional Classifi~tions The College's operating expenses by functional classification for fiscal year 2010 are shown below:
Functional Classification

Natural Classification

Instruction

Public Service

Academic Support

Student Services

Institutional Support

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

Total OperatingExpenses

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

Auxiliary

Fellowships

Enterprises

Total Operating Expenses

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "D"

Note 16, Amljated Organizations
In accordance with GASB Staternent No. 39, Determining Whether Certain Organizations are Component Units, the Georgia Perimeter College Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Georgia Perimeter College. 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. Therefore, the financial statements of the affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia Perimeter College.

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SUPPLEMENTARY INFORMATION

GEORGIA PERIMETER COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30,2010
ASSETS Accounts Receivable
Federal FinancialAssistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EOUITY Liabilities
Cash Overdraft Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue Funds Held for Others
Total Liabilities Fund Balances
Resewed Department Sales and Services Indirect Cost Recoveries Technology Fees Capital Outlay Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over l nventories
Unresetved Surplus Total Fund Balances
Total Liabilities and Fund Balances
Actual amounts were prepared on a prescribed basis of accountingthat demonstrates compliance with budgetary statutes and regulationsof the State of Georgia, which is a comprehensive basis of accountingother than generally accepted accounting princ~ples

SCHEDULE "I"

GEORGIA PERIMETER COLLEGE SUMMARY BUDGET COMPARISONAND SURPLUSANALYSIS REPORT (NON-GMPBASIS)
BUDGET FUND YEAR ENDEDJUNE 30.2010

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from ReservedFund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCEJULY 1
Reserved UnIeSeNed
ADJUSTMENTS
Prior Year Payables/ExpendltureS Prior Year Receivables/Revenues Mandatory Transfers UnreservedFund Balance (Surplus)Returned
to Boardof Regents - UniverslvSystem Off~ce Year Ended June 30,2009
Early Remittance of Surplus in Current Year Prior Year Reserved Fund Balance Included In Funds Ava~lable
FUND BALANCE JUNE30

BUDGET

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technolo& Fees Capital Outlay Restricted/Sponsored Funds Uncollect~bleAcwunts Receivable Tuition Carry-Over Inventories
Total Reserved
Unreserved Surplus

Total Fund Balance

Actual amounts were preparedon a prescribedbasis of accounting that demonstrates compliancew~thbudgetarystatutes and regulations of the State of Georgia, which is a comprehensivebasis of accountlng other than generallyaccepted accountlng principles.

ACTUAL

SCHEDULE " 2
VARIANCE -
FAVORABLE (UNFAVORABLE)

GEORGIA PERIMETER COLLEGE STATEMENT OF PROGRAM REYENUESAND EXPENDITURESBY FUNDINGSOURCE COMPAREDTO BUDGFl
(NON-GAAP BASIS) BUDGCT FUND YEAR ENDED JUNESO. 2010

Specla1 Fundtngln!tletiva Stale Appmprlatlon State GeneralFunds

Orlsnal Approprlauon

F~nal Budget

Current Year Revenues

Funds Avablable Carnparsd ta Budget

Prior Year Carry Over

Total Funds Available

Variance Posltlve (Negative)

Ttlash~ng State Appropr~atlon State General Funds Federal Funds Arnercan Recovery and Re~nvestmenAtct of 2009 F~deraSl tabllhzat~onFunds Other Funds
Total Teachlng
- Grand Totals All Programs

$ 59.303.239 0 0 $ 47.589.445 00 $ 47.589.445 0 0 $

000 $

47,009,445.00 $

0 00

3.264.106 0 0 79.359.003 0 0

9.658.973 0 0 118,451,607 0 0

9.658.973 0 0 115.540.711 3 4

0 00 4,616,488 52

$ 141.926.348 0 0 $ 175.7W.025 0 0 $ 172.789.129 34 $ 4.616.488 52 $

9.658 973 00 120,157,199 8 6
177.405 617 86 $

0 00 1,705,592 86
1705,592 86

--- $ 141.931 401 00 $ 175.700.025 00 $

172.789.129 34 $

-- 4,616,488 52 $

177,405,617 86 $

1,705.5928 6

m u a l amountswere prepared on a prsscrlbed bass of accounungthat demonstrates complancewltn Pudgetatystatutesand reguiatlons of the State of Geowa. whch IS a comorenenrlve bas16of accountlngother U~angenerally accepted accountlngprlnclples

Expena~WresCompared 10 Budget

Variance

Posltlve

Actual

(Negatne)

ktual FundsAva~lable
Ovsr/(Under) Expenditures

Prlar Perlad Adjustmenh

Early

Other

Remmance

- Ad)ustmsnts - of Surplus

Program Fund
Balances

Transfers

Pr~gramFund Balances

Reserve

Surplus

Total Fund &lance

Unexpenaable Reselves Unoolle~tlbleAccount3 Receivable lnventorles

(This page left intentionally blank)

GEORGIA PERIMETER COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE30,2010

SCHEDULE "4"

Totals per Annual Supplement
Accruals June 30.2010 June 30.2009
Compensated Absences June 30,2010 June 30,2009
Other Personnel Services Shared Services on Jointly Staffed Personnel Clayton State University Georgia College and State University Georgia Gwinnett College Georgia Highlands College Georgia Institute of Technology Georgia State University Gordon College Kennesaw State University Universityof West Georgia Valdosta State University
Unidentified Variance

SALARIES

TRAVEL

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the Georgia Perimeter College's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated January 26, 2011. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

ACCOUNTlNG CONTROLS (OVERALL) Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-571-10-01

Condition:

The accounting procedures of the College were insufficient to ensure that Cash, Accounts Receivable, Accounts Payable, Deposits Held for Other Organizations and Capital Assets were properly reflected on both the accounting records and the College's financial statements.

Criteria:

NCGA Statement 1,paragraph 1,prescribes that an accounting system (1) present fairly and fully disclose funds of the governmental unit in accordance with generally accepted accounting principles and (2) demonstrate compliance with finance related legal and contractual provisions. Additional administrative requirements contained in the University System of Georgia, Board of Regents' Business Procedures Manual require that the general ledger be reconciled to subsidiary records as a routine matter with any variances noted and resolved in a timely manner.

Questioned Cost:

N/A

Information:

The following deficiencies were noted: 1. A review of Accounts Payable revealed that $1,675,476 recorded as taxes payable at June 30, 2010, were drafted from the bank account during June 2010. As a result, Accounts Payable and Cash were overstated at June 30, 2010. An audit adjustment was proposed and made to correct this error.

GEORGIA PERIMETER COLLEGE SCHEDULE OF FINDINGSAND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010

FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-571-10-01

2. A review of the internal controls over the Accounts Payable process revealed a lack of documentation of periodic reconciliations of the Accounts Payable recorded on the subsidiary module to the General Ledger. According to the Board of Regents' Business Procedures Manual, reconciliations are required to be performed at least quarterly and documentation be maintained for a period of three years.

3. A total of $1,904,344 recorded as Accounts Receivable and Deposits Held for Other Organizations for HOPE scholarships was determined to be invalid. An audit adjustment was proposed and made to correct this error.

4. A review of Capital Assets records revealed assets totaling $12,009,909 were recorded on the General Ledger through online journal entries, but were not maintained in the Asset Management subsidiary module. These assets consist of Buildings and lmprovements totaling $5,643,399, Facilities and Other lmprovements totaling $6,281,965, and Equipment totaling $84,545. The Asset Management module was used by the College to calculate depreciation. As a result, current year depreciation expense and accumulated depreciation for these assets have not been recorded. The unrecorded depreciation activity is not material to the financial statements.

Cause:

The College's management failed to implement satisfactory controls to ensure that account balances were accurate, adequately documented and properly recorded in the accounting records.

Effect:

Significant errors were included in the financial statements presented for audit. In addition, the lack of controls and failure to adhere to Board of Regents policies could impact reporting of the College's financial position and results of operations.

Recommendation:

The College should review the accounting controls and procedures currently in place, identify weaknesses, and design and implement procedures necessary to strengthen controls over these accountingfunctions.

FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

No matters were reported.