East Georgia College, Swainsboro, Georgia, management report for fiscal year ended June 30, 2009

EAST GEORGIA COLLEGE
SWAINSBORO, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2009
A Member Institution of the University System of Georgia
Georgia Department of Audits and .Accounts Russell W. Hinton State Auditor

EAST GEORGIA COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMITTAL

SELECTED FINANCIAL INFORMATION

EXHIBITS

A STATEMENT OF NET ASSETS - (GAAP BASIS)

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS -

(GAAP BASIS)

3

C STATEMENT OF CASH FLOWS - (GAAP BASIS)

4

D SELECTED FINANCIAL NOTES

5

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND

18

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

19

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(STATUTORY BASIS) BUDGET FUND

20

4 RECONCILIATION OF SALARIES AND TRAVEL

23

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

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
October 7, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Honorable John Black, President East Georgia College
Ladies and Gentlemen:
As part ofour audit ofthe basic financial statements ofthe State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2009, we have performed certain audit procedures at East Georgia College. Accordingly, the financial statements and compliance activities ofEast Georgia College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of East Georgia College as of and for the year ended June 30, 2009. Information contained in this report is a by-product ofour audit ofthe basic financial statements ofthe State ofGeorgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.

This report is intended solely for the information and use of the management of East Georgia College, members of the Board of Regents of the University System of Georgia and the Southern Association ofColleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~-~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as

SELECTED FINANCIAL INFORMATION

EAST GEORGIA COLLEGE STATEMENT OF NET ASSETS (GAAP BASIS)
JUNE 30, 2009
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable (Note 3) Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Capital Assets, Net (Note 4)
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deferred Revenue (Note 5) 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 Unrestricted
Total Net Assets

EXHIBIT "A"

$

2,810,438

359,494 530,478
2,435 235,274

$

3,938,119

16,886,150 $ 20,824,269

$

68,411

38,839

40,818

1,517,670

220,879

82,378

52,440

201,898

$

2,223,333

$

16,587

189,409

$

205,996

$

2,429,329

$ 16,817,123
37,100 125,638 1,415,079

$ 18,394,940

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EAST GEORGIA COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2009

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal
Sales and Services of Educational Departments Auxiliary Enterprises
Bookstore Food Services Parking/Transportation 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 Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Federal Stimulus - Stabilization Funds Grants and Contracts
Federal State Other Gifts Interest and Other Investment Income Interest Expense
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
3 -

$

4,930,884

-2,373,524

2,295 32,806

43,088 8,050
30,736 1,391
24 529

$

2,7001255

$

3,004,489

3,104,889

1,803,176

60,927

34,454

3,157,502

387,601

2,020,039

722,520

$

141295,597

$ -11,595,342

$

6,425,155

59,404

5,428,034 140,647 196,519 194,565 117,416 -10,838

$

121550,902

$

955,560

125,749

$

1,081,309

17,313,631

$ ==1.8,=39=4=,9=4=0

EAST GEORGIA COLLEGE STATEMENT OF CASH FLOWS (GAAP BASIS)
YEAR ENDED JUNE 30, 2009
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 Auxiliary Enterprise Charges: Bookstore Food Services Parking/Transportation Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Federal Stimulus Stabilization Funds 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 Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable Inventories Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income

EXHIBIT "C"

$

2,719,019

-454,388

32,806

-4,272,154

-6,077,343

-3, 157,502

55,603 6,877
31,177 1,358
787 772

$ -10,326,775

$

6,425,155

59,404

9,761

5,959,765

$

12,454,085

$

125,749

-770,741

-52, 150

-10 838

$

-707 980

$

470,176

99,580

$

569 756

$

1,989,086

821,352

$ -11,595,342
722,520
-565,769 -1,033
-42,666 20,550 1,023,520 78,536 32,909

EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY East Georgia 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 East Georgia 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. East Georgia College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, East Georgia 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.
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.
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.

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS 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 $11,052.82. 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.
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, ce1iificates 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 Horne Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

DEPOSITS 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, 2009, the carrying value of deposits was $2,083,659 and the bank balance was $2,795,243. Of the College's deposits, $2,539,220 were uninsured. Of these uninsured deposits, $2,539,220 were collateralized with securities held by the pledging financial institution.

INVESTMENTS At June 30, 2009, the carrying value of the College's investment was $725,784, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents:

Investment Pool

Board of Regents Short-Term Fund

$===a=::7:=:::25::::.7==8==4

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Short-Term Fund is reported as Cash and Cash Equivalents on Exhibit "A" of this report.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2009.

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State and Private Funds Other

$

47,147

10,866

374,236

457,723

Total Accounts Receivable

$====='=='88-9,-97===2

NOTE 4: CAPITAL ASSETS

Following are the changes in the College's capital assets for the year ended June 30, 2009:

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS

Beginning Balance Julx 1, 2008

Additions

Reductions

Ending Balance June 30, 2009

Capital Assets, Not Being Depreciated:

Land

$ 221,959

$ 221,959

Construction Work-In-Progress

142,223 $ 518,429 $ 114 501

546 151

Total Capital Assets Not Being Depreciated

$ 364,182 $ 518 429 $ 114 501 $ 768,110

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

$ 1,316,826 $ 18,313,585 421,017 1,572,270 232,392 1,118,603

77,657 184,308
23,800 $ 16,708 7 366

222,102 4 682

$ 1,394,483 18,497,893 421,017 1,373,968 249,100 1,121,287

Total Assets Being Depreciated

$ 22,974,693 $ 309,839 $ 226,784 $ 23,057 748

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

$

20,352 $

3,805,358

381,405

1,101,047

I 02,543

1,033,267

51,150 509,208
61,564 $ 76,864 23 734

$

71,502

4,314,566

381,405

222,102

940,509

179,407

4 682

1,052,319

Total Accumulated Depreciation

$ 6,443,972 $ 722,520 $ 226,784 $ 6,939,708

Total Capital Assets, Being Depreciated,

Net

$ 16,530.721

$

0 $ 16,118,040

Capital Assets, Net

$ 16,894.903 $ 105.748 $ 114.501 $ 16,886,150

NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2009.

Prepaid Tuition and Fees Other Deferred Revenue

$ 607,684 909,986

Totals

$ 1,517,670

NOTE 6: LONG-TERM LIABILITIES

The College's Long-Term liability activity for the year ended June 30, 2009 was as follows:

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES

Leases Lease Obligations
Other Liabilities Compensated Absences
Total Long-Te1m Obligations

Beginning Balance July 1, 2008
$ 104,469
358,398 $ 462 867

Additions

$

16,708

247 999

Reductions

Ending Balance June 30, 2009

$

52,150 $

69,027

215,090 $

391,307 460,334

Current Portion

$

52,440

201,898

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2009 are as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets Total Net Assets
NOTE 8: LEASE OBLIGATIONS

Balance Julx 1, 2008

Additions

Reductions

Balance June 30, 2009

$ 16,790,434 130,793 392 404
$ 17 313 631

$

89,040

5,655,005

9,606,990

$ 15.351.035

$

62,351

5,623,060

8,584,315

$ 14 269 726

$ 16,817,123 162,738
1,415,079 $ 18,394,940

East Georgia College is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2010 and 2013. Expenses for fiscal year 2009 were $62,988 of which $10,838 represented interest. Total principal paid on capital leases was $52,150 for the fiscal year ended June 30, 2009. Interest rates range from 8.55 percent to 15.43 percent.

OPERATING LEASES East Georgia College's noncancellable operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers, other small business equipment, and buildings.

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT ''D"

NOTE 8: LEASE OBLIGATIONS

OPERATING LEASES Noncancellable operating lease rental expenses in 2009 were $237,246 for real property and/or equipment.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2009, were as follows:

Capital Leases

Operating Leases

Year Ending June 30: 2010 2011 2012 2013

$

60,588 $ 237,282

12,248

237,190

5,478

236,940

576

Total Minimum Lease Payments

$

78,890 $ 711,412

Less: Interest

9,863

Principal Outstanding

$

69,027

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description East Georgia College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or the Georgia Department of Audits and Accounts.

Funding Policy Employees of East Georgia College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. East Georgia 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 2009, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Fiscal Year

Percentage Contributed

Required Contribution

2009 2008 2007

100% 100% 100%

$ 332,331 $ 302,395 $ 267,303

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description East Georgia College participates in the Employees' Retirement System of Georgia (ERS), a single-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.

The ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.

The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan.

Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2009, for employees covered by ERS was $61,495. The College's total payroll for all employees was $6,109,378.

Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' eamable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These College contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2009 2008 2007

100% 100% 100%

$ 6,402 $ 4,396 $ 3,600

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2009 financial report, which may be obtained through ERS.

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
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 East Georgia 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 2009, the employer contribution was 8.15% for the first six months and 9.24% for the last six months of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
East Georgia College and the covered employees made the required contributions of $143,080 (8.15% or 9.24%) and $81,917 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description East Georgia 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 1s 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
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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits 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 and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2009 amounted to $18,106 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 10: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although East Georgia College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against East Georgia 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, 2009.
NOTE 11: 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

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EAST GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2009

EXHIBIT "D"

NOTE 11: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
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.
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 2008 and 2009 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, 2009, there were 27 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2009, East Georgia College recognized as incurred $150,555 of expenditures, which was net of $87,576 of participant contributions.
NOTE 12: AFFILIATED ORGANIZATIONS
The East Georgia College Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support East Georgia College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from East Georgia College.

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SUPPLEMENTARY INFORMATION - 17 -

EAST GEORGIA COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2009
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Encumbrances Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Inventories Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

2,292,912.19

359,494.35 371,423.84 235,273.77
2,435.13

$ ===3=,=26=1=,5=39=.2=8=

$

38,839.41

32,237.01

1,266,399.46

1,503,674.14

169,192.06

$

3,010,342.08

$

40,060.38

9,879.53

9,956.04

122,144.70

1,800.00

56,303.73

11,052.82

$

251,197.20

$ ===3=,=26=1=,5=39=.2=8=

Statutory Basis financial information was 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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EAST GEORGIA COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2009

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Special Funding Initiatives Teaching
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance {Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2008
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE {UNFAVORABLE}

$ 6,443,141.00 $ 6,443,141.00 $

59,404.00

59,404.00

10,521,289.00

11,066,167.49

$ 17,023,834.00 $ 17,568,712.49 $

0.00 0.00 544 878.49
544,878.49

0.00

183,709.75

$ 17,023,834.00 $ 17/52,422.24 $

183 709.75 728,588.24

$

652,963.00 $ 645,463.00 $

16 370 871.00

16,865,099.24

$ 17,023,834.00 $ 17,510,562.24 $

$

0.00 $

241,860.00 $

7,500.00 .494 228.24
-486 728.24
241 860.00

186,064.09 17,986.17

7,613.66 -630.80

-17,986.17 -183,709.75

$

251,197.20

SUMMARY OF FUND BALANCE
Reserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Inventories Tuition Carry-Over
Total Reserved
Unreserved Surplus
Total Fund Balance
Statutory Basis financial information was 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.

$

40,060.38

9,879.53

9,956.04

122,144.70

1,800.00

56,303.73

$

240,144.38

11,052.82

EAST GEORGIA COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30. 2009

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Funds Available Comeared to Budget

Current Year Revenues

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

746,488.00 $

652,963.00 $

652,963.00 $

0.00 $

652,963.00 $

0.00

Teaching State Appropriation State General Funds Federal Funds American Recovery and Reinvestment Act of 2009 Federal Stabilization Funds Other Funds
Total Teaching

$ 6,603,804.00 $ 5,790,178.00 $

5,790,178.00 $

0,00 $ 5,790,178.00 $

0.00

0.00 9 515 836.00
$ 16119640.00

59,404.00 10,521,289.00
16 370 871.00

59,404.00 11 066167.49

0.00 183 709.75

16 915 749.49 $ 183 709.75

59,404.00 11 249 877.24

0.00 728,588.24

17 099 459.24 $ 728 588.24

Grand Totals - All Programs

16,866,128.00 $ 17,023,834 00 $

17,568,712.49 $ 183,709.75 $ 17,752.422.24 $ 728,588.24

Statutory Basis financial information was 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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SCHEDULE "3"

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Pro9ram Fund Balances

Reserve

Surplus

Total Fund Balance

645,463.00 $

7,500.00 $

7,500.00 $

0.00 $

0.00 $

7,500.00 $ -7,500.00 $

0.00 $

0.00 $

0.00

$

5,797,678.00 $

-7,500.00 $

59,404.00 11 008 017.24
16,865,099.24

0.00 -486 728.24
-494 228.24 $

-7,500.00 $ 7,780.41 $

0.00 241 860.00
234 360.00

0.00 -797.55
6 982.86

0.00 $

280.41 $ 7,500.00 $

0.00 $ 7,780.41 $

7,780.41

0.00 554.34
554.34 $

0.00 241,616.79
241 897.20

0.00 0.00
7 500.00

0.00 238 344.38
238 344.38

0.00 3,272.41
11 052.82

000 241 616.79
249 397.20

17,510,562.24 $

-486,728.24 $

241,860.00 $ 6,982.86 $

554.34 $ 249,397.20 $

0.00 $ 238,344.38 $ 11,052.82 $ 249,397.20

Unexpendable Reserves Inventories

1 800.00 251 197.20

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EAST GEORGIA COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2009

SCHEDULE "4"

Totals per Annual Supplement
Accruals June 30, 2009 June 30, 2008
Compensated Absences June 30, 2009 June 30, 2008
Lag Salaries June 30, 2009 June 30, 2008
Adjustment Shared Services on Jointly Staffed Personnel Georgia Southern University Hamm, K. Joy Herrell, Dan Marsh, Robert Miller, Rex Song, Francois
Unidentified Variance

SALARIES $ 6,086,542.75 $

TRAVEL 34,454.05

38,839.00 -44,383.89

363,499.47 -332,929.24

-170,893.32 154,505.01

1,399.46 -2, 153.00 -1,500.00 5,200.00 12,957.36
-1,705.60
$ 6,109,378.00 $ ==3=4===,4=54::::::=05=

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SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

EAST GEORGIA COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2009
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
BUDGETARY OVEREXPENDITURES The approved budget for East Georgia College provided for expenditures totaling $17,023,834.00. A comparison ofanticipated funds available and expenditures by budgetary line item indicated that the Teaching category was overspent by $494,228.24. The College should closely monitor their budget operations to prevent expenditures of funds in excess of budget approval.
RECONCILIATION OF SUBSIDIARY LEDGERS East Georgia College did not have procedures in place to ensure that all subsidiary ledgers were properly reconciled. The College failed to identify and correct variances in the Cash and Financial Aid clearing accounts on the Banner/PeopleSoft Reconciliation. The College should establish procedures to ensure that reconciling items are identified and corrected in a timely manner to ensure materially correct financial reporting.