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

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~EPORT ON REVIEW

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, OF TH' E FINANCIAL STATEMENTS ,.

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FOR THE FISCAL YEAR ENDED JUNE 30. 2002

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Russell W. Hinton

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FLOYD COLLEGE -TABLE OF CONTENTS-

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENTS DISCUSSION AND ANALYSIS

3

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

11

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

12

C STATEMENT OF CASH FLOWS

I 3

D NOTES TO THE FINANCIAL STATEMENTS

14

SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO

BUDGET - (NON-GAAP BASIS)

I

RESIDENT INSTRUCTION

31

2

LOTTERY FOR EDUCATION

32

3 RECONCILIATION OF SALARIES AND TRAVEL

33

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

FLOYD COLLEGE - TABLE OF CONTENTS -
SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I
FINANCIAL

Rt1'-'"-U \\/. H1, rn'II
STATE AUDITOR
10,t) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
'25-4 WJ..,hrngwn Street S Vi.' ~u111: '214 AtlJnta, Georgia 30334-8400
January 29, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the Uruvers1ty System of Georgia
and Honorable J Randy Pierce, President Floyd College
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have reVIewed the accompanymg basic financial statements (Exh1b1ts A through D) of Floyd College, an orgaruzat1onal urut ofthe State ofGeorgia, as of and for the year ended June 30, 2002, m accordance with Statements on Standards for Accounting and ReV1ew Services issued by the Amencan Institute of Certified Pubhc Accountants. All infonnatlon included in these financial statements 1s the representation of the management of Floyd College.
A review consists prmc1pally ofinqumes ofCollege personnel and analytical procedures apphed to financial data. It 1s substantially less m scope than an audit in accordance with auditing standards generally accepted m the Uruted States of Amenca, the objective ofwluch 1s the expression of an opm1on regarding the financial statements taken as a whole Accordmgly, we do not express such an opm1on
Based on our review, with the excepuon of the matter discussed m the fourth paragraph, we are not aware ofany matenal modifications that should be made to the accompanymg financial statements m order for them to be m confoTIIllty with accounting pnnc1ples generally accepted in the Uruted States of Amenca
As descnbed m Note I to the financial statements, the College did not recogmze June 30, 2001, encumbrances as expenses m the June 30, 2002, basic financial statements To confonn to generally accepted accountmg pnnc1ples, encumbrances should be recogruzed as expenses and hab1ht1es m the penod that goods and services are received The effects on the basic financial statements ofth1s departure from generally accepted accountmg pnnc1ples were not reasonably deterrrunable
02ARL-67

As descnbed m Note 1, Floyd College adopted the prov1s1ons of Governmental Accountmg Standards Board (GASB) Statement No 35, Basic Financial Stateme11/s - and J,.,fanagement's Dzscusszon and Analysts -for Pub/zc Colleges and Umversmes, as amended by GASB Statement No 37, Basic Fznanc,al Statements - and Management's D,scusszon and Ana(vszs -for State and Local Governments, and GASB Statement No 38, Certain Fznanc,al Statements Note D,sclosures, as of July 1, 2001, to implement a new financial reportmg model
Management's D1scuss1on and Analysis 1s not a reqwred part ofthe basic financial statements but 1s supplementary mformat:Ion required by the GASB We have apphed certam hm1ted procedures, winch consisted pnnc1pally of mqwnes ofmanagement regardmg the methods of measurement and presentation of this supplementary mformatlon, and we are not aware of any matenal modifications that should be made thereto.
Our review was made for the purpose of expressmg llIIllted assurance that there are no matenal modifications that should be made to the financial statements m order for them to be m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca The accompanymg supplementary mformauon (Schedules 1 through 3) 1s presented for add1Uonal analysis purposes Such mformauon has been subjected to the mqumes and analytical procedures apphed m the review of the financial statements, and we are not aware of any matenal mod1ficat1ons that should be made to such data.
Respectfully submitted,
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Hmton State Auditor
RWHas 02ARL-67

REQUIRED SUPPLEMENTARY INFORMATION -I-

FLOYD COLLEGE
Management's Discussion and Analysis

Introduction

Floyd College 1s one ofthe 34 msl!tul!ons of the Uruvers1ty System ofGeorgia. The College, located m Rome, Georgia, was founded m 1970 and has become known for its state-of-the-art technology and alhed health programs. The College offers associate ofscience and associate ofarts degrees ma wide vanety of subJects. Tius wide range of educalional opporturul!es attracts a lughly qualified faculty and a student body ofmore than 3,000 students each year The mslitutlon continues to grow as shown by the EFT companson numbers that follow.

Faculty

Students

FY2002 FY2001 FY2000

69

3,679

65

3,217

66

3,037

Overview ofthe Financial Statements and Financial Analysis

Floyd College 1s proud to present its financial statements for fiscal year 2002 The emphasis of d1scuss1ons about these statements will be on current year data There are three financial statements presented: the Statement of Net Assets, the Statement of Revenues, Expenses and Changes m Net Assets, and, the Statement of Cash Flows Tius d1scuss1on and analysis of the College's financial statements proV1des an oveTV1ew ofits financial acliv11ies for the year Floyd College has elected to not restate pnor penods for purposes of prov1dmg the comparalive data for tlus Management's D1scuss1on and Analysis However, m future years, when pnor penod mformal!on 1s available, a comparative analysis will be presented.

Statement ofNet Assets

The Statement ofNet Assets presents the assets, hab1ht1es, and net assets ofthe College as ofthe end ofthe fiscal year The Statement ofNet Assets 1s a pomt oftlIIle fmanc1al statement The purpose of the Statement ofNet Assets 1s to present to the readers ofthe financial statements a fiscal snapshot of Floyd College The Statement of Net Assets presents end-of-year data concerrung Assets (current and non-current), L1abiht1es (current and non-current), and Net Assets (assets mmus hab1ht1es) The difference between current and non-current assets will be discussed m the notes to the financial statements

From the data presented, readers of the Statement of Net Assets are able to determme the assets available to contmue the operations ofthe Jnstltulion. They are also able to detemune how much the 1nslitut1on owes vendors, mvestors and lendmg Jnstltulions

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Fmally, the Statement ofNet Assets provides a picture ofthe net assets (assets mmus hab1hhes) and the1r ava1lab1hty for expenditure by the mst1tut10n Net assets are d1v1ded mto three maJor categones The first category, mvested m capllal assets, net ofdebt, provides the msl!tuhon's eqwty m property, plant and equipment owned by the mstJtuuon The next asset category 1s restncted net assets, winch 1s d1v1ded mto two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources 1s only available for mvestment purposes Expendable restncted net assets are available for expenditure by the msutut10n but must be spent for purposes as detennmed by donors and/or external entitles that have placed lime or purpose restnchons on the use of the assets The final category 1s unrestncted net assets Unrestncted assets are available to the mst1tutJon for any lawful purpose of the mshtullon

Statement of Net Assets, Condensed (thousands ofdollars)

Assets Current Assets Capital Assets, Net Other Assets

$ 2,983 11.592 26

Total Assets

$ 14,601

Liabilities Current L1ab1ht1es Non-Current L1ab1htJes

$ 2,610 252

Total Liabilities

$ 2,862

Net Assets Invested m Capital Assets, Net of Debt Restncted - Nonexpendable Restncted - Expendable Unrestricted

$ 11,592 20 11 116

Total Net Assets

$ 11 ZJ2

The total assets of the mst1tuhon decreased by $22,026,375 Tins large decrease was caused pnmanly by the wnte down of our capital assets to Fair Market Value, winch 1s required under the newly adopted GASB accounung rules

The total hab1ht1es for the year mcrcased by $217,135 The pnmary cause for the mcrease ts due to the reportmg ofthe hab1hty and related expenditure for compensated absences m the current funds as required by accountmg pnnctples generally accepted m the Uruted States of Amenca. The combmahon of the decrease m total assets of $22,026,375 and the mcrease m total hab1ht1es of $217,135 yields a decrease m total net assets of$22,243,510

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Statement ofRevenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the act1v1ty presented m the Statement of Revenues, Expenses and Changes in Net Assets The purpose of the statement 1s to present the revenues received by the insl1tulion, both operatmg and nonoperatmg, and the expenses paid by the mslitulion, operatmg and nonoperating, and any other revenues, expenses, gains and losses received or spent by the 1nst1tut10n Generally speaking operating revenues are received for provuiing goods and services to the vanous customers and consl!tuenc1es of the 1nslitut1on Operatmg expenses are those expenses paid to acqwre or produce the goods and services provided in return for the operating revenues, and to carry out the nuss1on of the mstltullon Nonoperatmg revenues are revenues received for which goods and services are not proVIded For example state appropnallons are nonoperatmg because they are provided by the Legislature to the mslltullon Without the Legislature directly receiving commerisurate goods and services for those revenues.

Statement of Revenues, Experises and Changes in Net Assets, Condensed (thousands of dollars)

Operating Revenues Operatmg Expenses

$ 6,407 18,264

Operating Loss

$-11,857

Nonoperatmg Revenues and Expenses

11.411

Increase m Net Assets

$ -446

Net Assets at Begmrung of Year, as Ongmally Reported

$ 33,983

Cumulallve Effect of Changes in Accountmg Pnnciple

-21,798

Net Assets at Beginrung of Year Restated

$ 12,185

Net Assets at End ofYear

$ 11.739

The Statement of Revenues, Expenses and Changes m Net Assets reflects a negative year with a decrease m the net assets at the end ofthe year Some Jughhghts ofthe information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows

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Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002

Operatmg Revenue Tmtlon and Fees Grants and Contracts Rents and Royalties Sales and Services of Educational Departments Aux1hary Other
Total Operatmg Revenue
Nonoperating Revenue State Appropnatlons Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Total Revenues
Expenses (thousands of dollars) For The Year Ended JW1e 30, 2002

$ 2,328 2,044 308 244 1,327 156
$ 6 407
$ 10,803 560 45 7 -4
$ 11.4 I I
$ lZ Sl~

Operating Expenses Instruction Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarslups and Fellowships Aux1hary Enterpnses Unallocated Depreciation
Total Expenses
Statement ofCash Flows

$ 6,947 1,740 I , 191 3,387 1,966 759 1,383 891
TM $ !8

The final statement presented by the College 1s the Statement of Cash Flows The Statement ofCash Flows presents detailed mformatmn about the cash activity of the institution dunng the year The statement 1s d1v1ded into five parts The first part deals with operating cash flows and shows the net

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cash used by the operating activities ofthe institution The second section reflects cash flows from non-capnal financing activities This section reflects the cash received and spent for nonoperating, non-investing, and non-capital financing purposes The tlurd section reflects the cash flows from investing act1V1Ues and shows the purchases, proceeds, and interest received from investing act1v1t1es The fourth section deals with cash flows from capital and related financing act1V1t1es This section deals with the cash used for the acqu1S1t1on and construction ofcapital and related items 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 Year Ended June 30, 2002, Condensed (thousands of dollars)

Cash Provided (Used) By Operating Acuv1t1es Non-Capital Financmg Activities Investing Activities Capital and Related Fmancing Activities

$ -12,454 12,192
378
-36

Net Change m Cash Cash, Begmrung ofYear

$ 80 850

Cash, End of Year Capital Assets

$ 930

The College had no capital asset addJt10ns for fac1ht1es m fiscal year 2002.

For additional information concerning Capital Assets, see Notes 1 and 5 m the notes to the financial statements.

Economic Outlook

The College 1s not aware of any currently known facts, dec1s1ons, or cond1t1ons that are expected to have a s1gruficant effect on the financial position or results of operations dunng this fiscal year beyond those unknown vanat10ns haVlng a global effect on v1rtually all types ofbusmess operations The College's overall financial position is strong, and we anticipate the current fiscal year will be much hke last We will mamtam a close watch over resources to rnamtam the College's ability to react to unknown internal and external issues

J Randy Pierce, President Floyd College

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BASIC FINANCIAL STATEMENTS -9-

FLOYD COLLEGE STATEMENT OF NET ASSETS
JUNE 30. 2002

EXHIBIT"A"

ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items lnventones
Total Current Assets
Noncurrent Assets Investments Capital Assets, Net (See Note 5)
Total Noncurrent Assets
Total Assets
LIAB\LffiES
Current 1.Jab1ll1Jes Salanes Payable Payroll Wrthholdings Accounts Payable Deferred Revenue Funds Held for Others Compensated Absences
Total Current l.Jablhbes
Noncurrent 1.Jablhtles Compensated Absences
Total l.Jablh!Jes
NET ASSETS
Invested in Capital Asse1s, Net of Related Debt Restncted for
Nonexpendable Expendable Unrestncted

$

929,950 38

42,952 67 1,487,723 72
286,704 00 235,420 87

$ 2,982,751 64

$

26,04510

1115921188 73

$ 11,6181233 83

$ 1416001985 47

$

42,975 39

93,337 62

223.914 47

1,164,73089

765,46613

319 481 85

$ 2,609,906 35

251 937 48 $ 2,8611843 83

$ 11,592,188 73
20,000 00 11,299 97 115,652 94

Total Net Assets
See Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnforrna!Jon
The no1es to the financial statements are an integral part of this statement - 11 -

$ 111739,14164

FLOYD COLLEGE
STATEMENT OF RE\/ENUES EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDER JUNE 30 2002

EXHIBIT "B"

OPERATING REVENUES
Student Tu,Oon and Fees Less Scholarship Allowances
Grants end Contracts Federal
Rents end Royalties Soles and Services of EdUC811onel Depanments AuX111ary Enterprise&
Bookstore Food Services Other Organlzabons Other Operating Revenues
Total Opera1mg Revenues
OPERATING EXPENSES
Selanes Faculty Stall
Employee Benellta Othar Personal Services Travel Scholarships end Fellowships Ubhbes Supphes and Other SeMcea Cle?raaa\lon
Tota1 Opera1mg Expenses
Operabng Income (Losa)
NONOPERATJNG RE\/ENUES CEXPENSESl
State Appropnebons Grants and Contracts
Federal State Nongovernmental Gifts Interest and Other Investment Income Other Nonoperetmg Revenues
Net Nonoperetlng Revenues
lncreaae/(Decreaae) In Net Assets
Ne1 Assets Net Assets Beginning of Year as Origmaly RO!)Ol1ed Cuml.iabve Effect of Changes In Accounting Principle
Net Assets - Begmrung of Year, Restated
Net Assets. End of Year
See Independent Accountant's Combined Report on Review of Basic Finanaal Statamants l!lnd Supplementary Information
The notes to the financial statements are an Integral part of ttus statement
12

$ 3,579 301 58 1,25155355
2,044,493 86 307,811 00 244,323 25
1,180,60969 22,550 54 123 425 19
156 207 04
$ 6 407 168 60

$ 4,193,398 32 5,187,321 17 2 442 621 84 1,320 00 155,126 52 879,874 24 750,577 19 3,762;289 83 891 292 98
$ 18,263,822 09
$ -11 856 653 49

$ 10 802,750 00

146,860 23 305 351 46 107,757 17 45,247 90
7,073 57 .3 575 83

$ 1141148470

$

-445 188 79

$ 33 982,652 55 -21,798,322 12
$ 12 184 330 43

$ 11 739141 84

FLOYD COLLEGE STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30 2002
CASH FLOWS FROM OPERATING ACTIVITIES Tuthan and Fees Grants and Contrads Sales and Services of Educatmnal Departments Payments to Supplters Payments to Em~oyees Payments for Scholarships and Fellowships Aux1.hary Enterprise Charges Bookstore Food Services Other Orgaruzet1ons Other Receipts (Payments)
Net Gash ProVlded (Used) by Operating ActlvrtIos
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropnat10ns Agency Funds Transactions Gifts and Grants Received tor Other than Capital Purposes Other Nonoperat1n9 Receipts
Net Gash Flows ProVlded (Used) by Noncap1tsl Financing AclMtJes
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capllal Assets
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Matunties of lrweatments Interest on Investments
Net Cash Provided (Used) by Investing Actlvrt1es
Net lncniasel(Deaease) in Cash
Gash and Gash Equivalents - June 30, 2001 Less Short-Tem, Investments
Cash and Gash EqU1valents - Begmmng of Year
Cash and Gash Equlvalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) AdJustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operabng Actlvitles Deprecation Change m Assets and Laab1lrt1es Accounts ReceJVableS, Net lnventones Prepaid Items Accounts Payable Salarles Payable Payroll Withholdings Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operabng Act1vrties
See Independent Accountant's Combmed Report on ReVJeW of Basic Fmancial Statements and Supplementary lnformat10n
The notes to the finenaal statements are en integral part of this statement
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EXHIBIT "C"

s

2 557,349 16

1 290 260 28

244 323 25

-8 219,968 56

-9 326,845 51

-879,874 24

1,180,609 69 20 841 79
108,290 86 571 155 75

$ -12,453,757 53

s 10,802 750 00
567,593 79 758,523 16
62 B47 15
$ 12 19171410

$

-36 015 62

$

369 97095

8 237 B4

s

378 208 79

$

80 149 74

$

1 246,980 96

-397 180 32

s

B49 800 64

s

929 950 38

s -11,856 653 49
891 292 98
-786 870 20 43 272 05 27 656 12
-1 158,77842 -25,737 69 1 456 73 352,632 38 57 972 01
s -12,453 757 53

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Floyd College serves the state, and nauonal commurut1es by providing !Is students with academic mstruclion that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Floyd College 1s one oftlnrty-four (34) State supported member mslitullons of higher educalion in Georgia wluch compnse the Uruvers1ty System of Georgia, an organ1zat10nal urut of the State of Georgia The accompanymg financial statements reflect the operallons of Floyd College as a separate reportmg enl!ty.
The Board of Regents has conslltutional authority to govern, control and manage the Uruvers1ty System of Georgia Tlus authonty includes but 1s not hm1ted to the power to designate management, the ab1hty to s1gruficantly mfluence operallons, the authonty to control mslltullons' budgets, the power to determine allotments of State funds to member msUtulions and the authonty to prescnbe accountmg systems and adnurustrat1ve pohc1es for member 1nsutu11ons. Floyd College does not have authonty to retwn unexpended State appropnalions {surplus) for any given fiscal year Accordingly, Floyd College 1s considered an orgaruzalional urut of the Board of Regents of the Uruvers1ty System of Georgia reportmg entity for financial reporting purposes because of the s1gruficance ofits legal, operational, and financial relatJonslups with the Board ofRegents as defined m Section 2100 of the Governmental Accountmg Standards Board (GASB) Codification of Governmental Accounting and Financial Reportmg Standards
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Financial Statements and Management Dzscusszon and Ana(vszsfor State and Local Governments. Tlus was followed m November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Dzscuss1on and Ana(vszs for Pub/zc Colleges and Umvers1t1es The State of Georgia 1s required to 1mplement GASB Statement No 34 as of and for the year ended June 30, 2002 As an organ1za11onal urut of the State of Georgia, the College 1s also reqwred to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 The financial statement presentation required by GASB Statements No 34 and No 35 as amended by GASB Statements No. 37 and No 38 provides a comprehensive, entity-wide perspective of the College's assets, hab1hlles, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective previously required
The College has elected to not restate its 200 I financial statements to conform with the new financial statement presentation, therefore comparative financial mformatlon will not be presented for fiscal year 2002. S1gruficant accountmg changes made m order to comply with the new requirements mclude (I) adoption ofdepreciauon on capital assets, and (2) recogrul!on ofcompensated absences. Generally Accepted Accounl!ng Pnnc1ples (GAAP) requires that the reporting of summer school
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FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION revenues and expenses be between fiscal years rather than m one fiscal year Due to the lack of matenahty, Institutions ofthe UmversJty System ofGeorgia will contmue to report summer revenues and expenses m the year m winch the predommate activity takes place
At June 30, 200 I, encumbrances (contractual obhgauons for goods and servJces not received at fiscal year end) were recorded as expenditures by the College mstead of reservations of fund balance as required by generally accepted accountmg pnnc1ples For fiscal year 2002, the College changed its method ofrecordmg encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses This change 1s m accordance with generally accepted accountmg pnnc1ples
No adjustments however, have been made on the financial statements to restate the fund balance at July I. 2001 for the June 30, 2001 encumbrances recorded as expenditures m fiscal year 2001 The net effect of the above accountmg treatment resulted in an understatement of expenses on the accompanymg financial statements for pnor year encumbrances winch should have been reflected as expenses m the penod when goods and servtces were received
BASIS OF ACCOUNTING For financial reportmg purposes, the College 1s considered a special-purpose government engaged only m busmess-type activities Accordmg1y, the College's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accounting, except as noted m the precedmg paragraphs. Under the accrual basis, revenues are recogruzed when earned, and expenses are recorded when an obligation has been mcurred All s1gmficant mtra-college transactions have been e1umnated
The College has the option to apply all Fmanc1al Accountmg Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The College has elected to not apply FASB pronouncements issued after the applicable date.
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result ofthe adoption ofGASB Statement No 34, the College was also required to make certam changes m accountmg pnnc1ples, specifically (I) adopt10n ofdeprec1at1on on capital assets, and (2) recordmg of compensated absences GASB Statement No. 34 reqmres certam summer semester revenues be recogruzed between fiscal years rather than the fiscal year m wluch the semester was predommantly conducted The Umvers1ty System of Georgia has chosen to continue to record summer revenue m the year m which the semester was predommantly conducted. Net assets at July 1, 2001 were reduced by $21,798,322.12 for the cumulallve effect of these changes.

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FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits and lime depos!ls III authonzed financial mstJtutJons, and cash management pools that have the general charactensl!cs of demand depos1t accounts
INVESTMENTS The College accounts for its mvestments at farr value m accordance With GASB Statement No. 31, Accounting and Fmanczal Reporting for Certain Investments and for External lnveszment Pools Changes m unrealized gam (loss) on the carrymg value ofmvestments are reported as a component of mvestment mcome m the statements of revenues, expenses, and changes m net assets.
ACCOUNTS RECEIVABLE Accounts receivable consists oftu11Ion and fee charges to students and aux1hary enterpnse services proVIded to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude amounts due from the Federal government, state and local governments, or pnvate sources, III connecl!on with reimbursement ofallowable expenditures made pursuant to the College's grant and contracts. Accounts receivable are recorded net of esl!mated uncollecable amounts.
INVENTORIES Consumable supplies are earned at the lower of cost or market on either the first-m, first-out ("FIFO") basis
Resale Inventones are valued at cost usmg the average-cost basis.
NON-CURRENT CASH AND INVESTMENTS Investments that are externally restncted and cannot be used to pay current hab1ht1es are classified as non-current assets m the statements of net assets
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqu1s11Ion, or farr market value at the date of donal!on m the case of gifts For eqwpment, the College's cap1tahzalion pohcy mcludes all items With a unit cost of $5,000 00 or more, and an estimated useful hfe of greater than one year Renoval!ons to bu1ldmgs, mfrastructure, and land Improvements that exceed $100,000 00 and s1gmficantly mcrease the value or extend the useful hfe of the structure are cap1tahzed. Rouline repairs and maintenance are charged to operating expense m the year m which the expense was mcurred. Deprec1atton 1s computed usmg the straight-lme method over the estimated useful hves of the assets, generally 40 to 60 years for bmldmgs, 20 to 25 years for land improvements, IO years for hbrary books, and 3 to 7 years for eqmpment

- 16 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS To obtam the total picture of plant additions in the Uruvers1ty System, 1t 1s necessary to look at the act1VJt1es ofthe Georgia State Fmancmg and Investment Co1TI1111ss1on (GSFIC)- an orgaruzat10n that 1s external to the System GSFIC issues bonds for and on behalfofthe State of Georgia, pursuant to powers granted to 1t m the Constitution ofthe State ofGeorgia and the Act creatmg the GSFIC The bonds so issued constitute drrect and general obhgat1ons of the State of Georgia, to the payment of wluch the full faith, credit and taxing power of the State are pledged
Effective July I, 2001, the GSFIC retains construction in progress on their books throughout the construction penod and transfers the entire proiect to Floyd College when complete
DEFERRED REVENUES Deferred revenues mclude amounts received for tuition and fees and certam aux1hary activities pnor to the end ofthe fiscal year but related to the subsequent accounting penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned
COMPENSATED ABSENCES Employee vacation pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable m the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets. Floyd College had accrued hab1hty for compensated absences m the amount of$513,447 32 as of July I, 2001 For Fiscal Year 2002, $377,453.86 was earned m compensated absences and employees were paid $319,481.85, for a net mcrease of $57,972 01
NET ASSETS The College's net assets are classified as follows:
Invested m capital assets, net of related debt Tlus represents the College's total mvestment m capital assets, net ofoutstandmg debt obhgat1ons related to those capital assets To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgatlons" as used m this defirutlon does not mclude debt of the GSFIC as discussed above )
Restricted net assets - nonexpendable Nonexpendable restncted net assets consist of endowment and similar type funds m wluch donors or other outside sources have stipulated, as a cond1t1on ofthe gift mstrument, that the pnnc1pal 1s to be mamtamed inv10late and m perpetuity, and invested for the purpose of producmg present and future mcome, wluch may either be expended or added to pnnc1pal The College may accumulate as much ofthe annual net mcome ofan mstltutlonal fund as 1s prudent under the standard estabhshed by Code Sect10n 44-15-7 of Annotated Code of Georgia

- 17 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Restricted net assets - expendable Restricted expendable net assets mclude resources m which the College 1s legally or contractually obligated to spend resources m accordance with restrictions imposed by external th.ml parties.
Unrestricted net assets Unrestricted net assets represent resources denved from student tumon and fees, state appropnal!ons, and sales and services of educauonal departments and aux1hary enterpnses These resources are used for transactions relatmg to the educational and general operations of the College, and may be used at the discretion ofthe governmg board to meet current expenses for those purposes, except for unexpended state appropnatlons (surplus) of $127,803 62 Unexpended state appropnatlons must be refunded to the Board ofRegents ofthe Uruvers1ty System of Georgia - Adm1mstrat1ve Central Office for remittance to the Office of Treasury and Fiscal Services. These resources also mclude aux1hary enterpnses, wluch are substan!Jally self-supportmg activities that provide services for students, faculty and staff.
When an expense 1s mcurred that can be prud usmg either restricted or unrestricted resources, the College's pohcy 1s to first apply the expense towards unrestricted resources, and then towards restricted resources.
INCOME TAXES Floyd College, as a pohUcal subd1vis1on of the State of Georgia, 1s excluded from Federal mcome taxes under SecUon 115(1) of the Internal Revenue Code, as amended.
CLASSIFICATION OF REVENUES The College has classified its revenues as either operatmg or non-operatmg revenues m the Statement of Revenues, Expenses, and Changes m Net Assets according to the following cntena
Operating revenues OperaUng revenues mclude acuviues that have the charactensucs ofexchange transacUons, such as (1) student twtlon and fees, net ofscholarship allowances, (2) sales and services of aux1hary enterpnses and (3) most Federal, state and local grants and contracts and Federal appropnatlons
Non-operating revenues Non-operal!ng revenues mclude act1v1t1es that have the charactenstlcs of non-exchange transactions, such as gifts and contnbuuons, and other revenue sources that are defined as non-operatmg revenues by GASB No 9, Reporting Cash Flows of Propnetary and Nonexpendable Trust Funds and Governmental Entitles That Use Propnetary Fund Accounting, and GASB No. 34, such as state appropnatlons and mvestment mcome
SCHOLARSHIP ALLOWANCES Student tuition and fee revenues, and certrun other revenues from students, are reported at gross with a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses and Changes m Net Assets. Scholarship allowances are the difference between the stated charge for
- 18 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXIIlBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SCHOLARSHIP ALLOWANCES goods and services provided by the College, and the amount that 1s paid by students and/or third parties makmg payments on the students' behalf Certam governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatmg revenues m the College's financial statements To the extent that revenues from such programs are used to satisfy tu1lion and fees and other student charges, the College has recorded contra revenue for scholarship allowances
NOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS, AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State of Georgia (and thus Floyd College) cannot be placed m a deposllory pa}'lng mterest longer than ten days without the depository proV1dmg a surety bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more of the following secunlies as enumerated m the Official Code of Georgia Annotated Seclion 50-17-59
1. Bonds, bill, cerllficates of mdebtedness, notes, or other chrect obhgalions ofthe Uruted States or of the State of Georgia.
2 Bonds, bills, cerllficates of mdebtedness, notes, or other obligations of the counties or muruc1pal1lies of the State of Georgia.
3. Bonds of any pubhc authonty created by the laws of the State of Georgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for tlus purpose
4 Industnal revenue bonds and bonds of development authonlies created by the laws of the State of Georgia.
5 Bonds, bills, cerllficates of indebtedness, notes, or other obhgalions of a subs1chary corporation ofthe Uruted States government, wluch are fully guaranteed by the Uruted States government both as to prmc1pal and mterest, or debt obhgalions issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Crecht Bank, the Central Bank for Cooperalives, the Farm Credi! Banks, the Federal Home Loan Mortgage Assoc1at1on, and the Federal Nalional Mortgage Assoc1alion
6 Guarantee or msurance ofaccounts proV!ded by the Federal Deposit Insurance Corporation
As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es which allow agencies of the State of Georgia (and thus Floyd College), the option of exempting demand deposits from the collateral reqmrements

- I9 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EOUNALENTS. OTHER DEPOSITS. AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES The Treasurer ofthe Board ofRegents 1s responsible for all details relative to furrushmg the reqmred depos1toryprotect1on for all umts of the Umvers1ty System of Georgia.

CATEGORIZATION OF DEPOSITS The College's cash deposits are categonzed by nsk as follows

Category 1 - Amounts covered by depository insurance or collaterahzed with secunues (at fair value) held by the College or by its agent m the College's name.

Category 2 - Amounts collateralized with secunties (at fair value) held by the pledging financial mshtullon's trust department or agent m the College's name.

Category 3 - Amounts collaterahzed with secunlles (at fair value) held by the pledging financial mslltullon, or by its trust department or agent but not m the College's name, and amounts uncollateral1zed.

Cash Deposits as of June 30, 2002 are as follows

Cash Depos,ts

Carrying
Amount

Bank
Balances

Risk Catcgoncs

s 921 985 38 s I 257 971 41 s 700 000 00 s,___o...oo""' s 1057971 41

CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrymg amount of the College's total mvestments was $26,045 10, which consisted entrrely offunds m the Board ofRegents' Pooled Investment Accounts (Short-Term Fund) These funds are not requrred to be categonzed smce the College does not own any specific identifiable secunlles m the pooled accounts.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2002

- 20 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EX'HIBIT "D"

NOTE 3 ACCOUNTS RECEIVABLE

Student Tuition and Fees Federal, State, and Pnvate Funds Other

$ 443,530 04 998,153 43 107,663 80

$ 1,549,347 27

Less Allowance for Doubtful Accounts

18,670 88

Net Accounts Receivable NOTE 4 INVENTORIES

$ 1.530 676.39

Inventones consisted of the following at June 30, 2002:

Bookstore Food Services Other

$ 225,039.84 3,088 59 7,292 44

Total

$ 235,420.87

NOTE 5 CAPITAL ASSETS

The balance at July 1, 2001 was adjusted for accountmg changes required m 1mplernentmg GASB Statements 34 and 35 as chsclosed m Note I. Following are the changes m capital assets for the year ended June 30, 2002.

- 21 -

FLOYD COLLEGE NOTES TO TIIE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 5 CAPITAL ASSETS

AdJustcd Balance
Jy)y I 200)

Add111ons

Reducuons

Balance
June 30 2002

Capital Assets, Not Bemg Depreciated

Land and Land Improvements

S 569 490 00

s 569.490 00

Capital Assets, Bcmg Depreciated
Infrastructure Bulldmg and Bu1ldmg Improvements
Fac1ht1cs and Other Improvements Equipment Library Collec11ons

S 1,356,385 00 18,057,284 00
1,350,008 00 2,303,336 66 S
I 93),17) 49

14,943 00 s
2),07262

s 24,998,185 15 s._-"3"6"."0)5 62 s

s 1,356,385 00
I8,057,284 00 1,350,008 00
49,995 53 2,268,284 13
9,)00 52 1,943 H3 59
59 096 05 S 24,975. I04 72

Less Accumulated Dcprcc1a11on

Infrastructure

S

Bu1ldmgs and Bu1ldmg lmproYffllCnts

Fac1hncs and Other Improvements

Equipment

Library Collections

883,871 65 S
8,049,506 41 998,931 66
1,686,872 64
1.495,)26 00

54,848 60 487,651 53 67,732 44
198,364 41 s
82 696 00

S 13,) )4 308 36 S--8~9)=,292,98 s

s
44,094 83
9,)00 52

938,720 25 8,537,157 94 1,066,664 I 0 1,841,142 22 ).568 72) 48

53 )95,35 s )3.952 405 99

Total Capital Assets, Bcmg Deprcc,ated,

Net

s 11,883.876 79 s-~-85=5,2TI,36 s

Capital A$cts, Net

S 12 453 366 79 s_""-8"5'5""277 36 s

5,900 70 s II,Q22.698 13 52QQZIJ s I I ~92 188 73

NOTE 6 DEFERRED REVENUE

Deferred revenue consisted of the following at Jwie 30, 2002.

Prepaid TmtJon and Fees Other Deferred Revenue

$ 993,022 97 171.707 92

Totals

$1,164,730 89

NOTE 7 LONG-TERM LIABILITIES

Long-term hab1hty actJV!ty for the year ended Jwie 30, 2002, was as follows

Compensated Absences

Balance Ju)y I 200)

Add1t100s

RedYCIIODS

Balance
June 30 2002

Current Poo1on

5 51344732 s 3TT4iD86 S 31948185 s 52141931 S 31948185

- 22-

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EX'HIBIT "D"

NOTE 8 LEASE OBLIGATIONS

OPERATING LEASES Floyd College's noncancellable operatmg leases havmg remammg terms ofmore than one year expire m vanous fiscal years from 2003 through 2005. Certa.m operating leases proVJde for renewal options for penods from one to three years at their fair rental value at the tirne ofrenewal All agreements are cancelable 1f the State of Georgia does not provide adequate funding, but that 1s considered a
remote poss1b1hty. In the normal course of business, operatmg leases are generally renewed or
replaced by other leases Operatmg leases are generally payable on a monthly basis Examples of property under operatmg leases are copiers and other small business eqmpment

Noncancellable operatmg lease expenses m 2002 were $ I 15,604.04 for real property

SUMMARY OF LEASE OBLIGATION Future cornrn1trnents for noncancellable operating leases having remaimng terms m excess of one year as of June 30, 2002, were as follows

Operatmg Leases

Year Endmg June 30: 2003 2004 2005

$ 27,204 00 18,936 00 18 936 00

Total Mm1mum Lease Payments NOTE 9 RETIREMENT PLANS

$ 65 076 00

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Floyd College part1c1pates m the Teachers Reltrement System of Georgia (TRS), a cost-shanng mulllple-employer defined benefit pens10n plan estabhshed by the General Assembly ofGeorgia for the purpose of proVJdmg rellrernent allowances and other benefits for teachers of the State of Georgia. TRS proVJdes service rellrernent, d1sab1hty retirement, and survivor's benefits for its members m accordance with State statute The Teachers Retuement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts

- 23 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE9 RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Employees ofFloyd College who are covered by TRS are requued by State statute to contnbute 5% ofthe1r gross eammgs to TRS Floyd College makes monthly employer contnbutlons to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as adVJsed by thelf independent actuary. For fiscal year 2002, the employer contribution rate was 9.24% for covered employees Employer contnbutlons for the current fiscal year and the precedmg two fiscal years are as follows.

Fiscal Year

Percentage Contnbuted

Reqwred Contnbutlon

2002 2001 2000

100% 100% 100%

$ 582,457.99 $ 719,331.94 $ 781,263 50

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a smg]e-employer defined contnbul!on plan, 1s an optional retirement plan established and admmistered by the Board of Regents of the Umvers1ty System of Georgia, under which 1t may purchase annwty contracts for the purpose of prov1dmg retirement and death benefits for eligible faculty and pn11c1pal adm1mstrators Benefits depend solely on amounts contnbuted to the plan plus mvestment earmngs. Benefits are payable to part1c1pal!ng employees or their benefic1anes m accordance with the terms of the annwty contracts.

Funding Policy Member contnbutlon requuements are established by the Board of Trustees of the Teachers Retirement System Employer contnbutions are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia The employer contnbutes 9 62% ofthe part1c1patmg employee's earnable compensation Employees contnbute 5% of their earnable compensation Amounts attnbutable to all plan contnbutlons are fully vested and non-forfe1table at all times

Floyd College and the covered employees made the required contnbutlons of$173,758 64 (9 62%) and $90,395 80 (5%), respectively

- 24-

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 9 RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Piao Description
Floyd College part1c1pates m the Georgia Defined Contnbutlon Plan (GDCP) wluch 1s a smgle-
employer defined contnbutlon plan estabhshed by the General Assembly ofGeorgia for the purpose ofproVIdmg retirement coverage for State employees who are temporary, seasonal, and part-tune and are not members of a pubhc retirement or pens10n system GDCP 1s adrmrustered by the Board of Trustees of the Employees' Retirement System of Georgia
Benefits A member may reure and elect to receive penod1c payments after attamment ofage 65 The payment will be based upon mortality tables and mterest assumptions to be adopted by the Board ofTrustees Ifa member has less than$ 3,500 00 credited to his/her account, the Board ofTrustees has the option ofreqwnng a lump sum d1stnbutlon to the member m heu ofmakmg penod!c payments Upon the death of a member, a lump sum d!stnbutlon equahng the amount credited to lus/her account will be p3.1d to the member's designated beneficiary. Benefit proV1s1ons are estabhshed by State statute
Contributions and Vesting Member contnbutlons are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contnbutlons. Contnbuuon rates are estabhshed by State statute Earrungs are credited to each member's account m a manner estabhshed by the Board of Trustees Upon termmatlon of employment, the amount of the member's account 1s refundable upon request by the member.
Total contnbutlons made by employees dunng fiscal year 2002 amounted to $40,375 06 wluch represents 7.5% of covered payroll. These contnbut1ons met the requuements of the plan.
NOTE IO RISK MANAGEMENT
Floyd College 1s a part1c1pant m the Board of Regents of the Umvers1ty System of Georgia Health
Benefits Plan, wluch 1s a self-msurance program of health and dental benefits for employees and reurees ofthe Umvers1ty System of Georgia Floyd College and part1c1pat1ng employees and retirees pay premiums to the Health Benefits Plan for tlus health insurance coverage. The Health Benefits Plan 1s mcluded m the financial statements of the Board of Regents of the Umvers1ty System of Georgia - Adm1mstraUve Central Office All uruts ofthe Umvers1ty System ofGeorgia share the nsk of loss for claJms of the Health Benefits Plan The Health Benefits Plan 1s considered a selfsustaJnmg nsk fund that proVIdes health coverage for its members up to a maximum hfetlme benefit of$2,000,000.00 per person and dental coverage up to an 3.llilual maximum of$ l ,OOO 00 per person The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claJms m accordance with the Health Benefits Plan as estabhshed by the Board of Regents

- 25 -

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 10 RISK MANAGEMENT
The Department of Admm1strat1ve Services (DOAS) has the respons1b1hty for the State of Georgia of makmg and carrymg out dec1s1ons that will mm1m12e the adverse effects ofaccidental losses that mvolve State government assets The State beheves 1t 1s more economical to manage its nsks mtemally and set aside assets for claim settlement. Accordmgly, DOAS processes claims for nsk of loss to wluch the State 1s exposed, mcludmg general hab1hty, property and casualty, workers' compensation, unemployment compensalion, and law enforcement officers' mdemmficalion Lumted amounts of commerc1al insurance are purchased apphcable to property, employee and automobile hab1hty, fidehty and certain other nsks. Floyd College, as an orgamzatJonal unit ofthe Board of Regents of the Umvers1ty System of Georgia, 1s part of the State of Georgia reportmg entity, and as such, 1s covered by the State of Georgia nsk management program adrmrustered by DOAS Premmrns for the nsk management program are charged to the vanous state orgamzauons by DOAS to provide claims serv1cmg and claims payment
A self-msured program of professional hab1lity for its employees was estabhshed by the Board of Regents of the Umvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Section 45-9-1. The program msures the employees to the extent that they are not immune from hab1hty against personal hab1hty for damages ansmg out of the performance of their duties or m any way connected therewith. The program 1s adrmmstered by DOAS as a SelfInsurance Fund
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies Th.ts could result m refunds to the grantor agency for any expenditures wluch are disallowed under grant terms The amount of expenditures whtch may be disallowed by the grantor cannot be determmed at tlus time although Floyd College expects such amounts, 1f any, to be tmmatenal to its overall financial position
L1t1gation, claims and assessments filed against Floyd College (an organ12at1onal urnt ofthe Board of Regents of the Umvers1ty System of Georgia), 1fany, are generally considered to be actions against the State ofGeorgia Accordmgly, s1gmficant ht1gat1on, claims and assessments pendtng against the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmanc1al Report for the fiscal year ended June 30, 2002
NOTE 12 POST-EMPLOYMENT BENEffiS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Secuon 20-331, the Board of Regents of the Umvers1ty System of Georgia has estabhshed group health and hfe msurance programs for regular employees ofthe Umvers1ty System ofGeorgia It 1s the pohcyofthe Board ofRegents to permit employees ofthe Umvers1ty System ofGeorgia ehgible for retirement or that become permanently and totally disabled to continue as members of the group health and hfe
- 26-

FLOYD COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 12 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

insurance programs. Employees who are ehgible for retirement or d1sab1hty under the cntena estabhshed by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the Uruversny System of Georgia are ehg1ble for these post-employment health and hfe insurance benefits. Orgaruzatlonal uruts of the Board of Regents of the Uruvers1ty System of Georgia pay the employer portion for group insurance for affected ind1V1duals

As of June 30, 2002, there were 65 employees who had retired or were disabled that were receiving these post-employment health and hfe insurance benefits For the year ended June 30, 2002, Floyd College recogruzed as incurred $192,202.54 of expenditures, which was net of $68,959 89 of part1c1pant contnbutlons.

NOTE 13 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The College's operaUng expenses by functional classification are shown below

Statem:nt of Operatmg Expense! - Nanni vs FIDlCbonal Class1ficanons
For the fiscal Year Ended June 30, 2002

Funcnonal OnssJtjcanon

Natural Class1ficabon

lnstructmn

Acadenuc
Sypport

Student Sgvtcg

hlstJ.b.Joonal
Sppgrt

Salanes Faculty Slaff
Employee Benefits Other Personal 5CTVJCC5 Travel Scholarships and
Fellowships Unhues Supplies and Other
Services
Dept=at,on
Toul Open,nng Expenses

s

4,115.283 81 1,111,835 84

s 56,040 00 1,123,52718

s

732 00 784,535 12

s

11,970 38 1,482,538 0)

1,155,074 83 248,109 12 185,967 66 673,11531

1,320 00

76,906 13

30,061 58

18,889 03

27,872 74

110,72647

16,578 97

24,174 44 14.253 30

97.251 IQ
43.272 87

377.299 26 265.238 13 162,468 51 1,050.014 58

s 6 9:17 126 J4 s I 732 354 9R 5 I 12192906 s 3 '87 )5'i 91

Natwil Class1ficabon
Salancs Faculty Staff
Employee Benefits Other Personal Services Tnvcl Scholarshps and
Fellowshtps Unhnes Suppl>CS and Othe>-
Scrvtces
Ocp,<cu,non
TOUI Open,bng Expenses

OpenP,nlaonnts 111d Mamtma:nce

EYI1'11211~ C:Jm1fienoo

Scholanlups
and FeUrnhm::i

Aux1l1ary
f.ntemn!CS

Unallocated
Depregauon

Total
Opcrann8 b.oenses

s 3,406 03 518,)63 08 133,937 18 476 52

s 5,966 10 166,521 92 46,417 74 920 52

s 4,19),)98 32 5,187,321 17 2,442,621 84 1,)20 00 155,126 52

5 758,448 70 559,242 47

6,503 11

879,874 24 750,S77 19

750,185 69

1,157,083 66

3,762,289 83

5 821.222 28

821 222 28

,~J s 12'i~~ID27 s 7~ ~H 79 s I JBJ~IJO~ s B2l ,2, 2 s ia a,~~

- 27 -

SUPPLEMENTARY INFORMATION - 29-

FLOYD COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED JO
BUDGET - (NON-OAAP BASIS! RESIDENT INSTRUCTION
YEAR ENDED JUNE 30 2002

SCHEDULE "1"

REVENUES
State Apprcpnabons Other Revenues Retained

BUDGET

ACTUAL(1l

VARIANCEFAVORABLE (UNFAVORABLE)

$ 10,616,734 00 $ 6,894,865 00

10,616,734 00 $ 6,850,299 57

000 -44 56543

$ 1715111599 00 S 17,467,033 57 $ _ _ _-44-'-"'"-'56""5-'4""-3

EXPENDITURES
Personal SeMc:es Educabon, General and Departmental SeMOeS Sponsored Operabons
Operabng Expenses Educabon, General and Departmental Services Sponsored Operabons
Caprtal Outlay Speaal Funding lnrtiatJve

$ 11,133,972 00 $ 11,118,24343 $

382,937 00

368,722 09

2,820,256 00 2,952,088 00
150,581 00 7176500

3,254,073 86 2,232,025 31
154,572 91 7176500

15,728 57 14,214 91
-'133,817 86 720,06269
-3,991 91 000

Excess of Revenues over Expenditures

$

s 111511 159900

17,199,402 60 $ ----=3"'12:,,1.:.:96:::....:40=-

$

s _ _ 267 630 97

...,;;26~71-6_30=9,;.7

(1) Actual amourrts wera prepared on a prescnbed bas1& of accounting that demonstrates compliance with budgetary atatutes and regulabons of the Stats of Georgia, wt11ch IS a comprehensive basis of accounbng
other than generally acceptad accounbng prmaples

See accompanymg notes and Independent Accountanfs Combined Report on Revll!W of Basic Fmanaal Statemants and Supptemantary Information
- 31 -

FLOYD COLLEGE SCHEDULE OF REVENUES 'AND EXPENDITURES COMPARED TO
BUDGET fNON-GAAP BASISl LOTTERY FOR EDUCATION
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

REVENUES State Appropnahons
EXPENDITURES Equipment, Technology and ConstructJon
Trust Fund Spec,al Funding lmt1ahves
Excess of Revenues over Expenditures

BUDGET

ACTUAL (1)

VARIANCE FAVORABLE (UNFAVORABLE)

- - - - - - - $ 186,01600 $

186,016 00 $

0 00

$ 121,500 00 S 121,50000 S

000

64,516 00

64 516 00

000

- - - - - - - $ 186,01600 $

186,016 00 $

0 00

$

ooo $ _ _ _ _....o._oo_

(1} Actual amounts were prepared on a prescnbed baSIS of accounting that demonstrates compliance wrth budgetary statu1es and regulaoons of the State of Georgia, wtuch 1s a comprehens,ve basis of accounhng other than generally accepted accounhng pnnaples

See accompanying notes and Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary Information
. 32.

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

SCHEDULE "3'

Totals per Annual Supplement
Accruals June 30, 2002 June 30, 2001
Prepaid Items June 30, 2002 June 30, 2001
Compensated Absences June 30, 2002 June 30, 2001

SALARIES $ 9,370,423 19 $

TRAVEL 155,126 52

42,975 39 -68,713 08

-285,272 46 267,45414

530,812 20 -476 959 89

$ 91380,71 e 49 $ _...,15_5_.,1_2_s_5_2,.

See accompanying notes and Independent Accountant's Combined Report on Review of Basrc Frnanc,al Statements and Supplementary lnformabon
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SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FLOYD COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-573-97-02 FS-573-00-01 FS-573-01-01

Umesolved - See Corrective Action/Responses Further Acllon Not Warranted Umesolved - See Corrective Acllon/Responses

CORRECTIVE ACTION/RESPONSES

FUND EQUITIES Deficit Restncted Funds Fmdmg Control Number. FS-573-97-02

The pnvate fundmg agency has provided fundmg m the current year earmarked for Nursmg The receivable resulted from nursmg scholarships III a pnor year A portion of the current fundmg will be used to satisfy the pnor year receivable

FUND EQUITIES Deficit to be Funded from Subsequent Years' Operallon Fmdmg Control Number FS-573-01-01

The College has been advised that they may petlllon the Umvers1ty System of Georgia to net the 5% Renewal and Replacement Reserve against the deficit balance m Auxiliary Funds Tlus would be a ont:-tlme occurrence to balance the books The College 1s also m the process ofpreparmg a Request for Proposal to out-source the bookstore operations In add11Ion, prehmmary conversations regardmg the pnvatJzmg ofthe cafetena are underway

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

FLOYD COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
ACCOUNTING CONTROLS (OVERALL) Inadequate Closing Procedures Findmg Control Number FS-573-02-01
Dunng fiscal year 2002, the Board of Regents ofthe Uruvers1ty System ofGeorgia converted uruts of the Uruvers1ty System from the College Uruvers1ty Fmanc1al Accountmg (CUFA) legacy system to the new GeorgiaF/RST System (Financtal, Information and Reporting Systems for Tomorrow). In December of 2001, Floyd College placed tins accounting system into production.
The management of Floyd College is responsible for implementing procedures to establish and mamtam adequate control over the operation, ut1hzat1on, and integnty of their data processed with the GeorgiaFIRST System We encountered problems with the financial data presented by the College The College's failure to estabhsh and adhere to a final closing for the year ended June 30, 2002, created a situation where data presented for l'CVlew was incomplete. Extensive reVJew procedures were necessary to determme the validity ofthe mformation provided
To reduce the nsk ofreporting incomplete mformatlon, the College should work with the Board of Regents Central Office to develop procedures that will result in complete reporung ofall financial data m a more efficient and timely manner.
GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers Finding Control Number. FS-573-02-02
Our examination included a reVJew of the procedures utilized by Floyd College m recording transactions to the vanous modules compnsing the GeorgiaFIRST accounting system Our testing revealed that, at June 30, 2002, the College's general ledger module did not balance with the subsidiary modules. Tius condition was pnmanly due to errors in posting subs1d1ary records dunng the conversion from the old College Uruvers1ty Financial Accounting (CUFA) legacy accounting system to the new GeorgiaFIRST accountmg system and due to transactions being posted to the general ledger module rather than the appropnate subsidiary modules The College did not proVJde a reconc1hatJon of the general ledger balances to the subsidiary records winch resulted in extensive work by the auditors to identify reconciling Items at June 30, 2002
Our review also revealed that certam general ledger balance sheet accounts for accounts receivable, deferred revenues and accounts payable, which are supported by information proVJded from the College's Banner Student Registration System, included numerous errors. These errors were the result of incorrect postings between the Banner Student Registration System module and the College's GeorgiaFJRST accountmg system.
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FLOYD COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers Finding Control Number. FS-573-02-02
Management's failure to ensure that subsidiary records are accurate and properly support general ledger balances causes mternal reports to management, generated from the subsu:hary modules, to be inaccurate and m1sleadmg This condition can lead to erroneous dec1s1ons by the College's management and result in inaccurate reporting of financial information.
To ensure accurate and timely reporting offinancial information from subsidiary records, the College should post transactions correctly to the subsidiary ledgers winch support financial data reported in the general ledger. The College should develop appropnate controls and procedures to ensure that rcconc1hat1ons of subs1d1ary ledgers and the general ledger are performed on a regular basis
GENERAL LEDGER Unsupported Agency Fund Balances Finding Control Number: FS-573-02-03
Our reVIew of Floyd College's accounting procedures for the Agency Funds deterrnmed that procedures m place were msuflic1ent to provide for adequate mtemal control over the College's Agency Funds The followmg defic1enc1es were noted:
I) The detail ofAgency Funds accounts proVIded by the College did not agree to the general
ledger The College fa.lied to proVIde documentation ofthe correct Agency Funds total.
2) At June 30, 2002, the College had numerous agency funds that had deficit balances totalmg $19,244.41.
3) During FY 2002, 31 agency funds were added to the College's detailed hstmg. No documentation was proVIded to mdlcate the validity of these new accounts.
These deficiencies were attnbutable to the inadequate condition ofthe College's accounting records and actlVItles that occurred in prior penods that were never recorded, were recorded incorrectly on the general ledger, or were overpayments to students by the College. The College should establish appropnate mternal controls to ensure that Agency accounts are reconciled monthly and necessary
adJustrnents are recorded in a tJ.mely manner. In addition, these accounts should be analyzed to
determine amounts to be refunded to grantor agencies and amounts to be funded through student refunds or local funds Appropnate action should be taken by the College to ensure that the Agency accounts are properly accounted for and maintained on the accountmg records
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FLOYD COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Inadequate Controls Over Capital Assets Finding Control Number FS-573-02-04 Our reVJew of Floyd College's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to proVJde adequate control over the College's capital assets The following deficiencies were noted
I) The College was unable to provide a Capital Asset Listmg by Asset ID winch detailed the acqws1t1on cost, accumulated deprec1auon at July I, 2001, current year depreciation,
acqws1t1on year and estunated useful life for each inchVJdual asset
2) Effective July 1, 2001, the cap1tahzatlon threshold for eqwpment was increased from $1,000 00 to $5,000.00. The College failed to reconcile the equipment component ofthe Asset Management module as ofJuly 1, 2001, with the equipment inventory balance as of June 30, 2001.
3) The College failed to proVJde documentation for the library collections additions durmg the current penod.
These defic1enc1es are a result of management's failure to implement adequate pohc1es and procedures to ensure that the College's capital assets are properly mamtamed. The College should estahhsh appropnate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded
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