Audit report, state of Georgia, Fort Valley State University, Fort Valley, Georgia, year ended June 30, 1999

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AUDIT REPORT STATE OF GEORGIA FORT VALLEY STATE UNIVERSITY FORT VALLEY, GEORGIA L=ENDED nmE30,1999
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESlRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESlRICTED

21

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES



UNRESlRICTED

22

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

23

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

2

RESIDENT INSTRUCTION

24

3

LOTTERY FOR EDUCATION

27

4 CHANGES IN INVESTMENT IN PLANT

28

5 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

30

6 RECONCILIATION OF SALARIES AND TRAVEL

32

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -
SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
October 25, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia Members ofthe Board ofRegents ofthe University System ofGeorgia
and Hon9rable Oscar L. Prater, President Fort Valley State University
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS
AND supPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) of Fort Valley State University as of and for the year ended June 30, 1999. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those.standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement p~sentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the financial statements ofthis departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.
As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. Ifcompensated absences were reported, liabilities would be increased and fund balance would
99ARL-63X

be decreased by $1,703,561.57 as ofJune 30, 1999, and the net change in fund balance for the year ended June 30, 1999, would be decreased by $195,391.52.

As discussed in Note 1 to the financial statements, the University did not report an allowance for estimated uncollectible accounts receivable. To conform to generally accepted accounting principles, these amounts should be included in the financial statements. The effects on the financial statements of this departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.

The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial

statements but is supplementary information required by the Governmental Accounting Standards Board. We

have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding

the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit

the information and do not express an opinion on it. In addition, we do not provide assurance that Fort Valley

State University is or will become year 2000 compliant, that the University's year 2000 remediation efforts

will be successful inwhole or in part, or that parties with which Fort Valley State University does business

are or will become year 2000 compliant.

.

In our opinion, except for the effects on the financial statements ofthe matters discussed in the third, fourth, and :fifth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position ofFort Valley State University as ofJune 30, 1999, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.

Our audit was made for the purpose offorming an opinion on the financial statements taken as a whole. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 2 through 6) are presented for purposes ofadditional analysis and are not a required part of the financial statements of Fort Valley State University. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects of the matters discussed in the third, fourth, and :fifth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole.

As more fully discussed in Section III, Current Year Findings and Questioned Costs, Fort Valley State University expended certain Federal grant funds ofthe Student Financial Aid Cluster Program in a manner that may have violated certain program compliance requirements. The outcome of the resulting questioned costs is uncertain at this time, pending a management decision by the Federal grantor agency. Accordingly, no provision for any liability has been made in the financial statements for possible Federal claims for refunds ofthose grant monies.

Respectfully submitted,

RWH:jb 99ARIr63X

RUssell W. Hinton State Auditor

FINANCIAL STATEMENTS -1-

FORT VALLEY STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30, 1999

Cash and Cash Equivalents Invesbnents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Invesbnent in Plant
Total Assets
LIABILITIES AND FUND BALANCES
LIabilities Accounts Payable Student Deposits Deferred Revenue Tuition and Fees Other Deposits Held In Custody for Others Due to Other Fund Groups
Total LIabilities
Fuild Balances U. S, Government Grants Refundable Institutional Loans - Restricted Endowment Net Invesbnent in Plant Restricted Unrestricted
Total Fund Balances
Total LIabilities and Fund Balances

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

2,232,981,37

$

141,000.66

2,682.32

7n,836.53 $

1,704,519.75

2,168,463,21

305,557,69

60,000.00

823,056.27

$

4,199,431.86 $

1,704,519.75 $ _==2=,3=1;;;;2.,1...,;;46;;,;,..1.9. =

$

1,504,899,66

128,317.46

729,126.95 4,681,00

$

$

2,367,025,07 $

$

$

1,832,406.79

$

1,832,406.79 $

823,056,27 823,056,27

$

2,308,515,05

3,631,14

881,463.48

881,463.48 $

2,312,146.19

$

4,199,431.86 $

1,704,519.75 $

2.,.3.1.2.,1.4.6.;0,;,.19...

The notes to the financial statements are an Integral part of this statement -2-

ENDOWMENT FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL
(Memorandum Only)

$

1,362,297.39 $

1,740,818.41 $

965,452.04

$

72,137.50

- - - - - - $ 78,210,098:58

$

1,434,434.89 $

1,740,818.41 $

965,452.04 $ 78,210,098.58 $

n,459.84 $

6,520,009.71 74,819.82
4,650,819.49 305,557.69 60,000.00 823,056.27
78,210,098.58

n,459.84 $

90,644,361.56

$

1,624,492.16 $

478,247.95

$

$

1,624,492.16 $

478,247.95

$

$

1,434,434.89

$

$

1,434,434.89 $

116,326.25 $ 116,326.25 $

$ 487,204.09 487,204.09 $

78,210,098.58 78,210,098.58

$

1,434,434.89 $

1,740,818.41 $

965,452.04 $ 78,210,098.58 $

34,545.85 $
42,913.99 n,459.84 $

3,642,185.62 128,317.46
729,126.95 4,681.00
42,913.99 823,056.27
5,370,281.29

$

2,308,515.05

3,631.14

1,434,434.89

78,210,098.58

881,463.48

2,435,937.13

$ 85,274,080.27

n,459.84 $

90,644,361.56

-3-

FORT VALLEY STATE UNNERSITY COMBINEP STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS
YEAR ENDED JUNE 30, 1999

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Regular Lottery Proceeds Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income -Endowment Other Net IncreaselDecrease in Fair Value of Investments Interest on Loans Receivable Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Renewals and Replacements Georgia State Financing and Investment Commission Other Additions Recovery of Prior Years' Cancelled Loans
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (SurplUS)
Adjustments Prior Years' Revenues/Accounts Receivable
Loans Assigned to Federal Govemment
.Loan Cancellations and Write-Offs Administrative and Collection Costs Expended for Plant Facilities
Capitalized Noncapitalized DisposalslDeletionslAdjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1, 1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

28,942,067,26

$

27,285,634,62 $

1,087,465,26

491,942.94

56,960,97

21,588.94 11,071,35

37,527,00 12,500,00
4,091,71 46,889,35

$

28,974,727,55 $

28,922,003.79 $

89,4n.00 190,485,06

$

25,319,966,08 $

29,211,593,36

3,177,797,94

206,744,09

153,576.96
744,00 $

6,985,00 29,022,03 75,719.75

$

28,652,086,98 $

29,418,337.45 $

111,726.78

$

-245,911,44

-354,115.17

$

-600,026,61

$

-277,386,04 $

-496,333,66 $

78,758.28

2,109,792.83

1,377,797,14

2,233,387,91

FUND BALANCES JUNE 30, 1999

$

The notes to the financial statements are an integral part of this statement
4

1,832,406,79 $

881,463,48 $

2,312,146,19

EXHIBIT"B"

ENDOWMENT FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

1,589,015.00

58,000.00

$

15,170.10

78,500.99 2,871.32 $

$

15,170.10 $

1,728,387.31 $

$ 113.58 113.58 $

$
45,641.89
1,644,885.n 1,573,807.82
426,874.99 392,037.62 4,083,046.09 $

28,942,067.26
1.589,015.00 58,000.00
27,323,161.62 1,087.465.26 550,064.83
56,960.97 82,592.70 15,170.10 46,889.35
24.573.84 11,071.35
1,644,885.n
1,573,607.82 426,874.99 392,037.62
89,4n.00
63,913,935.48

$

0.00

$

54,531,561.44

3,1n.797.94

206.744.09

$

3.890.29

157,467.25

744.00 6,985.00 29,022.03 75,719.75

1,573.607.82 $ 38,453.24

426,874.99 185,374.72
$

74,349.94

2,000,482.81 223,827.96 74,349.94

$

0.00 $

1,615,951.35 $

612,249.71 $

74,349.94 $ 60,484,702.21

$

15.170.10 $

1,419,264.79

$

1,434,434.89 $

$
$ 112,435.96 $
3,890.29

245,911.44 354,115.17 600,026.61 -12,109.52 $ 499.313.61

$
$ 4,008.698.15 $ 74.201,400.43

0.00 0.00 0.00 3,429,233.27 81,644,847.00

116,326.25 $

487,204.09 $

78,210,098.58 $

85,274.080.27

-5-

FORT VALLEY STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES. EXPENDITURES.
AND OTHER CHANGES YEAR ENDED JUNE 30. 1999

EXHIBITC

Net Increase/(Decrease) in Fund Balances

$

-277,386.04 $

The notes to the financial statements are an integral part of this statement -6-

-496,333.66 $ ====-:::.77:=3=:,7=1=:9.=70=

FORT VALLEY STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Fort Valley State University is one ofthirty-four (34) 'State supported member institutions ofhigher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State ofGeorgia. The accompanying financial statements reflect the operations ofFort Valley State University as a separate reporting entity.
The Board ofRegents 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. Fort Valley State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Fort Valley State University is considered an organizational unit ofthe Board ofRegents ofthe University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 ofthe Governmental Accounting Standards Board Codification of Governmental Accounting and Financial RC(porting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use ofthe resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions . ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the' primary functions of the University, e.g., instruction, research, public service, etc.
RESTRICTED - The fund used to record extemauy restricted funds which may only be utilized in accordance. with the purposes e$tablished by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.
-7-

FORT VALLEY STATE UNIVERSITY
NOIES TO THE FINANCIAL STATEMENTS JUNE 30.1999

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
LOAN FUNDS
The fund :used to account for resources which have been made available for financial loans to students.
ENDOWMENT FUNDS
The funds used to account for gifts that are subject to the restrictions by the donors of gift instruments requiring that the principal be invested in perpetuity and income only be utilized.
PLANT FUNDS
UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes.
RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement ofinstitutional properties.
INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staffmembers, and organizations.
BASIS OF ACCOUNTING
Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis ofaccounting, which is materially the same as the accrual basis ofaccounting applicable to colleges and universities prescribed in the American Institute ofCertified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period.
Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion ofcontracts for goods and services. The recognition ofencumbrances as expenditures and liabilities is in conformity with
-8-

FORT VALLEY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "0"

NOTE 1; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations of the University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of$I,703,561.57 and a related net current year expenditure of$195,391.52 have not been reported in the current funds as required by generally accepted accounting principles.
No provision has been made to record allowances for estimated uncollectible accounts receivable. In accordance with generally accepted accounting principles, receivables of all funds should be evaluated as to collectibility and appropriate allowances for estimated uncollectible amounts should be recorded. These amounts are considered material to the financial statements and should be recorded to conform to generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances ofcurrent funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements.
To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State .Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
It is the policy ofFort Valley State University to record assets acquired through capital leases as additions to Investment in Plant at the end ofthe lease. The liability for such leases at fiscal year-end is not recorded on the Combined Balance Sheet. This presentation differs from generally accepted accounting principles in that the assets and the related liability resulting from capital leases should be recorded in Investment in Plant at the inception ofthe agreement at the net present value ofthe future minimum lease payments, not to exceed the fair value of the leased property. The effect ofthis departure is deemed to be immaterial to the fair presentation of the financial stat~ents.

-9-

FORT VALLEY STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT"D"

. NOTE 1; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities ofcurrent funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement ofincome or a statement ofrevenues and expenses.

BUDGET The Board ofRegents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units ofthe University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of 1998-1999. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the College by the Administrative Central Office. In addition, the College receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

A comparison ofanticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below:

Resident Instruction Personal Services: Education, General and Departmental Services Year 2000 Project

$ 41.125.64 $ 20.000.00

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations ofbudget authority are reported at the Board object class level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics ofdemand deposit accounts.

INVESTMENTS Investments are reported at fair value. Funds received by the University as endowments or for restricted purposes are invested according to conditions stipulated by the donor, grantor, or in accordance with the Board ofRegents authorizing resolutions. Gains and losses on investment transactions are accounted for in the funds where such assets are recorded.

ACCOUNTS RECEIVABLE Accounts receivable consist of reimbursements due from Federal, State, local,and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

-10 -

FORT VALLEY STAIB UNIVERSITY.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXEllBIT "D"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the first-in, first-out method.
Inventories of goods for resale are valued at cost using the first-in, first out method.
PREPAID ITEMS . Prepaid items are payments made to vendors in advance ofthe receipt of goods and services that will benefit periods subsequent to the balance sheet date.
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICmS Funds belonging to the State of Georgia 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 anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations ofthe United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities ofthe State of Georgia.
(3) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia.
(5) Bonds, bills, certificates ofindebtedness, 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, or debt obligations issued by the Federal Land Bank, the Federal Home

-11-

FORT VALLEY STATE UNNERSITY
NOTES TO THE FINANCIAL STAIEMENTS
JUNE 30. 1999

EXHIBIT "0"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the FederaJ National Mortgage Association.

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

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board ofRegents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.

The treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units ofthe University System ofGeorgia.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1999, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

Category 1 - Amounts covered by depository insurance or collaterillized with securities (at fair value) . held by the University or by its agent in the Universityts name.

Category 2 - Amounts collateralized with securities (at fair value) held by.the pledging financial institution's trust department or agent in the Universityts name.

Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the Universityts name, and amounts uncollateralized.

Total Cash Deposits

Canying
Amount

Bank Balances

Risk Categories

2

3

$ 5,223,888,77 $ 7,089,677.18 $ 367,000,00 $,===o~,o~o $ 6,722,677.18

CATEGORIZATION OF INVESTMENTS Investments are summarized and classified as to custodial credit risk within the three categories described below:

Category 1 - Insured or registered, or securities held by the University or its agent in the Universityts name.

-12 -

FORT VALLEY STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1999

EXIllBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the University's name.

Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the University's name.

The carrying amounts of investment balances as ofJune 30, 1999, are categorized below:

I}!lle of Investment Common Stock U. S. Government Securities
Investments Not Subject to Categorizations: Board ofRegents
Balanced Income Fund Total Investments

Risk CatelWries

1

2

$ 5,137.50 $ 1.325.00

0.00 $

$ 6.462.50 $

0,00 $

Carrying

3

Amount

0.00 $

5,137.50 1.325.00

0,00 $ 6,462.50

1,362,297.39 $ 1.368,759.89

Funds invested in an investment pool managed by another governmental entity are not required to be categorized since the University didnot own any specific, identifiable investment securities of the pool.

NOTE 3: INVESTMENT IN PLANT

The following is a summary ofInvestment in Plant fixed assets as of June 30, 1999:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 1,262,548.17 52,053,257.85 4,790,803.34 15,157,115.43 4,946,373.79

Total Investment in Plant

$18,210,098.58

-13-

FORT VALLEY STATE UNIVERSITY
NOTES TO THE FINANCIAL STAIEMENTS JUNE 30.1999

EXHIBIT "D"

NOTE 4 : RISK MANAGEMENT
Fort Valley State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements of the Board of Regents of the University System of Georgia - Administrative Central Office. All units ofthe University System of Georgia share the risk ofloss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of$1,000,000.00 per person and dental coverage up to an annual maximum of $1 ,000.00 per person. The Board ofRegents has contracted with Blue Cross Blue Shield ofGeorgia to process claims in accordance with the Health Benefits Plan as established by the Board ofRegents.
The Department ofAdministrative Services (DOAS) has the responsibility for the State ofGeorgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes itIs more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased . applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board ofRegents ofthe University System of Georgia, is part ofthe State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program ofprofessional liability for its employees was established by the Board ofRegents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out ofthe performance oftheir duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 5: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Fort Valley State University participates in the Teachers Retirement System ofGeorgia (IRS), a cost-sharing 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. IRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department ofAudits and Accounts.
-14 -

FORT VALLEY STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
ruNE 30. 1999

EXHIBIT "D"

NOTE 5: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1999, the employer contribution rate was 11.95% for covered employees. In addition, the University contributed 3.46% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1999 1998 1997

100% 100% 100%

$ 2,024,909.52 $ 1,884,551.77 $ 1,784,978.29

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board ofRegents ofthe University System of Georgia, under which it may purchase annuity contracts for the purpose ofproviding retirement and death benefits for eligible faculty and principal administrators. 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 ofthe annuity contracts.

Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia The employer contributes 8.34% ofthe participating employee's earnable compensation. Employees contribute 5% oftheir earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

The University and the covered employees made the required contributions of $263,887.45 (8.34%) and $158,112.64 (5%), respectively.

-15 -

FORT VALLEY STAIB UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
ruNE 3D. 1999

EXHIBIT "0"

NOTE 5: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Fort Valley State University participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board ofTrustees ofthe . 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 ofTrustees. Ifa member
has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring a lump
sum distribution to the member in lieu ofmaking 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 ofTrustees. 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 1999 amounted to $38,008.13 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan.
NOIE 6: LEAVE POLICIES
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length ofcontinuous State service with maximum accumulation offorty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Certain employees who retire with a minimum ofthree months ofunused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.

-16-

FORT VALLEY STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

'NOTE7: CONUNGENCrnS

Amounts received or receivable from grantor agencies are subject to audit which may result in 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 the University expects such amounts, ifany, to be immaterial to its overall financial position.

Litigation, claims and assessments filed against Fort Valley State University (an organizational unit of the Board ofRegents ofthe 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 ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1999.
NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System of Georgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the University System ofGeorgia are eligible for these postemployment 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.

As of June 30, 1999, there were 101 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1999, Fort Valley State University recognized as incurred $132,627.02 of expenditures, which was net of $40,652.75 ofparticipant contributions.

NOTE9: ENROLLMENT

The equivalent full-time student enrollment ofFort Valley State University was as follows:

Regular Term Fall Semester, 1998 Spring Semester, 1999

2,195
1.212

Average

Summer School, '1998

-17 -

suppLEMENTARY INFORMATION -19 -

FORT VALlEY STATE UNIVERSITY COMBINING BALANCE SHEET
CURRENT FUNDS - UNRESTRICTED JUNE 30. 1999

EXHIBIT "e-

~
cash and cash EqUivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT. ACTIVITIES

TOTAL

$ 1,051,795.85 $ 233,868.07 36,289.29
823.058.27

50.258.78 $

1.107,123.33 $ 490,689.38 289,268.40 60,000.00

23.803.41 $ 53.279.08

2,232,981.37 777,836.53 305,557.69 60,000.00 823,056.27

Total Assets

$ 2,145,009.48 $

50.258.78. $ 1.927.081.11 $

n,082.49 $ 4,199,431.86

LIABILITIES AND FUND BALANCES
Usbilities Accounts Payable Student Deposits Deferred Revenue Tuition and Fees Other
Total LIabilities Fund Balances
Unrestricted

$ 1.395.550.17 $ 529,499.07
$ 1,925,049.24 $ 219.960.24

50,005.25 $

57,690.76 $ 128,317.46

171.311.88 4,681.00

50.005.25 $ 362,001.10 $

253.53

1.565,080.01

1,653.48 $ 1.504,899.66 128,317.46

28,316.00

729.128.95 4,681.00

29,969.48 $ 2,387.025.07

47,113.01

1.832,406.79

Total Liabilities and Fund Balances

$ 2,145,009.48 $

50.258.78 $ 1.927.081.11 $

n,082.49 $ 4,199,431.86

See notes to the financial statements.

-20-

FORT VALLEY STATE UNIVERSITY
COMBINING STATEMENT OF CHANGES IN FUND BAlANCES
CURRENT FUNDS - UNRESTRICTEP
YEAR ENDED JUNE 30. 1999

EXHIBIT"P

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER PEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net Increasel(Oecrease) for the Year
FUND BALANCES JULY 1. 1998

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 24,758,639.21 $
20,984.65 11.071.35
$ 24.790,695.21 $

166.500.00 $ 3,629,468.39 $ 604.29
166.500.00 $ 3,630,072.68 $

365,459.66 $ 28,942,067.26
21.566.94 11,071.35
365,459.66 $ 28,974,727.55

$ 24.766.605.81 $

188.246.47

$

$ 3,1n.797.94

365,115.80 $ 25,319,968.08 3,1n.797.94

153.576.96 524.00

75.00

145.00

153.576.96 744.00

$ 24.92O,706.n $ 166,246.47 $ 3,1n,872.94 $ 365.260.80 $ 28,652.086.98

$ -130.011.56 $ 349.971.80

$ -245,911.44 -354.115.17

$ -600,026.61

253.53 $ -147.826.87 $

0.00

1.712,906.66

$ -245.911.44 -354.115.17

$ -600,026.61

198.86 $ -2n,386.04

46,914.15

2.109,792.83

FUNp BALANCES JUNE 30. 1999

$

219.960.24 $

253.53 $ 1,565,080.01 $

47.113.01 $ 1,832.406.79

see notes to the financial statements.

-21-

FORT VALLEY STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENPITURES,
ANP OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30, 1999

EXHIBIT"G"

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTal

REVENUES

State Appropriations Tuition and Fees Federal Grants and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources

$ 18,724,757,00 $ 5,516,336,66 206,744,09 39,517,55
271.283,91

188,500,00 $
$ 3,629.505,17 -36.78

316.673,n 48,785,89

$ 18,913.257,00 5,833,010,43 206,744,09 39,517,55 3,629,505,17 320,033.02

Total Revenues

$ 24,758,639,21 $ 188,500,00 $ 3,629,468,39 $ 365,459,66 $ 28,942,067,26

EXPENDITURES

Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units

$ 10,978.290,29 $ 398,081,18 416,460,81
2,075,874,63 2,097,905,56 5,109,786.14 3,385.376.20
304,631,00

160,966,99

12,017,94

15,261,54

$

$ 1,492,021,67 20,108.07 264.346.74 146,506,52 863,601,64 391.211.30

365.115,80

$ 11.139,257,28 398,081.18 416,460,81
2,087.892.57 2,478,282.90 5,109,786,14 3,385.376.20
304.631,00

1,492,021,67 20.108,07
264.346,74 146,508.52 663,601,64 391.211,30

Total Expenditures

$ 24,766,605.81 $ 188,246.47 $ 3,1n,797,94 $ 385.115.80 ,$ 28,497,766,02

OTHER TRANSFERS AND ADDmONS/CDEDUCTIONS)

Transfers for Renewals and Replacements Transfers for Capital Projects Prior Period Adjustments (Net) Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)

$

31.532.00

-153,576,96

$ -245,911,44 -354,115,17 529,29 $

$ -145,00

-245,911,44 -354.115,17
31.916,29

-153,576.96

Total Other Transfers and Additionsl(Deductions)

$ -122,044,96

$ -599.497,32 $

-145,00 $ -721.687,28

Net Increasel(Decrease) In Fund Balances

$ -130.011.56 $

253,53 $ -147,826,87 $

198.86 $ -2n.386,Q4

see notes to the financial statements,

-22-

FORT VALLEY STATE UNIVERSITY

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1999

The year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the University's operations beyond calendar year 1999. Fort Valley State University has completed an inventory ofcomputer systems and other electronic equipment that may be effected by the year 2000 issue and that are necessary to conducting institutional operations. The following stages have been identified as necessary to implement year 2000 compliant systems.
~wareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process ofidentifying all systems and individual components ofsystems to check for compliance.
Remediation Stage - The time when changes are made to systems and equipment.
Validationtresting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the University to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.
Fort Valley State University has identified the following financial systems requiring year 2000 remediation that are supported by the Board ofRegents, University System of Georgia and have been remediated by the Board.
The College and University Fund Accounting System has been remediated, validated and tested.
The Regents Budget Reporting System is reportedly year 2000 compliant. The awareness, assessment, validation/testing phases were completed in 1997.
The Regents Payroll/Personnel System has been remediated, validated and tested.
The Regents Property Inventory System is reportedly year 2000 compliant. The awareness, assessment, validation/testing phases were completed in 1997.
The Banner Student Infonnation System is supported by SCT Banner, Inc. The year 2000 version has been released and distributed to the University.
Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. While management is confident that the University will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the University does business will be year 2000 ready.

See notes to the financial statements.

- 23-

FORT VAlLEY STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION
YEAR ENDED JUNE 30, 1999

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$

18,724,757.00

$

1,589,015.00 $

0.00

6,033,882,21 $ _ _.::29::z:,2::.:1:..:.1z=,5~93::::,3::6~

78,500.99

$

24,758,639.21 $

29,211,593.36 $

1,667,515.99 $

.;.O. ;.OO~

expENDITURES
Personal Services:
Education, General and Departmental Services $
Sponsored Operations Operating Expenses:
Education, General and Departmental Services Sponsored Operations Capital Outlay Special Funding Initiative
Year 2000 Project

18,860,236.64 $
5,002,948.17
883,421.00 20,000.00

6,840,155.47
22,371,437,89 $

1,554,061.06 $

612,249.71

$

24,766,605.81 $

29,211,593,36 $

1,554,061.06 $ _ _..;;6..;,;12;;,;;,2;;.,4.;.9';,;..7.;.,.1

Excess of Revenues over Expenditures

$

-7,966.60 $

0,00 $

113,454,93 $===-6=123:,2;;:4=9.=7.1..

(1) To eliminate tuition waivers not budgeted and to reclassify current year
transfers and prior year fund balances budgeted as revenues.

see notes to the financial statements.

-24-

SCHEDULE "2"

TOTAl

ADJUSTMENTS (1 )

TOTAl (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 20,313,n2.00 35,323,976.56 $

$ 307,418.71

20,313,n2.00 $ 20,313,n2.00 S

35,631,395.27

40,414,422.00

0.00 -4,783,026.73

$ 55,637,748.56 $

307,418.71 $ 55,945,167.27 $ 60,728,194.00 $ -4,783,026.73

$ 18,860,236.64 6,840,155.47
5,002,948.17 $ 22,371,437.89 2,166,310.n
883,421.00 20,000.00

$ -304,831.00

18,860,236.64 $ 18,819,111.00 $

6,840,155.47

8,076,335.00

4,698,117.17 22,371,437.89
2,166,310.n 883,421.00 20,000.00

4,740,252.00 25,820,342.00
2,388,733.00 883,421.00 0.00

-41,125.64 1,236,179.53
42,134.83 3,448,904.11
222,422.23 0.00
-20,000.00

$ 56,144,509.94 $ -304,831.00 $ 55,839,678.94 $ 60.728,194.00 $

4,888,515.06

$

-506,761.38 $

612,249.71 $ _.......1.0.00;5.,4.88=..3.3. =

$ """",==..1.0=5=,4;,:8,;,;8.=33.

-25-

FORT VAlLEY STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION
YEAR ENDEP JUNE 30, 1999

SCHEDULE "3"

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

PLANT FUNDS UNEXPENDED

TOTAl (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

188,500.00 $

58,000,00 $ 246,500,00 $ 246,500,00 $

0.00

EXPENDITURES

Equipment, Technology and Construction

Trust Fund

$

Special Funding Initiatives

58,000.00 $ 130,246,47

58,000.00 $

116,000.00 $ 130,246.47

116,000.00 $ 130,500,00

0.00 253.53

$

188,246.47 $

58,000.00 $ 246,246.47 $ 246,500.00 $

2. .;,5. ;., 3...;.,,53_

Excess of Revenues over Expenditures

s

253.53 $

0.00 S-==-=2.5:=3.:=53=

$ ====2=5,;;;3.=:53=

See notes to the financial statements.

-27-

FORT VALLEY STATE UNIVERSITY CHANGESININVESTMENTINPbANT
YEAR ENDED JUNE 30, 1999

Land Buildings Improvements Other Than Buildings EqUipment Ubrary Books and Collections

BALANCE JULY 1,1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT UNEXPENDED

$

1,262,548.17

50,258,795.43

$

1,037,601.73

4,261,600.00

527,541.34

13,653,884.85 $

795,853.00 $

667,230.96

8,464.75

4,764,571.98

181,801.81

$ 74,201,40Q.43 $

9n,654.81 $

667,230.96 $ =======1!::,57=3:::;.6:=07=.8=:2=

See notes to the financial statements.

-28-

ADDITIONS
FUNDS RENEWALS AND REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

364,823.07 $

392,037.62

1,662.00

60,389.92

$

PRIVATE GIFTS

DEDUCTIONS DISPOSALSI DELETIONSI ADJUSTMENTS
$

45,641.89 $

74,349.94

BALANCE JUNE 30, 1999
1,262,548.17 52,053,257.85
4,790,803.34 15,157,115.43 4,946,373.79

$

426,874.99 $

392,037.62 $

45,641.89 $

74,349.94 $

78,210,098.58

-29-

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30. 1999

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTTERY FOR

AUXILIARY

EDUCATION

ENTERPRISES

STUDENT ACTIVITIES

NET INVESTMENT IN PLANT

Investment in Plant Facilities

RESTRICTED

Designated for Subsequent Years' Expenditures

UNRESTRICTED

Designated

For Bus Replacement Reserve

For Intercollegiate Athletics

$

182.62

For Inventory Reserve

$

29.312.11

269.268.40

For Renewals and Replacements Reserve

For Subsequent Years' Expenditures

1.069,655.59 $

16,401.16

For Uncollectible Accounts

166,798.73

225,973.40

30,711.85

Surplus

Regular Lottery for Education

23.849.40 _____ $

....:2::::53::::.:::53~

$

219,960.24 $

253.53 $

1,565.080.01 $ _ _.....;4:.:,7.z..:.1:.,:;13::::.0::,.1:-

$

219,960.24 $

253.53 $

1.565,080.01 $ =_-==4..71.1:;;3.:;,0.1...

see notes to the financial statements.

-30-

SCHEDULE-S"

RESTRICTED

PLANT FUNDS

UNEXPENDED

LOTIERYFOR

RENEWALS AND

REGULAR

EDUCATION

REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 78.210.098.58 $ 78.210.098.58

$ _ _.;:;.88_1",-.4,",,6.;:;.3.;.;.48~

$ _ _.;:;.88;.,;1.:.;.4""63;;..;..;.;48;,..

$

123.173.25

364.030.84

$

123.173.25

182.62

298.580.51

364,030.84

1.086.056.75

423.483.98

$

116.326.25

.......

$ ......._ _-.:::O.:.:.:OO~

$

116.326.25 $

0.00 $ _ _-.48;;.;7...2.""04""'.0;;.;9;...

140.175.65 253.53
$ 2.435.937.13

$

881.463.48 $

116.326.25 $.

0.00 $

487.204.09 $ 78.210.098.58 $ 81.527.499.19

31

FORT VALLEY STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 1999

SCHEDULE "6"

Totals per Annual SL,lpplement
Adjustments Shared Services on Jointly Staffed Personnel Georgia College and State University Yasin, Jehad Middle Georgia College Collins, James W. Other Gibbs, Yolanda Jackson, Annie Miller, Parris

SALARIES

$

21,445,483.05 $

TRAVEL 519,921.71

-4,200.00
2,250.00
375.00 937.50 1,626.48

$

21,446,472.03 $ ===5::1=9=,9=21....7=1=

See notes to the financial statements.

-32-

SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FORT VALLEY STATE UNIVERSITY
AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-533-97-03 FS-533-97-04 FS-533-97-06 FS-533-98-01 FS-533-98-02 FS-533-98-03 FS-533-98-04 FS-533-98-05 FS-533-98-06

Further Action Not Warranted See FS-533-98-02 Previously Reported Corrective Action Implemented Further Action Not Warranted See FS-533-98-06 Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - Se~ Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

REVENUES/RECEIVABLES/RECEIPTS Improper Student Accounts Receivables Finding Control Number: FS-533-98-02

All students are billed on a monthly basis. Students whose deferments fail to clear within a' reasonable time are placed on hold, which makes them ineligible to register or transact any other business with the institution. Old accounts are placed with a collection agency.

EXPENDITURESILIABILITIESIDISBURSEMENTS H.O.P.E. Disbursements Made to Ineligible Students Questioned Costs: $743.00 Finding Control Number: FS-533-98-03

The then Financial Aid Director does not concur with finding. Information is to be submitted to Georgia Student Finance commission to make a determination ofthe students' eligibility for the H.O.P.E. Scholarship and Book Allowance.

GENERAL LEDGER H.O.P.E. Program Reconciliation Report Not Reconciled to Accounting Records Finding Control Number: FS-533-98-06

The accounting office forwards the detailed. disbursements for the H.O.P.E. program to the financial aid department on a periodic basis. The financial aid office has the responsibility for transmitting the disbursements to Georgia Student Finance Authority and for completing the reconciliation. At this time, the reports are not being reconciled to the accounting records.

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FORT VALLEY STATE UNIVERSITY
AUPITEE'SRESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

533-96-14 533-96-15 533-96-16 533-96-18 533-96-19 FA-533-97-01 FA-533-97-02 FA-533-97-03 FA-533-97-04 FA-533-98-01 FA-533-98-02 FA-533-98-03 FA-533-98-04 FA-533-98-05 FA-533-98-06 FA-533-98-07 FA-533-98-08 FA-533-98-09

Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Further Action Not Warranted See FA-533-98-02 Further Action Not Warranted See FA-533-98-06 Further Action Not Warranted See FA-533-98-07 Further Action Not Warranted See FA-533-98-08 Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

TYPES OF SERVICES/ALLOWED OR UNALLOWED Disbursement in Excess of Cost of Attendance Finding Control Number: 533-96-14

The institution has mandated a policy that all payments to students, regardless ofthe source, must be approved by the financial aid office before disbursement. This policy was already in effect, but apparently not adhered to sufficiently. Therefore, the emphasis that the institution now places on the procedure should provide the appropriate enforcement ofthe policy.

ELIGIBILITY Funds Disbursed While Enrolled in Excess Remedial Hours Finding Control Number: 533-96-15

We concur with the audit finding, but are awaiting a response from U. S. Department ofEducation for resolution of the questioned cost.

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FORT VALLEY STATE UNNERSITY
AUDItEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

ELIGffiILITY Improper Detennination ofEnrollment Status Finding Control Number: 533-96-16

We concur with the audit finding, but are awaiting a response from the U. S. Department of Education for resolution of the questioned cost.

ELIGffiILITY Student Financial Aid in Excess ofMaximum Time .Frame Finding Control Number: 533-96-18

We submitted information to the Federal government concerning this student's specific situation. Documentation supporting this was available in the student's folder, but was not appropriately listed for the audit year. We have appealed this finding with the understanding that documentation will always be appropriately listed in the future.

EUGffiILITY Satisfactory Academic Progress Not Maintained Finding Control Number: 533-96-19

We do not concur with this finding. Satisfactory Academic Progress (SAP) reviews are made at the end of the Spring quarter, with allowances for Summer enrollment before suspension takes place. The auditors were informed of this policy. Beginning the 95-96 school year appeals were approved for the same period. The auditors were given this information and requested not to use the old catalogs since the latest one had not been received from the printing company. Further, an analysis ofthe cases cited by the auditors revealed the following:

The two students cited for incremental measurement violation had complied with requirements

at the end ofthe Summer 1995 period, preceding Fal11995. Therefore, no financial suspension

was warranted. Two students had been suspended from financial aid at the end of Spring 1995,

had appealed their suspension and been approved for 1995-1996, and documentation was

available in the respective student's records attesting to action taken. Two students began the

1995-1996 school year in compliance of satisfactory academic progress. During the course of

the school year academic problems prevailed. However, as long as the institution allowed the

.students

to

re-enroll

d~g

this

period, no .

action

was

warranted

until

the

end

ofthe

1995-1996

school year.

A result of all the aforestated information, we do not concur with audit findings in this area.

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FORT VALLEY STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
ELIGffiILITY Control Procedures Inadequate Finding Control Number: FA-533-98-02
We are awaiting a response from the U. S. Department ofEducation for resolution.
ELIGffiILITY Failure to Disburse FSEOG Funds to All Pell Recipients Finding Control Number: FA-533-98-03
We are awaiting a response from the U. S. Department ofEducation for resolution.
ELIGffiILITY Overpayment of Student Financial Aid Finding Control Number: FA-533-98-04
We are awaiting a response from the U. S. Department ofEducation for resolution ofthe questioned cost.
PERIOD OF AVAILABILITY Funds Awarded in Excess ofAnnual Limits Finding Control Number: FA-533-98-05
Our concurrence was with one error in Pell Grant payment, whereas the auditors cited two. We will reimburse the Pell Grant program upon direction from the U. S. Department of Education when final resolution is received.
REPORTING Expenditures in Excess of Authorization Finding Control Number: FA-533-98-06
Awaiting final response from the U. S. Department ofEducation on the Pell Grant expenditures in question.
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FORI VALLEY STATE UNNERSITY AuPITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES REPORTING Inadequate Documentation for Report Finding Control Number: FA-533-98-07 Documentation to support the FISAP report is maintained on file in the Financial Aid and Accounting Services Offices. Infonnation used to prepare the report is generated through the University's Banner Student Infonnation System. and CUEA then summarized into appropriate data files. REPORTING Reports Not Reconciled Finding Control Number: FA-533-98-08 The Financial Aid and Accounting Service Offices have taken steps to ensure that all reports are reconciled on a timely basis. A new Financial Aid Director was appointed in October 1999. The University will engage a consultant to assist with documenting all reconciliation and reporting procedures. SPECIAL TESTS AND PROVISIONS Entrance and Exit Counseling not Conducted Finding Control Number: FA-533-98-09 The Financial Aid Office will adhere more strongly to its procedures on entrance and exit counseling.
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SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS

FORI VALLEY STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
'FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECENABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-533-99-01
At June 30,1999, the University had $604,604.69 in student accounts receivables which were not supported by approved financial aid. A review ofthese receivables revealed, that $602,557.32 ofthe receivables were accumulated prior to Summer Quarter 1998. There is no provision in the policies of the Board ofRegents for defennents ofstudent accounts without the student having approved documentation of financial aid at the time ofregistration. This condition occurred because management disregarded the policies of the Board of Regents.
Collections ofstudent accounts receivable should be made on at least a quarterly basis, and no student should be granted a defennent without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, ifnecessary.
EXPENDITURESILIABILITIESIDISBURSEMENTS H.O.P.E. Disbursements Made to Ineligible Students Questioned Costs: $5,265.00 Finding Control Number: FS-533-99-02
An examination of eight students receiving H.O.P.E. Scholarship funds during fiscal year 1999 revealed $5,265.00 was awarded and disbursed to three students who had not met satisfactory academic progress requirements. The H.O.P.E. Scholarship Program requires a minimum of3.0 grade point average to maintain satisfactory academic progress. These deficiencies occurred because the financial aid office failed to adequately monitor the students' academic progress before disbursing the funds.
The University should establish procedures to ensure that financial aid payments are made in accordance with appropriate H.O.P.E. Scholarship Program. regulations. The University should contact the Georgia Student Finance Commission regarding the resolution ofthese questioned costs.
GENERAL LEDGER Reports Not Reconciled to Accounting Records Finding Control Number: FS-533-99-03
The University's H.O.P.E. Scholarship Program reconciliation reports for fiscal year 1999, which were provided to the Georgia Student Finance Commission, did not reconcile with the accounting records as indicated below:
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FORT VALLEY STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Reports Not Reconciled to Accounting Records Finding Control Number: FS-533-99-03

Report Item

Per H.O.P.E. Reconciliation

Per Accounting
Records

Umeconciled Difference

Cash Disbursed to School

$546,770.00

$558,495.80

$11,725,80

Amount Awarded to Students

$546,645.00

$556,720.80

$10,075.80

The unreconciled differences identified above occurred because management failed to reconcile accounting records to the H.O.P.E. Scholarship Program reconciliation reports at year end. Procedures should be established to ensure that all H.O.P.E. Scholarship Program reconciliation reports are reconciled to the University's formal accounting records.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ELIGIBILITY Improper Disbursement ofFSEOG Funds Student Financial Aid Cluster Program
c
Questioned Cost: $42,750.00 Finding Control Number: FA-533-99-01

For fiscal year 1999, it was noted that 54 students received $42,750.00 in FSEOG funds that did not receive Federal Pell Grants. Federal regulations (34 CFR 676.10) state that an institution shall award FSEOG funds to those students with the lowest expected family contributions who will also receive Federal Pell Grants. Ifthe institution has FSEOG funds remaining after awarding FSEOG funds to all Federal Pell Grant recipients at the institution, the institution shall award the remaining FSEOG funds to those eligible students with the lowest expected family contributions who will not receive Federal Pell Grants. It appears very unlikely that the 54 students that received FSEOG funds were entitled to the funding because the University had 1,560 students having a higher need as these students received Pell Grants but did not receive FSEOG funds. The University could not provide documentation that the lowest expected family contributions of these 1,560 students were considered prior to awarding the FSEOG funds to non-Pell recipients.

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FORT VALLEY STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
, FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Improper Disbursement of FSEOG Funds Student Financial Aid Cluster Program Questioned Cost: $42,750.00 F,inding Control Number: FA-533-99-01
This questioned cost of$42,750.00 was a result ofmanagement's failure to properly award FSEOG funds to those students with the lowest expected family contribution who also received Federal Pell Grants. The University should contact the U. S. Department ofEducation regarding resolution ofthese questioned costs.
Federal Prowams/Awards Afj'ected: Student Financial Aid Cluster Program
U. S. Department ofEducation Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Pell Grant Program (CFDA 84.063)
ELIGIBILITY Failure to Notify Students ofAwards Student Financial Aid Cluster Program . Questioned Cost: $67,409.20 Finding Control Number: FA-533-99-02
A sample ofseventy financial aid files was selected to determine if financial aid was properly awarded and disbursed to eligible students. Federal regulation (34 CFR 668.165) states that before an institution disburses Title VI, HEA program funds for any award year, the institution must notify a student ofthe amount offunds that the student or his or her parent can expect to receive under each Title VI, HEA program. The files sampled disclosed twenty-nine instances where students received financial aid in excess of their award as shown below:
(I) Twenty-seven' students received Federal work study wages when they received no award notification for Federal work study or they received Federal work study wages in excess of their award. This noncompliance resulted in questioned costs of $146,747.68. Of this amount, $82,338.48 resulted in students receivirig funds in excess of their eligible need and therefore is included in finding FA-533-99-03, which leaves a net amount of $64,409.20 in unduplicated questioned costs. The questioned costs resulted from a weakness in the Federal work study program in that procedures were not in place to ensure that students had received a Federal work study award and/or signed a work agreement prior to being allowed to work and receive wages.
(2) Two students received Federal Pell Grant Program funds; however, they never received an award notification. This noncompliance resulted in questioned costs of$3,000.00.
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FORT VALLEY STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Failure to Notify Students ofAwards Student Financial Aid Cluster Program Questioned Cost: $67,409.20 Finding Control Number: FA-533-99-02
These questioned Costs resulted from management's failure to properly notify students of their financial aid award before disbursing funds to students. The University should implement procedures to ensure that students are notified ofawarded financial aid before disbursements are made and that disbursements do not exceed individual awards. The University should contact the U. S. Department of Education regarding the resolution ofthese questioned costs.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department ofEducation Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063)
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $404,048.97 Finding Control Number: FA-533-99-03
A sample ofseventy financial aid files was selected to determine iffinancial aid was properly calculated and disbursed to eligible students. The items sampled contained financial aid disbursements of$1,125,896.86 out of a population of $17,855,285.85. Our examination revealed that fifty-six students received funds in excess oftheir eligible need totaling $404,048.97 as shown below:
(l) Twenty-seven students' awards were not adjusted for a change in enrollment status. The students either never registered for full-time enrol4nent or originally registered for classes then formally dropped classes before the beginning of the quarter. Chapter Two of The Federal Student Financial Aid Handbook states that, with the exception ofthe Federal Pell Grant Program, the cost of attendance for a student is based on the student's actual costs'for the period for which need is being determined. This noncompliance resulted in questioned costs of $136,222.98.
(2) Four students were not in compliance with the University's published satisfactory academic progress policies.' Federal regulations (34 CFR 668.32 and 668.34) state that a student must maintain satisfactory academic progress to be eligible to receive financial assistance under the Title N programs. The noncompliance with established published standards of satisfactory progress is as follows:
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FORI VALLEY STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 3D. 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $404,048.97 Finding Control Number: FA-533-99-03
(a) The University's policy states that an undergraduate student is expected to successfully complete an increment ofat least 70% ofthe total number ofhours required per academic year. The increment measurement formula is cumulative in nature; therefore, all hours attempted and completed are carried forward and measured against each new incremental total. One student was found that had not successfully completed at least 70% of the total number ofhours required.
(b) The University's policy states that a graduate student must maintain a grade point average of3.0 or higher and that no probationary period is allowable. Three students were found with a grade point average below the required grade point average.
This noncompliance resulted in questioned costs of$69,264.00.
(3) Six students were classified by the financial aid office as graduate students when in fact they were taking undergraduate classes and paying undergraduate fees. This misclassification resulted in the University disbursing Federal Direct Student Loans for which the students did not qualify. This noncompliance resulted in questioned costs of $38,207.50.
(4) Seven students' dependency status was adjusted without the necessary documentation or a reasonable explanationfor the adjustment. Federal regulation (34 CFR 685.203) requires that all adjustments based on professional judgement be fully documented and reasonable. This noncompliance resulted in questioned costs of $27,361.49.
(5) Six students' cost ofattendance was adjusted without the necessary documentation or a reasonable explanation for the Wljustment. Federal regulations require that all adjustments based on professional judgement be fully documented and reasonable. This noncompliance resulted in questioned costs of $24,000.00.
(6) Two students' files contained no 1998-99 eligibility documentation. Federal regulation (34 CFR 668.24) states that an institution must maintain all of the records required for a student to participate in any of the Federal Student Financial Aid Programs and any supporting documentation required by the applicable program regulations. The regulation also states that an institution shall make its records readily available for review. This noncompliance resulted in questioned costs of$21,396.00.
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FORT VALLEY STATE UNNERSIIY
SCHEDULE OF FINJ)INGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEDERAL AWARD FlNDlNGS AND QUESTIONED COSTS
ELIGffiILIIY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $404,048.97 Finding Control Number: FA-533-99-03
(7) Two students had not been accepted into an eligible program prior to their third academic year of study. The University's policy states students taking courses in their junior and senior years, who have yet to declare an academic major, are not considered to be following a prescribed course of study leading to a degree. Therefore, such students are not eligible for financial aid until a program of study has been declared. Federal regulation (34 CFR 668.32) states that a student is eligible to receive Title VI , HEA program assistance if the student is a regular student enrolled, or accepted for enrollment, in an eligible program at an eligible institution. This noncompliance resulted in questioned costs of $16,711.00.
(8) Two students were enrolled less than half-time while receiving Federal Direct Student Loan Program funds. Federal regulation (34 CFR 685.200) states that a student participating in the Direct Loan Program must be enrolled, or accepted for enrollment, on at least a half-time basis. This noncompliance resulted in questioned costs of$I5,209.00.
(9) Four students received other resources of financial aid which were not considered in their financial need calculation. Federal regulation (34 CFR 673.5) states that the institution must consider those resources it can reasonably anticipate at the time it awards funds. This noncompliance resulted in questioned costs of$I3.,406.00.
(10) Three students had no remaining need after the expected family contribution was deducted from their cost of attendance; however, they were disbursed Federal Direct Subsidized Loans and Perkins loans. Students that receive these loans must demonstrate financial need as described in Federal regulations (34 CFR 674.9 and 34 CFR 685.200). This noncompliance resulted in questioned costs of $12,847.00.
(11) Four students' expected family contribution was adjusted without proper documentation. Chapter 2 of The Student Financial Aid Handbook states that the reason for an expected family contribution adjustment must relate to the student's special circwpstance and must be adequately documented in the student's :file. This noncompliance resulted in questioned costs of$II,277.00.
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FORT VALLEY STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBllJTY Overpayment ofStudent Financial Aid Student Financial Aid Cluster Program Questioned Cost: $404,048.97 Finding Control Number: FA-533-99-03
(12) One student received Federal Direct Student Loans and did not appear to meet the requirements for "ability to benefit" regulation. The student in question is an eighty-five year old male who is enrolled in the University's Education Program. Federal regulation (34 CPR 685,214) states that a student's eligibility to borrow is to have been falsely certified by the school, if the school certifies the eligibility of a student who, because of age, would not meet the requirements for employment in the occupation for which the training program supported by the loan was intended. This noncompliance resulted in questioned costs of$10,737.00.
(13) One student, who had satisfied all requirements for graduation, received financial aid funds for an additional semester of undergraduate courses and then completely withdrew from the institution. Federal regulation (34 CPR 690.6) states that a student is eligible to receive grant funds for the period of time required to complete his or her first undergraduate baccalaureate course of study. This noncompliance resulted in questioned costs of$5,833.00.
(14) One student was disbursed $1,577.00 in excess of aggregate loan limits for the Federal Direct Student Loan Program. According to Federal regulations 34 CPR 685.203(d)2, the aggregate unpaid principal amount of all Direct Subsidized Loans made to a student may not exceed $65,500.00 in the case ofa graduate or professional student, including loans for undergraduate study. The student in question has received $67,077.00 in Federal Direct Subsidized Student Loan Program funds which resulted in questioned costs of$1,577.00. .
The above instances ofnoncompliance resulted from weaknesses in the internal control procedures over the Federal Student Financial Aid Cluster Program. The following deficiencies were noted.
Procedures were not in place to ensure that student financial aid :files were complete and properly maintained.
Procedures were not in place to ensure awards and disbursements were made based on the student's proper enrollment status.
Procedures were not being followed or were not in place to ensure all resources were considered when awards are made to students.
Procedures were not in place to ensure that student financial aid awarded to friends and relatives ofthe director were reviewed by someone other than the Financial Aid Director. Such procedures would help to avoid the appearance ofimpropriety within the financial aid department.
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FORT VALLEY STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $404,048.97 Finding Control Number: FA-533-99-03
The weaknesses identified in the Federal Student Financial Aid Cluster Program were a result of management's failure to perform a risk assessment of the critical areas of the program and to implement appropriate controls in the financial aid department. The University should develop and implement policies and procedures to ensure adequate controls over the eligibility process. Also, the University should develop and implement a monitoring process to ensure that the controls are being followed.. The University should contact the U. S. Department ofEducation regarding the resolution of these questioned costs.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
REPORTING Expenditures in Excess ofAuthorization Student Financial Aid Cluster Program Finding ControlNumber: FA-533-99-04
The Statement ofAccount report from the U. S. Department of Education indicated that the University was . authorized to expend $4,310,538.00 in Federal Pell Grant Program funds in state fiscal year 1999. The University's accounting records however, reflected $4,376,127.00 for fiscal year 1999 Pell Grant expenditures. On September 30, 1999, the University's authorization was increased to $4,331,801.00. This adjusted authorization amount represents the level that the University was authorized to expend for Pell Grants in fiscal year 1999. As a result, the University expended $44,326.00 in excess ofthe authorized amount. In order to be reimbursed for the excess Pell Grant program expenditures, the Uliiversity, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then provide appropriate adjustments ofthe fiscal year 1999 authorized amount in order to make the funds available to the University.
Federal Programs/Awards Affected; Student Financial Aid Cluster Program
U. S. Department of Education Federal Pell Grant Program (CFDA 84.063)
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FORI VALLEY STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QlJESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEDERAL AWARD FINDINGS AND QlJESTIONED COSTS
REPORTING Inadequate Documentation for Report Student Financial Aid Cluster Program Finding Control Number: FA-533-99-05
The University failed to provide adequate documentation to support Part VI, Section A of the Fiscal Operations and Application to Participate (FISAP) report for award period July 1, 1998 - June 30, 1999 submitted by the University to the U. S. Department of Education. Federal regulations (34 CFR 674.19, 675.19 and 676.19) require the University to ensure that the information is compiled and available for review upon request. This noncompliance was a result ofmanagement's failure to retain documentation supporting amounts included on the report. The University should retain all documentation used to complete the FISAP report and make it available for review upon request.
Federal PrQgrams/Awards 4llected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038)
REPORTING Reports Not Reconciled Student Financial Aid Cluster Program Finding Control Number: FA-533-99-06
For the year under review, expenditures reported on several of the required reports for Federal Financial Assistance programs submitted by the University to the U. S. Department ofEducation were not reconciled as follows:
The Student Payment Summary (SPS) report and the Statement ofAccount, which report Federal Pell Grant Program expenditures for the year, were not reconciled to the accounting records.
The Fiscal Operations and Application to Participate (FISAP) report had amounts reported for the Federal Work-Study Program, the Federal Perkins Loan Program and the Federal Pell Grant expenditures that did not reconcile to the accounting records.
The Federal Direct Loan Program reports have not been reconciled to the general ledger by the University since the beginning oftheir participation in the program, September 1995. The University
was required to have all ofthe Federal Direct LOans that had been disbursed by the University through
June 30, 1998, reconciled to the accounting records and submitted to the Federal Direct Loan servicer by July 31, 1999. This reconciliation had not been completed as required.
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FORT YALLEY STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Reports Not Reconciled Student Financial Aid Cluster Program Finding Control Number: FA-533-99-06
Federal regulations (34 CFR 675.19,685.309,690.81 and 690.83) require the University ensure that reported information is accurate and reconciled as necessary. The deficiencies identified were a result of management's failure to adequately reconcile required reports to the accounting records.
The University should implement adequate controls to ensure that all reports submitted to the U. S. Department of Education are accurately completed ,and supported by the accounting records. Detailed reconciliations should be prepared for any variances and maintained as part ofthe supporting documentation.
Federal Programs/Awards Affected. Student Financial Aid Cluster Program
U. S. Department ofEducation Federal Work-Study Progr~ (CFDA 84~033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
SPECIAL TESTS AND PROVISIONS Entrance and Exit Counseling not Conducted Student Financial Aid Cluster Program Finding Control Number: FA-533-99-07
An examination ofthe financial aid records ofseventy students receiving Federal financial aid revealed that three Federal Direct Student Loan recipients files did not contain the required entrance interview documentation and twenty Federal Direct Student Loan recipients files did not contain the required exit interview documentation. Federal regulation (34 CFR 685.304) requires the institutions to conduct in-person entrance counseling prior to the release ofthe first disbursement ofthe proceeds ofthe first Direct Loan mad~ to the borrower for attendance at the school. The Federal regulations also require the University to conduct exit counseling with each Direct Loan borrower shortly before the student graduates or ceases at least halftime study at the institution. Documentation of the required counseling should be maintained in the student's financial aid file.
This deficiency resulted from management's failure to ensure documentation was maintained. The University should implement the necessary controls to ensure that each recipient receives the required counseling and that this counseling is documented in the student's file.
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FORI VALLEY STATE UNIVERSITY
SCHEDULE OF FlNl)INGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
'FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Entrance and Exit Counseling not Conducted Student Financial Aid Cluster Program Finding Control Number: FA-533-99-07
Federal Programs/Awards A.ffected: Student Financial Aid Cluster Program
U. S. Department ofEducation Federal Direct Student Loan Program (CFDA 84.268)
SPECIAL TESTS AND PROVISIONS Inadequate Control Procedures Student Financial Aid Cluster Program Finding Control Number: FA-533-99-08
The internal control procedures ofFort Valley State University were found to be inadequate over the Federal Work Study Program. The following weaknesses were noted in the program.
Procedures were not in place to ensure that time sheets were always approved and/or approved only after the last date indicated as worked on the time sheet.
Procedures were not in place to ensure that the supervisor's name on the time sheet was actually signed by the supervisor.
Procedures were not in place to ensure that tax withholding authorizations were obtained from the students prior to their employment.
The weaknesses identified in the program were a result ofmanagement's failure to perfonn a risk assessment ofthe critical areas ofthe program and tO'implement appropriate controls in the Financial Aid Department. The University should develop and implement policies and procedures to ensure adequate controls over the program. Also, the University should develop and implement a monitoring process to ensure that the controls are being followed.
Federal Programs/Awards Affected.' Student Financial Aid Cluster Program
U. S. Department ofEducation Federal Work-Study Program (CFDA 84.033)
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