Fort Valley State University, Fort Valley, Georgia, management report for the fiscal year ended June 30, 2014

FORT VALLEY STATE UNIVERSITY
FORT VALLEY, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014
A Member Institution of the University System of Georgia
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS)
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS)
C STATEMENT OF CASH FLOWS - (GAAP BASIS)
D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

Page
2 3 4 5
20 21 22 24 26 27

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

FORT VALLEY STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 15, 2015

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Honorable Ivelaw Lloyd Griffith, President Fort Valley State University
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Report for the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2014, we have performed certain audit procedures at Fort Valley State University. Accordingly, the financial statements and compliance activities of Fort Valley State University were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Fort Valley State University as of and for the year ended June 30, 2014. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Fort Valley State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

GSG:as

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2014
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Due from Affiliated Organizations Prepaid Items
Total Current Assets
Noncurrent Assets Due from USO - Capital Liability Reserve Fund Investments Notes Receivable, Net Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Advances (Including Tuition and Fees) (Note 5) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for:
Expendable Unrestricted
Total Net Position
- 2 -

EXHIBIT "A"

$

5,932,695

1,614,353 1,146,159 1,194,341
48,751

9,936,299

646,895 57,652
1,280,080 152,632,764
154,617,391
164,553,690

2,805,373 100,968 68,055 3,653
2,332,806 312,488 849,383
1,436,650 7,909,376
81,753,123 708,855
82,461,978 90,371,354
70,030,258 4,568,103 -416,025
$ 74,182,336

FORT VALLEY STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Federal Appropriations Grants and Contracts
Federal State Other Sales and Services Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts Federal State
Total Other Revenues, Expenses, Gains or Losses
Increase in Net Position
Net Position - Beginning of Year, As originally reported
Net Position - End of Year

EXHIBIT "B"

$

16,709,211

-6,879,020

5,282,647

916,918 88,601
202,910 468,025

6,549,683 54,804
4,567,908 179,146 429,344
1,507,693 974,805 188,522

31,241,197

10,370,160 18,908,617
9,878,539 457,829 591,462
5,639,146 4,707,157 14,297,886 5,722,982
70,573,778
-39,332,581

24,002,876
18,595,197 731,655 168,608 8,819
-4,557,700 11,341
38,960,796
-371,785
697,472 1,301,421
1,998,893
1,627,108
72,555,228

$

74,182,336

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FORT VALLEY STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Federal Appropriations Grants and Contracts (Exchange) Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts, Net
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts, Net
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments
Net Cash Provided by Investing Activities
Net Increase in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Prepaid Items Notes Receivable, Net Accounts Payable Other Liabilities Compensated Absences
Net Cash Used by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income
- 4 -

EXHIBIT "C"

$

9,690,264

5,282,647

1,867,057

468,025

-30,263,815

-29,485,190

-5,639,146

70,760

6,591,472 32,112
4,024,561 173,131 422,301
1,496,114 1,144,792 1,062,409

-33,062,506

24,002,876 -230,748
19,495,460 12,913
43,280,501

1,998,893 -4,851,376
-674,449 -4,557,700
-8,084,632

75,509 3,393
78,902 2,212,265 3,720,430

$

5,932,695

$

-39,332,581

5,722,982
-165,416 -15,484 70,760 414,151 272,371 -29,289

$

-33,062,506

$

423,343

$

5,426

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Fort Valley State University (University) is one of thirty-one (31) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Fort Valley State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. 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 of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, deferred outflow of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows, if applicable.
BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues, are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated.
NEW PRONOUNCEMENTS In fiscal year 2014, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement clarify the use of deferred inflows of resources and deferred outflows of resources. Certain items, including those items which were previously reported as assets and liabilities, will now be reported as outflows of resources or inflows of resources. As of June 30, 2014, the University did not have any deferred outflows of resources or deferred inflows of resources.
In fiscal year 2014, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 66, Technical Corrections - 2012, an amendment to GASB Statements No. 10 and No. 62. The objective of this Statement is to resolve conflicting guidance by amending GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues and GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and AICPA Pronouncements. GASB Statement No. 10 was amended by removing the provision that limited fund based reporting of an entity's risk and financing activities to certain funds. GASB Statement No. 62 was amended by modifying guidance on (1) operating lease

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

payments that vary from a straight-line basis, (2) purchases of a loan or a group of loans, and (3) recognition of servicing fees on mortgage loans that are sold when the stated service fee rate differs from a current (normal) servicing fee rate. The adoption of this statement does not have a significant impact on the University's financial statements.
In fiscal year 2014, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. This Statement establishes accounting and reporting requirements for state and local governments that extend or receive financial guarantees that are nonexchange transactions. The adoption of this statement does not have a significant impact on the University's financial statements.
FUTURE ACCOUNTING PRONOUNCEMENTS In fiscal year 2015, the University will adopt Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this Statement will require the University to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Actuarial estimates are currently being made to determine the University's liability, the effects of which are believed to be material.
NET POSITION The University's net position is classified as follows:
Net Investment in Capital Assets: This represents the University's total investment in capital assets, net of outstanding debt obligations, deferred outflows of resources and deferred inflows of resources related to those capital assets. To the extent debt has been incurred or deferred inflows of resources have been received but not yet expended for capital assets, such amounts are not included as a component of the net investment in capital assets.
Restricted - nonexpendable: Nonexpendable restricted net position consists of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted - expendable: Restricted expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted: Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $119,644.25. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2014, the carrying value of deposits was $5,930,945 and the bank balance was $5,930,945. Of the University's deposits, $5,680,945 were uninsured. Of these uninsured deposits, $5,680,945 were collateralized with securities held by the financial institution's trust department or agent in the University's name.

INVESTMENTS At June 30, 2014, the carrying value of the University's investment was $57,652, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pool Board of Regents Balanced Income Fund

$

57,652

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2014.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal, State and Private Funds

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

Other

1,294,446 215,752
1,614,353 88,114
1,194,341 473,204

Less Allowance for Doubtful Accounts

4,880,210 925,357

Net Accounts Receivable

$

3,954,853

NOTE 4: CAPITAL ASSETS

Following are the changes in the University's capital assets for the year ended June 30, 2014:

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

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

$

3,762,548

5,457,218 $

2,990,493 $

$ 835,343

3,762,548 7,612,368

Total Capital Assets, Not Being Depreciated

9,219,766

2,990,493

835,343

11,374,916

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

99,800,367 2,728,820
10,956,832 82,922,035
5,390,681

350,237
1,226,935 666,930 30,114

300,377 4,507

100,150,604 2,728,820
11,883,390 83,588,965
5,416,288

Total Assets Being Depreciated

201,798,735

2,274,216

304,884

203,768,067

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

30,926,863 1,441,891 7,847,333
12,056,147 4,570,436

1,970,282 49,254
862,627 2,651,067
189,752

47,138 3,788 4,507

32,897,145 1,491,145 8,662,822
14,703,426 4,755,681

Total Accumulated Depreciation

56,842,670

5,722,982

55,433

62,510,219

Total Capital Assets, Being Depreciated, Net

144,956,065

-3,448,766

249,451

141,257,848

Capital Assets, Net

$ 154,175,831 $

-458,273 $

1,084,794 $ 152,632,764

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

NOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances consisted of the following at June 30, 2014.

Prepaid Tuition and Fees Other - Advances

$

429,283

1,903,523

Total Advances
NOTE 6: LONG-TERM LIABILITIES

$

2,332,806

The University's Long-Term liability activity for the year ended June 30, 2014 was as follows:

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

Current Portion

Leases Lease Obligations

$ 83,016,246 $

260,709 $

674,449 $ 82,602,506 $

849,383

Other Liabilities Compensated Absences

2,174,794

1,300,364

1,329,653

2,145,505

1,436,650

Total Long-Term Obligations $
NOTE 7: NET POSITION

85,191,040 $

1,561,073 $

2,004,102 $ 84,748,011 $

2,286,033

Changes in Net Position for the year ended June 30, 2014 are as follows:

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

Invested in Capital Assets Net of Related Debt

$

71,620,683 $

216,176 $

1,806,601 $

70,030,258

Restricted Net Position

3,457,619

19,803,626

18,693,142

4,568,103

Unrestricted Net Position

-2,523,074

56,954,960

54,847,911

-416,025

Total Net Position

$

72,555,228 $

76,974,762 $

75,347,654 $

74,182,336

NOTE 8: LEASE OBLIGATIONS

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

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2015 and 2040. Expenses for fiscal year 2014 were $5,232,149 of which $4,557,700 represented interest. Total principal paid on capital leases was

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

$674,449 for the fiscal year ended June 30, 2014. Interest rates range from 4.2 percent to 16.7

percent. The following is a summary of the carrying values of assets held under capital lease at

June 30, 2014:

Net Position

Outstanding

Held Under

Balances per

Accumulated

Capital Lease Lease Schedules

Description

Gross Amount

Depreciation

at June 30, 2014 at June 30, 2014

(+)

(-)

(=)

Equipment Buildings

$

451,703 $

214,990 $

236,713 $

352,063

83,137,262

14,488,436

68,648,826

82,250,443

Total Assets Held Under Capital Lease at June 30, 2014

$

83,588,965 $

14,703,426 $ 68,885,539 $ 82,602,506

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Fort Valley State University had three capital leases with related entities in the current fiscal year. In June 2008, Fort Valley State University entered into a capital lease of $19,603,070 at 4.85 percent with the Fort Valley State University Foundation Properties, LLC whereby the University leases building for a thirty year period that began August 2009 and expires June 2040. In May 2013, Fort Valley State University Foundation Properties refunded the bonds on this property and passed the benefit to the University through a lease renewal that reduced future lease payments. Lease Purchase Obligations were increased by $467,388, as a result of a lower effective interest rate of 4.2 percent.

In June 2006, Fort Valley State University entered into a capital lease for $43,334,897 at 4.544 percent with the Fort Valley State University Foundation Properties, LLC whereby the University leases buildings for a thirty year period that began May 2008 and expires in May 2037.

In November 2008, Fort Valley State University entered into a capital lease of $19,716,695 at 6.139 percent with Georgia Higher Education Facilities Authority GFEFA whereby the University leases a stadium and student activity center for a thirty year period that began July 2010 and expires June 2040.

The outstanding balances of these leases at June 30, 2014 were $42,583,105, $19,895,586 and $19,771,752, respectively.

Fort Valley State University also has various capital leases for equipment with an outstanding balance at June 30, 2014 in the amount of $352,063.

OPERATING LEASES Fort Valley State University's noncancellable operating leases having remaining terms of more year expire in fiscal years from 2015 through 2017. Certain operating leases provide for renewal options for periods from one to five years at their fair rental value at the time of renewal. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are real property, copiers, and student transportation.

Noncancellable operating lease rental expenses in 2014 were $83,101 for real property and equipment.

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2014, were as follows:

Capital Leases

Operating Leases

Year Ending June 30: 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2029 2030 - 2034 2035 - 2039 2040

$ 5,160,929 $ 5,303,730 5,441,355 5,458,314 5,611,564
30,266,060 33,199,399 36,555,597 28,195,506
1,694,883

71,773 55,073 55,073

Total Minimum Lease Payments

156,887,337 $

181,919

Less: Interest Less: Executory costs (if paid)

64,319,001 9,965,830

Principal Outstanding

$ 82,602,506

NOTE 9: RETIREMENT PLANS
Fort Valley State University participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Fort Valley State University participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
Employees' Retirement System of Georgia
The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing

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FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, Fort Valley State University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Fort Valley State University contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. Fort Valley State University is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Fort Valley State University contributions are not at any time refundable to the member or his/her beneficiary.

- 12 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

Employer contributions required for fiscal year 2014 were based on the June 30, 2011 actuarial valuation as follows:

Old Plan* New Plan GSEPS

18.46% 18.46% 15.18%

* 13.71% exclusive of contributions paid by the employer on behalf of old plan members
Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits.

Teachers Retirement System of Georgia

The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.

On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014 were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011 actuarial valuation.

- 13 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

The following table summarizes the Fort Valley State University contributions by defined benefit plan for the years ending June 30, 2014, June 30, 2013, and June 30, 2012:

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

2014

$

2013

$

2012

$

Regents Retirement Plan

0 0 2,093

100% 100% 100%

$ 2,303,990 $ 2,264,447 $ 2,198,303

100% 100% 100%

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Fort Valley State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2014, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Fort Valley State University and the covered employees made the required contributions of $527,482 (9.24%) and $342,521 (6%), respectively.

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

Georgia Defined Contribution Plan

Plan Description Fort Valley State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

- 14 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2014 amounted to $114,993 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to four different self-insured healthcare plan options. For the University System of Georgia's Plan Year 2014, the following health care options were available:
Blue Choice HMO plan (Blue Cross Blue Shield) HSA Open Access POS plan (Blue Cross Blue Shield) Open Access POS plan Kaiser Permanente HMO plan
Fort Valley State University and participating employs and retirees pay premiums to either of the selfinsured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a selfsustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the self-insured healthcare plan products. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental loses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Fort Valley State University, as an organizational unit of the

- 15 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Fort Valley State University expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Fort Valley State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014.
NOTE 12: POST-EMPLOYMENT 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 of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2014 plan year, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2014, there were 204 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2014, Fort Valley State University recognized as incurred $1,067,127 of expenditures, which was net of $420,401 of participant contributions.

- 16 -

FORT VALLEY STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2014

EXHIBIT "D"

NOTE 13: AFFILIATED ORGANIZATIONS
The Fort Valley State University Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support Fort Valley State University. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in this financial statement. Copies of the financial statements for the affiliated organization may be obtained from Fort Valley State University.

- 17 -

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SUPPLEMENTARY INFORMATION - 19 -

FORT VALLEY STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2014
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Advances
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

4,809,361.42

5,917,119.22 3,622,272.87
44,565.14

$

14,393,318.65

$

97,143.96

9,409,411.55

64,439.50

2,158,713.98

11,729,708.99

104,058.27 567,461.48 555,455.82 926,517.04 390,472.80
119,644.25
2,663,609.66

$

14,393,318.65

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 20 -

FORT VALLEY STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2014

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2013
Early Return of Surplus in Fiscal Year 2014 Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 24,005,877.00 $ 24,005,877.00 $

0.00

63,545,364.00

47,941,605.16

-15,603,758.84

87,551,241.00

71,947,482.16

-15,603,758.84

0.00 87,551,241.00

1,134,846.95 73,082,329.11

1,134,846.95 -14,468,911.89

3,664,741.00 83,886,500.00

87,551,241.00

$

0.00

3,664,741.00 67,916,493.74

0.00 15,970,006.26

71,581,234.74

15,970,006.26

1,501,094.37 $ 1,501,094.37

2,177,805.14 45.60

122,512.10
-45.60 -2,955.00 -1,134,846.95 $ 2,663,609.66

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over
Total Reserved
Unreserved Surplus
Total Fund Balance

$

104,058.27

567,461.48

555,455.82

926,517.04

390,472.80

2,543,965.41

119,644.25

$ 2,663,609.66

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 21 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2014

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

3,664,741.00 $

3,664,741.00 $

3,664,741.00 $

3,664,741.00 $

19,716,136.00 52,064,582.00
71,780,718.00

20,341,136.00 59,714,371.00
80,055,507.00

20,341,136.00 63,545,364.00
83,886,500.00

20,341,136.00 47,941,605.16
68,282,741.16

$

75,445,459.00 $

83,720,248.00 $

87,551,241.00 $ 71,947,482.16 $

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 22 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Excess of Funds Available
Over Expenditures

0.00 $

0.00 $

3,664,741.00 $

0.00 $

3,664,741.00 $

0.00 $

0.00

0.00 1,134,846.95
1,134,846.95

0.00 0.00
0.00

20,341,136.00 49,076,452.11
69,417,588.11

0.00 -14,468,911.89
-14,468,911.89

20,333,507.21 47,582,986.53
67,916,493.74

7,628.79 15,962,377.47
15,970,006.26

7,628.79 1,493,465.58
1,501,094.37

1,134,846.95 $

0.00 $ 73,082,329.11 $ -14,468,911.89 $ 71,581,234.74 $ 15,970,006.26 $

1,501,094.37

- 23 -

FORT VALLEY STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2014

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2013
Surplus

Prior Period Adjustments

$

0.00 $

0.00 $

0.00 $ 28,593.18 $

45.60 1,134,846.95
1,134,892.55
1,134,892.55

0.00 -1,134,846.95
-1,134,846.95
-1,134,846.95

-45.60 0.00
-45.60
-45.60

0.00 93,918.92
93,918.92
122,512.10

1,042,958.19

0.00

0.00

0.00

Budget Unit Totals

$

2,177,850.74 $

-1,134,846.95 $

-45.60 $ 122,512.10 $

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 24 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2014
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

0.00 $

0.00 $

0.00 $

28,593.18 $

0.00 $

28,593.18 $

28,593.18

0.00 116,441.15
116,441.15
116,441.15

-2,955.00 0.00
-2,955.00
-2,955.00

7,628.79 1,493,465.58
1,501,094.37
1,501,094.37

4,673.79 1,703,825.65
1,708,499.44
1,737,092.62

0.00 1,617,448.37
1,617,448.37
1,617,448.37

4,673.79 86,377.28
91,051.07
119,644.25

4,673.79 1,703,825.65
1,708,499.44
1,737,092.62

-116,441.15

0.00

0.00

926,517.04

926,517.04

0.00

926,517.04

0.00 $

-2,955.00 $

1,501,094.37 $ 2,663,609.66 $ 2,543,965.41 $

119,644.25 $ 2,663,609.66

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Ending Fund Balance - June 30

$ 104,058.27 567,461.48 555,455.82 926,517.04 390,472.80
$
$ 2,543,965.41 $

$ 104,058.27 567,461.48 555,455.82 926,517.04 390,472.80

119,644.25

119,644.25

119,644.25 $ 2,663,609.66

- 25 -

FORT VALLEY STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.

Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")

$

2,663,609.66

Amounts reported for Business-Type Activities in the Statement of Net Position are different because:

Capital Assets used in Business-Type Activities are not reported in the Budget Fund.

152,632,763.49

Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position.

-926,517.04

Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity

$ 1,329,786.00 -1,329,786.00

0.00

Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity

$

-893,738.83

-1,729,969.19

-2,623,708.02

Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity

$ 1,582,273.58 0.00

1,582,273.58

Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity

$ 1,450,557.79 0.00

1,450,557.79

Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity

$

308,079.55

-11,847.07

296,232.48

The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Accounts Receivable items reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Payables for goods and services provided in the current fiscal year reported in the Budget Fund as encumbrances payable are reported as accounts payable for GAAP reporting. Total Net Effect of Encumbrance Activity

$ 9,409,411.55 -5,351,224.81
-148,614.26

3,909,572.48

Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Capital Leases Payable Compensated Absences Payable Contracts Payable Total Liabilities

$ -82,602,505.89 -2,145,504.23 -68,054.79

-84,816,064.91

Unidentified Variance

13,616.49

Net Position of Business-Type Activities (Exhibit "A")
The supplementary information presented on Schedules 1, 2, 3 and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
- 26 -

$ 74,182,336.00

FORT VALLEY STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2014

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2014 June 30, 2013
Compensated Absences June 30, 2014 June 30, 2013
Adjustments Shared Services on Jointly Staffed Personnel Columbus State University Anderson, Shae Georgia Southern University Moore, Teah Kennesaw State University Grimes, Jamie
Unidentified Variance

SALARIES

$

29,433,273 $

TRAVEL 561,462

100,968 -229,270

1,993,037 -2,020,244

-5,500 -3,000 3,230 6,284

$

29,278,777 $

561,462

- 27 -

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FORT VALLEY STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-533-12-01

Partially Resolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number: FS-533-12-01

The University will conduct a review of all roles and the access they provide for each user on a quarterly basis. Any appropriate access will be removed as needed.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

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

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

Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-533-14-01 Deficiencies in Controls over Financial Reporting

Control Category: Internal Control Impact:

Financial Reporting Significant Deficiency

Description: The University's accounting procedures were insufficient to provide for adequate internal control over the preparation of the financial statements.

Criteria: A system of internal control over financial reporting does not stop at the general ledger. Management is responsible for implementing a system of internal control over the preparation of financial statements prepared in accordance with generally accepted accounting principles (GAAP). Additionally, the University is required to annually submit GAAP basis financial statements for inclusion in the State of Georgia's Comprehensive Annual Financial Report and the State of Georgia's Single Audit Report. In addition, the University is required to annually submit budget basis financial statements for inclusion in the State of Georgia's Budgetary Compliance Report.

Condition: Numerous errors were noted during our review of the University's GAAP basis financial statements, budget basis financial statements and Schedule of Expenditures of Federal Awards. Some of the errors are listed below:

1. The University's Statement of Cash Flows contained significant errors.

a) The University overstated the amount of purchases of capital assets by $890,525.

b) The University understated the amount of capital gifts and grants received by $697,472.

c) The University overstated the amount for payments to suppliers by $193,053.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
d) The University erroneously included $476,294 as noncash gift of capital assets reducing proceeds of capital gifts and grants.
e) The University overstated the amount of operating income on the reconciliation of operating loss to net cash used by operating activities by $193,053.
2. The University could not provide a reconciled budget to GAAP statement.
3. The University understated net invested in capital assets by $439,228.
4. The University understated uncollectible accounts receivable by $259,070.
5. The University overstated interest payable by $592,993.
6. The University understated Federal accounts receivable by $365,702.
7. The University omitted $678,141 in bank balances from the deposit and investment note disclosure.
8. Additions to lease obligations reported in the University's long-term liabilities note disclosure were overstated by $390,153.
Cause: In discussing this deficiency with the University, management indicated that the cause was due to personnel changes within business and finance and the loss of one position in the accounting services office during fiscal year 2014. This caused a breakdown in the recording, approval and review of yearend journal entries and the preparation of financial statements.
Effect of Potential Effect: Significant misstatements were included in the financial statements presented for review. In addition, the lack of controls and monitoring could impact the reporting of the University's financial position and results of operations.
Recommendation: The University should review the accounting controls and procedures currently in place, identify weaknesses, and design and implement procedures necessary to strengthen controls over the preparation of the financial statements.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University will review the accounting controls and procedures and make improvements to address identified weaknesses. The University will properly assign duties, as well as providing one-on-one training, to ensure personnel understand the processes relative to financial reporting. The University will conduct weekly meetings with personnel involved in the yearend closeout and financial reporting during the months of June and July to improve the financial reporting process.
Contact Person: Lynn Hobbs, VP of Business and Finance Telephone: (478) 825-6374; Fax: (478) 825-1963; E-mail: hobbsl@fvsu.edu
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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-533-14-01 Weaknesses in Logical Access IT General Controls

Compliance Requirement:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Activities Allowed or Unallowed Eligibility Significant Deficiency N/A U. S. Department of Education 84.SFA Student Financial Assistance Cluster Program

Description: University policies and procedures were insufficient to provide adequate internal controls over logical access IT general controls.

Criteria: Management of the University is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly processed and reported.

Condition: Our review of the established internal control structure associated with significant financial applications at the University revealed design and operating effectiveness deficiencies in logical access controls intended to protect financial and student financial assistance information from unauthorized access, manipulation and corruption.

The details related to these deficiencies have been provided to University Management in accordance with Official Code of Georgia Annotated 50-6-9.

Cause: In discussing these deficiencies with the University, management stated that the cause was directly related to ineffective policies and failure to adequately monitor general security settings and user access to the financial application.

Effect or Potential Effect: Failure to maintain adequate internal controls related to logical access increases the risk that misappropriation of assets, fraud, errors, irregularities and/or noncompliance with Federal regulations could occur.

Recommendation: Management should review and enhance their policies and procedures to ensure the integrity and accuracy of the information used within the financial statements and as part of awarding financial assistance to students. Additionally, management should ensure proper separation of duties as it relates to financial and student financial assistance processes.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University will review the policies and procedures relative to access controls and will ensure that all personnel involved in the review of access is aware of the requirements of their review to include the review for proper separation of duties.

Contact Person: Melissa Lee, Controller Telephone: (478) 827-3017; Fax: (478) 825-1963; E-mail: leem@fvsu.edu

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-533-14-02 Excessive Cash Balances

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Cash Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University maintained excessive cash balances related to the Federal Direct Loan Program.

Criteria: Provisions included in 34 CFR 668.163 and 668.166 provide requirements for maintaining and accounting for funds and excess cash, respectively.

Condition: Upon review of cash drawdowns and disbursements related to the Federal Direct Loan Program, excessive cash balances were noted for nine days in the fiscal year. Provisions included in 34 CFR 668,166(a)(1), "The Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Secretary."

Questioned Cost: N/A

Cause: In discussing these deficiencies with management, they stated that University personnel incorrectly drew down Federal Direct Loan Program funds and returned the funds when the error was discovered. However, the error was not discovered in a timely manner.

Effect or Potential Effect: The University was not in compliance with Federal regulations concerning the disbursement of Federal Direct Loan Program funds and excess cash.

Recommendation: The University should establish procedures to ensure that Federal Direct Loan Program funds are disbursed within three business days of the receipt of such funds. The University should only request Federal Direct Loan Program funds when the amounts are immediately needed to disburse funds to students or parents. Additionally, the University should develop and implement a monitoring process to ensure that controls are properly implemented. The University should also contact the U.S. Department of Education regarding resolution of this finding.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University will review the policies and procedures relative to cash monitoring and will ensure that the personnel involved in the review is aware of the time requirements of the review. The University will contact the Department of Education as appropriate.

Contact Person: Melissa Lee, Controller Telephone: (478) 827-3017; Fax: (478) 825-1963; E-mail: leem@fvsu.edu

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-533-14-03 Overpayment of Student Financial Assistance

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Eligibility Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University's Student Financial Assistance Office improperly determined the financial need of eligible students.

Criteria: Provisions included in 34 CFR 668 provide general provisions for administering Student Financial Assistance (SFA) programs and 34 CFR 674, 675, 676, 685, and 690 provide eligibility and other related program requirements that are specific to the Federal Perkins Loan Program, Federal WorkStudy program, Federal Supplemental Educational Opportunity Grant (SEOG), Federal Direct Loan Program, and Federal Pell Grant Program, respectively.

Condition: A sample of 60 financial assistance files was selected to determine if financial assistance was properly calculated and disbursed to eligible students. The following deficiencies were noted:

1. Six students in the sample received Direct Unsubsidized Student Loans before the Subsidized need-based loan limit was reached.

2. Three students in the sample received additional funds from outside sources that were not included in other resources available to the student in the calculation of need.

3. One student in the sample was eligible to receive $298.00 more in Pell Grant funds based upon their attempted credit hours and Expected Family Contribution than they actually received.

4. One student in the sample was 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 is eligible to receive financial assistance under Title IV programs if satisfactory academic progress (SAP) is maintained. The student failed to meet the quantitative requirement of satisfactory academic progress, which resulted in SFA over disbursements totaling $10,143.00.

5. One student in the sample was not in compliance with the University's published SAP policies. SFA funds were disbursed to the student prior to the SAP review. Later in the semester, the student was required to submit a SAP appeal form, which was approved. However, these activities should have occurred prior to the disbursement of SFA funds.

Questioned Cost: Questioned costs of $10,143.00, with likely questioned costs of $543,582.73, were identified for the students who received student financial assistance in excess of their eligible need.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Cause: In discussing these deficiencies will management, they stated that there was inadequate monitoring of processes related to SAP and student financial aid eligibility determination.

Effect or Potential Effect: The University was not in compliance with Federal regulations concerning awarding of SFA funds to students.

Recommendation: The University should review its processes and procedures for determining each student's financial aid eligibility. Where vulnerable, the University should develop and/or modify its policies and procedures to ensure that correct amounts will be awarded to students in conformity with financial need requirements. Additionally, the University should develop and implement a monitoring process to ensure that controls are properly implemented. The University should also contact the U.S. Department of Education regarding resolution of this finding.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University has changed leadership in the financial aid office. The new leadership will review the processes and procedures relative to determining each student's financial aid eligibility and will make appropriate modifications for any weaknesses noted and will ensure that monitoring controls are in place. The University will contact the Department of Education as appropriate.

Contact Person: Cynthia Parks, Director of Financial Aid Telephone: (478) 825-6605; Fax: (478) 825-6976; E-mail: parksc@fvsu.edu

FA-533-14-04 Undocumented Cost of Attendance Budgets

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Eligibility Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University's Student Financial Aid Office failed to document the procedures used to establish their Cost of Attendance budgets.

Criteria: Provisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs.

Condition: Upon review of the University's Cost of Attendance (COA) budgets, it was noted that University personnel could not provide supporting documentation or explanations for the calculation of several components of the COA budgets, including Books and Supplies, Personal Expenses and Transportation. Additionally, University personnel could not explain an inconsistency noted in the comparison of the Room and Board component of the Undergraduate Resident and Non-Resident COA budgets.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Questioned Cost: N/A

Cause: In discussing these deficiencies will management, they stated that due to turnover in the SFA Office, the University could not locate documentation for the procedures used in calculating COA budget components or determine if this documentation initially existed.

Effect or Potential Effect: The University was not in compliance with Federal regulations concerning the COA budgets used as the basis for determining SFA eligibility. The COA is the cornerstone of establishing a student's financial need and sets a limit on the total aid a student may receive. If the estimated costs used for components in the COA budget are unreasonable and do not represent average costs for students at the University, a majority of the student population may have been significantly overawarded.

Recommendation: The University should reevaluate the components used in the COA budgets and document that these costs represent average costs for students enrolled at the University. The University should modify its procedures to ensure that any future changes to the COA budgets are reasonable and based on documented average costs for students. The University should also contact the U.S. Department of Education regarding resolution of this finding.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University has changed leadership in the financial aid office. The new leadership will review the processes and procedures relative to determining the cost of attendance and will maintain documentation. The University will contact the Department of Education as appropriate.

Contact Person: Cynthia Parks, Director of Financial Aid Telephone: (478) 825-6605; Fax: (478) 825-6976; E-mail: parksc@fvsu.edu

FA-533-14-05 Failure to Comply with Federal Work-Study Earmarking Requirements

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Matching, Level of Effort, Earmarking Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University failed to use at least seven percent of the sum of its initial and supplemental Federal Work-Study (FWS) allocations for an award year to compensate students employed in community service activities.

Criteria: Provisions included in 34 CFR 675.18 provide requirements for the use of FWS Program funds.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: Our review of expenditures related to the FWS Program, noted that the proper amount was not expended for community service activities. The FWS amount authorized for the University was $408,525.00. Seven percent of the authorization is $28,596.75. The University expended $20,508.61 for community service activities. The University should have expended an additional $8,088.14 for community service activities to be in compliance with Federal regulations. Questioned Cost: $8,088.14 Cause: In discussing these deficiencies with management, they stated that the noncompliance occurred as a result of inadequate monitoring of FWS community service activities. Effect or Potential Effect: The University was not in compliance with Federal regulations concerning the use of FWS Program funds. Recommendation: The University should establish procedures to ensure that the proper amount of FWS Program funds is expended for community service activities. Additionally, the University should develop and implement a monitoring process to ensure that controls are properly implemented. The University should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University will review the processes and procedures relative to documenting, expending and monitoring the community service activities of the Federal Work Study Program to include all appropriate community service activities. The University will contact the Department of Education as appropriate. Contact Person: Cynthia Parks, Director of Financial Aid Telephone: (478) 825-6605; Fax: (478) 825-6976; E-mail: parksc@fvsu.edu
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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-533-14-06 Return of Title IV Funds

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: The University did not properly perform the refund process to ensure that unearned Title IV funds were returned in a timely manner.

Criteria: 34 CFR 668.22 provides requirements over the treatment of Title IV funds when a student withdraws. The University is required to determine the amount of Title IV grant that the student earned as of the student's withdrawal date when a recipient of a Title IV grant withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance. A refund must be returned to Title IV programs when the total amount of Title IV grant or loan assistance that was disbursed to the student as of the withdrawal date.

Condition: Twenty-five students who received Federal financial assistance for the Fall 2013 and Spring 2014 semesters and withdrew from the University were selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student in a timely manner. Our examination revealed the following deficiencies:

1. The refund calculation for six students who withdrew during the Fall 2013 semester and seven students who withdrew during the Spring 2014 semester was calculated incorrectly due to the deduction of the improper number of scheduled break days and/or the use of the incorrect withdrawal date. Five of these students were requested to return $5,131.27 less than the required amount to various SFA programs and eight of these students were requested to return $4,418.07 more than the required amount to various SFA programs. Additionally, the proration between the school and student portion of the refund was incorrect for three students who withdrew during the Fall 2013 semester and seven students who withdrew during the Spring 2014 semester as a result of these errors.

2. Funds were not returned to the appropriate grantor programs within the required time frame of 30 days after the semester ended for four of the 11 unofficially withdrawn students tested.

Questioned Cost: Questioned costs of $5,131.27, with likely questioned costs of $35,264.26, were identified for refunds calculated incorrectly.

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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Cause: In discussing these deficiencies with management, they stated that the miscalculation of refund amounts occurred because several students' withdrawal dates were entered into accounting system incorrectly and scheduled break days were not properly set up in the Return of Title IV calculation module. Additionally, internal procedural errors led to the untimely return of funds to the appropriate grantor programs.
Effect or Potential Effect: The Student Financial Assistance Office did not calculate the correct amount of refunds for the Title IV Federal program and did not apply the SFA refunds to the Title IV Federal programs in a timely manner.
Recommendation: The University should develop and implement procedures to ensure that student financial aid refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments 1998, Public Law 105-244. The University should also contact the U.S. Department of Education regarding resolution of this finding.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The University has reviewed the processes and procedures relative to calculating the return of Title IV funds. Individual training has occurred with responsible personnel. The University will contact the Department of Education as appropriate.
Contact Person: Cynthia Parks, Director of Financial Aid Telephone: (478) 825-6605; Fax: (478) 825-6976; E-mail: parksc@fvsu.edu
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
Private Purpose Venture Not Self-Liquidating Observation: The University's Stadium/SAC private purpose venture (PPV) was not self-liquidating during the year under review. The PPV did not cover all of the costs associated with the corresponding capital lease payments and the maintenance of the project and had a net loss of $487,906.35 for the year.
Recommendation: Management should ensure that the revenue stream associated with the project is sufficient to pay the principal and interest payments of the debt as well as the cost of maintaining, repairing and operating the project.
Fiscal Operations and Application to Participate (FISAP) Reporting Observation: All amounts reflected on the Fiscal Operations and Application to Participate (FISAP) report were not accurately completed and supported by the accounting records. Several amounts reported by the University did not agree to the accounting records. Additionally, supporting documentation was not maintained for one balance reflected on the FISAP report.
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FORT VALLEY STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) Recommendation: The University should implement policies and procedures to ensure that all reports submitted to the U.S. Department of Education are accurate and adequately supported by appropriate documentation. Untimely Enrollment Reporting Observation: Our testing of 15 students who withdrew during the Fall 2013 and Spring 2014 semesters revealed that all of the students' withdrawn enrollment statuses were reported to the National Student Loan Data System (NSLDS) in an untimely manner. Additionally, two students' withdrawn enrollment statuses were never reported to NSLDS. Recommendation: The University should implement policies and procedures to ensure that all changes in student enrollment statuses are reported in a timely manner. Failure to Obtain Written Agreements with Non-Institutional Employer Observation: University personnel failed to enter into a written agreement with a non-institutional employer providing employment under the Federal Work-Study Program. Recommendation: The University should implement policies and procedures to ensure that written agreements with noninstitutional Federal Work-Study Program employers are obtained and contain the appropriate information as required by 34 CFR 675.20.
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