Gainesville State College, Gainesville, Georgia, independent accountant's report on applying agreed-upon procedures for the fiscal year ended June 30, 2006

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
I
GAINESVILLE STATE COLLEGE GAINESVILLE, GEORGIA
INDEPENDENT ACCOUNTANTS REPORT ON APPLYING AGREED-UPON PROCEDURES
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Russell W. Hinton State Auditor

GAINESVILLE STATE COLLEGE - TABLE OF CONTENTS -
INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXHIBIT
A BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 1, 2006

Members of the State Board of Regents of the University System of Georgia Honorable Martha T. Nesbitt, President Gainesville State College
Independent Accountant's Report on Applying Agreed-Upon Procedures
Ladies and Gentlemen:
We have performed the procedures enumerated below, which were agreed to by the College and the University System Office (Oversight Unit) of the Board of Regents of the University System of Georgia, solely to assist you in assessing the accuracy of the financial information reported to the University System Office in the College's 2006 Annual Financial Report and Budget Comparison and Surplus Analysis Report. The Budget Comparison and Surplus Analysis Report is attached as Exhibit A. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute ofCertified Public Accountants. The sufficiency of these procedures is solely the responsibility ofthe parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.
1. Review selected balance sheet items reported on the Annual Financial Report (cash, accounts receivable, accounts payable, deferred revenues, net assets). Confirm that these items have adequate supporting documentation and are properly reconciled to the College's general ledger.
We did not note any exceptions as a result of our procedures.
2. Obtain the College's GAAP basis Statement of Net Assets and Statement of Revenues Expenses and Changes in Net Assets (SRECNA) submitted for inclusion in the State's CAFR and Single Audit. Utilizing test scripts, confirm that financial information presented in these statements properly supports activity reported in the College's accounting records.
Nonoperating Federal and State revenues were incorrectly reported on the SRECNA. Federal grant revenues of $11,938.72 were misclassified as State revenues resulting in an overstatement of State revenues and a corresponding understatement of Federal revenues.

Although Net Assets were correctly reported in total on the Statement of Net Assets, the breakdown of Net Assets by individual net asset categories was not correct. Restricted - Expendable Net Assets were overstated by $454,701.00, due to a 2002 GAAP entry not being reversed properly within the financial accounting system. As a result, Unrestricted Net Assets were understated by the same amount.
3. Obtain the College's Statement of Cash Flows submitted for inclusion in the State's CAFR and Single Audit. Utilizing cash flow worksheets, confirm information reported on Statement of Cash Flows.
The College improperly recorded activity related to a donated asset on the Statement of Cash Flows. Payments to Suppliers (Cash Flows from Operating Activities) was understated by $714,565.25 and Purchases of Capital Assets (Cash Flows from Capital and Related Financing Activities) was overstated by a corresponding amount. In addition, the Purchases of Capital Assets, as reported on the Statement of Cash Flows, was not properly reconciled to capital asset additions reported in the Notes to the Financial Statements.
4. Obtain the College's Notes to the Financial Statements submitted for inclusion in the State's CAFR and Single Audit. Utilizing notes worksheets and other supporting documentation confirm that note disclosures related to Cash, Investments, Accounts Receivable, Capital Assets, Long-Term Debt, Lease Obligations and Retirement Plans have been properly reported.
We did not note any exceptions as a result of our procedures.
5. Review the College's year end GAAP basis journal entries. Obtain documentation for GAAP journal entries and confirm that the entries were posted to the College's Annual Financial Report.
We did not note any exceptions as a result of our procedures.
6. Confirm that State Appropriation revenues, receivables and remittances ofprior year surplus balances have been properly recorded in the College's financial records. Prior year surplus balances should be netted against State Appropriation revenues in the GAAP basis financial statements; however, prior year surplus balances should be reflected as fund balance adjustments on the Budget basis financial statements.
We did not note any exceptions as a result of our procedures.
7. Obtain listing ofwrite-offrequests for accounts receivable less than $3,000.00 for fiscal year 2006. Confirm that these write-off requests have been approved by the State Accounting Officer and have been posted to the College's financial statements.
We did not note any exceptions as a result of our procedures.

8. Verify that the listing ofsalaries, travel, and per diem and fees reported to the Department of Audits is in accordance with O.C.G.A. 50-6-27 reconciles to amounts recorded in the College's financial statements.

We did not note any exceptions as a result of our procedures.

9. Review year end Budget Comparison and Surplus Analysis Report (Exhibit A). Confirm that budget information presented in this report supports activity reported in the College's accounting records and determine if any budget overexpenditures exist.

We did not note any exceptions as a result of our procedures.

10. Obtain documentation for Budget basis reserves reported by College on the Budget Comparison and Surplus Analysis Report (Exhibit A). Confirm that the reserves are properly documented, valid and appropriate.

The College's reserves for Restricted/Sponsored Funds were improperly calculated on Exhibit A. The College erroneously recorded two prior year adjusting entries totaling $19,313.05 as reductions to current year revenues which resulted in Restricted/Sponsored funds reporting a deficit fund balance position of $11,309.78 at year end. These entries should have been posted against Accounts Receivable instead of current year revenues and when the corrections were made Restricted/Sponsored funds had a positive fund balance reserve of $8,003.27 at June 30, 2006, as reported on Exhibit A.

11. Review the H.O.P.E. Scholarship Program reconciliation between the College and the Georgia Student Finance Commission. Confirm that information reported to the Georgia Student Finance Commission has been reconciled with H.O.P.E. Scholarship activity reported on the College's financial records.

The College's H.O.P.E. Scholarship Program reconciliation did not reconcile to the College's accounting records as follows:

Report Item

Per Hope Reconciliation

Per Accounting Records

Unreconciled Difference

Cash disbursed

to school

$ 3,932,943.34

$ 3,898,924.00

$ 34,019.34

Amount Awarded

to Students

$ 3,927,954.00

$ 3,898,924.00

$ 29,030.00

These agreed-upon procedures do not constitute an audit of the financial statements or any part thereof, the objective ofwhich is to express an opinion on the financial statements or a part thereof. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~
R ssell W. Hinton, CPA, CGFM State Auditor
RWH:as

EXHIBIT

GAINESVILLE STATE COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
YEAR ENDED JUNE 30, 2006

EXHIBIT"A"

REVENUES
State Appropriation State General Funds
Research Funds Other Funds
Total Revenues
EXPENDITURES
Public Service/Special Funding Initiatives 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 - Administrative Central Office Year Ended June 30, 2005
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 16,055,134.00 $ 16,055,134.00 $

3,133,555.00

3,073,360.37

10,482,917.00

10,372,238.44

$ 29,671,606.00 $ 29,500,732.81 $

0.00 -60,194.63 -110678.56
-170,873.19

$

9,384.00 $

9,384.00 $

29,662,222.00

29,340,746.81

$ 29,671,606.00 $ 29,350,130.81 $

$

0.00 $

150,602.00 $

0.00 321 475.19
321,475.19
150,602.00

58,457.48 5,899.49

-1,871.61

-5 899.49

$

207,187.87

SUMMARY OF FUND BALANCE
Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds

$

118,693.65

9,336.59

71,154.36

8,003.27

Total Fund Balance

$ ==2=0=7'=18=7=.8=7=