GAINESVILLE STATE COLLEGE
GAINESVILLE, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2012
A Member Institution of the University System of Georgia
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

GAINESVILLE STATE COLLEGE - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET ASSETS - (GAAP BASIS)
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (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 SALARIES AND TRAVEL

Page
2 3 4 5
20 21 22 24 27

SECTION II 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
October 11, 2012

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 Randy Pierce, Interim President Gainesville State College
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, 2012, we have performed certain audit procedures at Gainesville State College. Accordingly, the financial statements and compliance activities of Gainesville State College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Gainesville State College as of and for the year ended June 30, 2012. 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 Gainesville State College, 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 -

GAINESVILLE STATE COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30, 2012
ASSETS
Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Capital Assets, Net (Note 4)
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Deferred Revenue (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 ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Expendable Unrestricted
Total Net Assets

EXHIBIT "A"

$

12,014,273

1,971,785

34,709 523,644 602,109
50,307

$

15,196,827

74,340,271

$

89,537,098

$

388,554

984,955

114,288

390,027

693,092

$

2,570,916

$

11,786,821

561,308

$

12,348,129

$

14,919,045

$

62,163,423

102,794 12,351,836

$

74,618,053

- 2 -

GAINESVILLE STATE COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2012
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Sales and Services of Educational Departments Auxiliary Enterprises
Bookstore Food Services Parking/Transportation Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Other Gifts Interest and Other Investment Income Interest Expense Other Nonoperating Revenues/Expenses
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Increase in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXHIBIT "B"

$

26,889,246

-5,469,537

690,096

2,344,152 5,563
1,338,865 45,702
392,124

$

26,236,211

$

14,725,233

11,967,196

7,392,181

188,751

297,836

9,707,862

1,201,712

12,124,217

3,284,250

$

60,889,238

$

-34,653,027

$

18,719,950

15,181,013 34,524 48,681
469,757 33,542
-604,428 -1,303

$

33,881,736

$

-771,291

$

35,561,495

63,650

$

35,625,145

$

34,853,854

39,764,199

$

74,618,053

- 3 -

GAINESVILLE STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Auxiliary Enterprise Charges: Bookstore Food Services Parking/Transportation Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Gifts and Grants Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Maturities of Investments Interest on Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable Inventories Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts
- 4 -

EXHIBIT "C"

$

20,190,905

690,096

-21,210,642

-26,741,264

-9,707,862

2,614,579 5,563
1,333,163 45,702
409,502

$

-32,370,258

$

18,719,950

-180,726

15,733,975

$

34,273,199

$

1,985,527

-255,781

-373,456

-604,428

$

751,862

$

4,129

33,542

$

37,671

$

2,692,474

9,321,799

$

12,014,273

$

-34,653,027

3,284,250
346,004 -1,155
330,481 -367,277 -1,459,929
-4,870 155,265

$

-32,370,258

$

35,625,145

GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Gainesville State College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Gainesville State College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Gainesville State College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Gainesville State College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
On January 10, 2012, based on the Chancellor's recommendation, the Board of Regents voted to consolidate certain institutions of the University System of Georgia to enhance and improve educational offerings and student success. All final determinations regarding consolidations will be made by the Board, in consultation with the Chancellor. On January 1, 2013, Gainesville State College will merge with North Georgia College and State University to form the University of North Georgia.
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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets and cash flows.
BASIC OF ACCOUNTING For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph. Under the accrual basis, revenues, are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-College transactions have been eliminated.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
NET ASSETS The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Gainesville State College and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $944.36. 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.
CHANGE IN APPLICATION OF ACCOUNTING PRINCIPLE During fiscal year 2012, Gainesville State College changed its method of accounting for summer school revenues and expenses to more accurately reflect periodic results of operations between fiscal years. Beginning net assets were not restated due to lack of materiality and time and effort considerations. Therefore, the effects of the change are prospectively applied reflecting a net increase of revenues over expenses of $1,083,532 in fiscal year 2012.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Gainesville State College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, 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.

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

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, 2012, the carrying value of deposits was $13,957,090 and the bank balance was $14,916,733. Of the College's deposits, $14,066,733 was uninsured. Of these uninsured deposits, $535,000 were collateralized with securities held by the financial institution's trust department or agent in the College's name, $13,531,733 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2012.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal, State and Private Funds

Other

334,951 8,364
34,709 316,961

Less Allowance for Doubtful Accounts Net Accounts Receivable

$

694,985

136,632

$

558,353

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the College's capital assets for the year ended June 30, 2012:

Beginning Balance July 1, 2011

Additions

Reductions

Ending Balance June 30, 2012

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

$

1,622,731 $

596,508

0

$

1,622,731

$

596,508

0

Total Capital Assets, Not Being Depreciated $

2,219,239 $

0$

596,508 $

1,622,731

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

$

1,049,233

40,014,149 $

36,221,653

2,450,262

3,187,468

156,524 $

13,027,696

2,204,207

102,898

$
261,716 68,038

1,049,233 76,235,802
2,450,262 3,082,276 13,027,696 2,239,067

Total Assets Being Depreciated

$

61,933,015 $

36,481,075 $

329,754 $

98,084,336

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

$

311,864 $

15,707,975

1,306,567

2,201,658

1,001,966

1,877,328

-113,814 2,198,195
76,053 311,891 $ 725,579
86,346

$
223,147 33,627 68,038

198,050 17,906,170
1,382,620 2,290,402 1,693,918 1,895,636

Total Accumulated Depreciation

$

22,407,358 $

3,284,250 $

324,812 $

25,366,796

Total Capital Assets, Being Depreciated, Net $

39,525,657 $

33,196,825 $

4,942 $

72,717,540

Capital Assets, Net

$

41,744,896 $

33,196,825 $

NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2012.

601,450 $

74,340,271

Prepaid Tuition and Fees Other Deferred Revenue
Total Deferred Revenue

$

855,870

129,085

$

984,955

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES The College's Long-Term liability activity for the year ended June 30, 2012 was as follows:

Beginning Balance July 1, 2011

Additions

Reductions

Ending Balance June 30, 2012

Current Portion

Leases Lease Obligations

$ 12,550,304

$

373,456 $ 12,176,848 $

390,027

Other Liabilities Compensated Absences

1,099,135 $

836,812

681,547

1,254,400

693,092

Total Long-Term Obligations

$ 13,649,439 $

836,812 $ 1,055,003 $ 13,431,248 $

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2012 are as follows:

1,083,119

Beginning Balance July 1, 2011

Additions

Reductions

Ending Balance June 30, 2012

Invested in Capital Assets Net of Related Debt

$

29,194,592 $ 35,884,567 $

2,915,736 $

62,163,423

Restricted Net Assets

-1,194

15,122,983

15,018,995

102,794

Unrestricted Net Assets

10,570,801

45,600,695

43,819,660

12,351,836

Total Net Assets

$

39,764,199 $ 96,608,245 $ 61,754,391 $

74,618,053

NOTE 8: LEASE OBLIGATIONS

Gainesville State College 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 2012 and 2040. Expenses for fiscal year 2012 were $977,884 of which $604,428 represented interest. Total principal paid on capital leases was $373,456 for the fiscal year ended June 30, 2012. Interest rates range from 3.995 percent to 5.952 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2012:

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

Description

Infrastructure

$

Buildings

Total Assets Held Under Capital Lease

at June 30, 2012

$

Outstanding

Net Assets Held

Balances

Under Capital

per Lease

Accumulated

Lease at

Schedules at

Gross Amount

Depreciation

June 30, 2012

June 30, 2012

(+)

(-)

(=)

5,367,608 $

-322,056 $

5,045,552 $

5,529,056

7,660,088

-1,371,862

6,288,226

6,647,792

13,027,696 $ -1,693,918 $ 11,333,778 $ 12,176,848

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.
Gainesville State College had two capital leases with related entities in the current fiscal year. The outstanding liability at June 30, 2012, on these capital leases is $12,176,848. The capital leases are for the Athens Center-Oconee County Campus and the Parking Deck structure.
FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) as of June 30, 2012, were as follows:

Capital Leases

Year Ending June 30: 2013 2014 2015 2016 2017 2018 - 2022 2023 - 2027 2028 - 2032 2033 - 2037 2038 - 2040

$

1,006,534

1,010,224

1,012,869

1,012,869

1,012,869

5,074,792

5,138,134

2,594,442

2,357,107

1,455,085

Total Minimum Lease Payments

$ 21,674,925

Less: Interest Less: Executory Costs (if paid)

8,245,630 1,252,447

Principal Outstanding

$ 12,176,848

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
Gainesville State College 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 Gainesville State College 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 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). Members of the GSEPS plan may also participate in the GSEPS 401(k) defined contribution component described below. ERS members hired prior to January 1, 2009, also have the option to irrevocably 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

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

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, Gainesville State College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Gainesville State College 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. Gainesville State College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Gainesville State College contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions required for fiscal year 2012 were based on the June 30, 2009 actuarial valuation as follows:

Old Plan* New Plan GSEPS

11.63% 11.63%
7.42%

* 6.88% 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.

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

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, 2012, were 5.53% of annual salary. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009, actuarial valuation.

The following table summarizes the Gainesville State College contributions by defined benefit plan

for the years ending June 30, 2012, June 30, 2011, and June 30, 2010 (dollars in thousands):

ERS

TRS

Required

Percentage

Required

Percentage

Fiscal Year

Contribution Contributed Contribution Contributed

2012

$

2011

$

2010

$

Regents Retirement Plan

3,163 1,553
0

100% 100% 100%

$ 1,613,782 $ 1,501,855 $ 1,328,803

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 Gainesville State College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2012, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

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GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

Gainesville State College and the covered employees made the required contributions of $596,969 (9.24%) and $323,035 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Gainesville State College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 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 2012 amounted to $145,765 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 three different selfinsured healthcare plan options. Effective January 1, 2012, The Blue Cross Blue Shield of Georgia PPO and HDHP plan names were changed to BCBS Open Access PPO and HAS/HDHP Open Access POS, respectively; both plans use the Blue Cross Blue Shield Open Access POS network. Also effective January 1, 2012, the Consumer Choice Option was eliminated and the Blue Cross Blue Shield of Georgia HMO and the Kaiser Permanente HMO were frozen for new enrollment for active employees only; the Senior Advantage Plan 65+ remained open for new enrollment.
Gainesville State College and participating employees and retirees pay premiums to either of the self-insured 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

- 14 -

GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

considered to be a self-sustaining 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. College, as an organizational unit of the 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 Gainesville State College expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Gainesville State College (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012.
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

- 15 -

GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2011 and 2012 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2012, there were 115 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2012, Gainesville State College recognized as incurred $519,386 of expenditures, which was net of $231,244 of participant contributions.
NOTE 13: AFFILIATED ORGANIZATIONS
The Gainesville State College Foundation, Inc., and the Gainesville State College Real Estate Foundation are legally separate, tax exempt organizations whose activities primarily support Gainesville State College. These affiliated organizations are considered potential component units of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of these affiliated organizations are not included in these financial statements. Copies of the financial statements for the affiliated organizations may be obtained from Gainesville State College.
NOTE 14: SUPPLEMENTARY INFORMATION
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 comprehensive basis of accounting other than generally accepted accounting principles. 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.

- 16 -

GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2012

EXHIBIT "D"

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

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

$ 1,351,749.77

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

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

74,340,271.00

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 Assets.

-136,632.12

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

$

748,002.17

-680,146.58

67,855.59

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

$ 7,621,725.98 -89,132.61

7,532,593.37

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

$

485,032.87

0.00

485,032.87

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 Assets. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Reimbursement from grantors reported as revenues in the Budget Fund that are for expenditures based on encumbrances are deferred for GAAP reporting. Total Net Effect of Encumbrance Activity

$ 4,192,341.98 216,088.79

4,408,430.77

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 Total Liabilities

$ -12,176,848.00 -1,254,400.00

-13,431,248.00

Rounding

-0.25

Net Assets of Business-Type Activities (Exhibit "A")

$ 74,618,053.00

- 17 -

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SUPPLEMENTARY INFORMATION - 19 -

GAINESVILLE STATE COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2012
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Encumbrances Payable Accounts Payable Deferred Revenue Funds Held for Others
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

4,180,842.82

1,572,785.27

34,708.70 691,514.57
50,307.48

$

6,530,158.84

$

4,192,341.98

21,415.33

961,568.66

3,083.10

$

5,178,409.07

$

339,337.41

109,787.10

109,833.47

102,794.24

136,632.12

552,371.07

994.36

$

1,351,749.77

$

6,530,158.84

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 20 -

GAINESVILLE STATE COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2011
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

18,758,683.00 $

18,758,683.00 $

0.00

43,759,729.00

42,247,554.19

-1,512,174.81

$

62,518,412.00 $

61,006,237.19 $

-1,512,174.81

0.00

0.00

0.00

0.00

1,009,942.48

$

62,518,412.00 $

62,016,179.67 $

1,009,942.48 -502,232.33

$

62,518,412.00 $

60,674,177.92 $

$

0.00 $

1,342,001.75 $

1,844,234.08 1,342,001.75

1,131,307.71 38,732.79

-9,226.22 -102,390.99

-38,732.79 -1,009,942.48

$

1,351,749.77

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

$

339,337.41

109,787.10

109,833.47

102,794.24

136,632.12

552,371.07

$

1,350,755.41

994.36

Total Fund Balance
Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 21 -

$

1,351,749.77

GAINESVILLE STATE COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2012

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

19,141,513.00 $ 19,141,513.00 $

18,758,683.00 $ 18,758,683.00

37,791,134.00

37,791,134.00

43,759,729.00 42,247,554.19

$

56,932,647.00 $ 56,932,647.00 $

62,518,412.00 $ 61,006,237.19

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 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 (Deficiency) of Funds Available
Over/(Under) Expenditures

$

0.00 $

1,009,942.48

94,921.94 $ 18,853,604.94 $ -94,921.94 43,162,574.73

94,921.94 $ 18,850,235.74 $

-597,154.27

41,823,942.18

-91,552.74 $ 1,935,786.82

3,369.20 1,338,632.55

$ 1,009,942.48 $

0.00 $ 62,016,179.67 $

-502,232.33 $ 60,674,177.92 $

1,844,234.08 $

1,342,001.75

- 23 -

GAINESVILLE STATE COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2012

Teaching State Appropriation State General Funds Other Funds
Total Teaching
Prior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable

Beginning Fund Balance/(Deficit)
July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2011
Surplus

Prior Period Adjustments

$

0.00 $

1,048,675.27

$

1,048,675.27 $

0.00 $ -1,009,942.48
-1,009,942.48 $

121,365.23

0.00

0.00 $ -38,732.79

-3,369.20 -108,248.01

-38,732.79 $ -111,617.21

0.00

0.00

Budget Unit Totals

$

1,170,040.50 $

-1,009,942.48 $

-38,732.79 $ -111,617.21

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 24 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2012
Surplus

Excess (Deficiency) of Funds Available
Over/(Under) Expenditures

Ending Fund Balance/(Deficit)
June 30

Analysis of Ending Fund Balance

Reserved

Surplus/(Deficit)

Total

$

0.00 $

-15,266.89

$

-15,266.89 $

15,266.89

$

0.00 $

0.00 $ 0.00
0.00 $

3,369.20 $ 1,338,632.55
1,342,001.75 $

0.00 $ 1,215,117.65

0.00 $ 1,214,123.29

1,215,117.65 $ 1,214,123.29 $

0.00 $ 994.36

0.00 1,215,117.65

994.36 $ 1,215,117.65

0.00

0.00

136,632.12

136,632.12

0.00

136,632.12

0.00 $

1,342,001.75 $

1,351,749.77 $ 1,350,755.41 $

994.36 $ 1,351,749.77

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

$

339,337.41

109,787.10

109,833.47

102,794.24

136,632.12

552,371.07

$

$ 1,350,755.41 $

$

339,337.41

109,787.10

109,833.47

102,794.24

136,632.12

552,371.07

994.36

994.36

994.36 $ 1,351,749.77

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GAINESVILLE STATE COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2012

SCHEDULE "5"

Totals per Annual Supplement
Accruals June 30, 2011
Prepaid June 30, 2011
Compensated Absences June 30, 2012 June 30, 2011
Adjustments Shared Services on Jointly Staffed Personnel Georgia State University Vines, Anthony Clark University of Georgia Durham, Katie Gresham, Ashley Hagood, Samatha Jimenez, Elizabeth Parks, Rodney Sale, Jennifer Zwillich, Paula
Rounding

SALARIES $ 26,348,322.15 $

TRAVEL 297,835.88

-175,693.74

308,918.06

1,165,257.90 -1,021,026.64

7,200.00
11,735.10 2,583.60 4,986.35
11,735.10 12,918.00
3,758.00 11,735.10
0.02

0.12

$ 26,692,429.00 $

297,836.00

- 27 -

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

GAINESVILLE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2012
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
Budgetary Over-expenditure The approved budget of the College provided for expenditures totaling $62,518,412.00. A comparison of anticipated funds available and expenditures by budgetary program and funding source indicated that State Appropriations in the Teaching program were overspent by $91,552.74. We recommend that the College closely monitor their internal control procedures over budget operations to prevent expenditure of funds in excess of budget approval.
Misclassification of Accounts Receivable and Accounts Payable A review of accounts payable revealed negative balances which should have been reported as accounts receivable on the College's Annual Financial Report (AFR). An immaterial misstatement in the amount of $370,074.48 was not corrected for these errors.
Management should review the individual accounts within the financial statements more closely to ensure activity of this nature is appropriately classified.
Unallowable Use of P-cards A review of purchasing card activity revealed transactions that did not follow the guidelines for purchasing card usage as prescribed in the College's Procurement Card (P-Card) Manual. We identified instances of split purchases which circumvented established individual user purchasing limits.
Management should review procedures in place and implement changes necessary to ensure that all purchasing card transactions adhere to the policies and procedures as outlined in its Procurement Card (P-Card) Manual.