REPORT ON AUDIT OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED
JUNE 30, 2013
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

UNIVERSITY OF GEORGIA - TABLE OF CONTENTS -

SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S REPORT
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
EXHIBITS
A STATEMENT OF NET POSITION
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
C STATEMENT OF CASH FLOWS
D NOTES TO THE FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO
BUDGET BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

Page
i
2 3 4 6
28 29 30 34 38 41

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

UNIVERSITY OF GEORGIA - TABLE OF CONTENTS -
SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND MANAGEMENT'S CORRECTIVE ACTION PLAN

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
December 5, 2013

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Jere W. Morehead, President University of Georgia

INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying basic financial statements (Exhibits A through D) of the University of Georgia, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2013.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the University of Georgia's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
13ARL-62

purpose of expressing an opinion on the effectiveness of the University of Georgia's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the University of Georgia as of June 30, 2013, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements of the University of Georgia are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of the University of Georgia. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2013, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
As described in Note 1 to the financial statements, in 2013, the University of Georgia adopted new accounting guidance, GASB Statement No. 63, Reporting Deferred Outflows, Deferred Inflows, and Net Position. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages i through vi be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the University of Georgia. The accompanying supplementary information (Schedules 1 through 6) is presented for purposes of additional analysis and is not a required part of the basic financial statements.
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The accompanying supplementary information (Schedules 1 through 6) is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting or other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully,

GSG:as 13ARL-62

Greg S. Griffin State Auditor

REQUIRED SUPPLEMENTARY INFORMATION

UNIVERSITY OF GEORGIA
Management's Discussion and Analysis

Introduction

The University of Georgia is one of the 31 institutions of higher education of the University System of Georgia. The University of Georgia was incorporated by an act of the General Assembly on January 27, 1785. Georgia became the first state to charter a state-supported university.

The University of Georgia, a land-grant and sea-grant university with state-wide commitments and

responsibilities, is the state's flagship institution of higher education. It is also the state's oldest,

most comprehensive, and most diversified institution of higher education. Its motto, "to teach, to

serve, and to inquire into the nature of things," reflects the University's integral and unique role in the

conservation and enhancement of the state's and nation's intellectual, cultural, and environmental

heritage. As a comprehensive land-grant and sea-grant institution, the University of Georgia offers

baccalaureate, master's, doctoral and professional degrees in the arts, humanities, social sciences,

biological sciences, physical sciences, agricultural and environmental sciences, business,

environmental design, family and consumer sciences, forest resources, journalism and mass

communication, education, law, pharmacy, social work, and veterinary medicine. A comparison of

Faculty and Student numbers follow:

Students

Students

Faculty

(Headcount)

(FTE)

Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011

1,886 1,866 1,822

34,518 34,816 34,677

Overview of the Financial Statements and Financial Analysis

33,119 33,422 33,157

The University of Georgia is pleased to present its financial statements for fiscal year 2013. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses and Changes in Net Position; and the Statement of Cash Flows. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2013 and fiscal year 2012.

Statement of Net Position

The Statement of Net Position presents the assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position of the University as of the end of the fiscal year. The Statement of Net Position is a point-of-time financial statement. The Statement of Net Position presents a fiscal snapshot of the University of Georgia. The Statement of Net Position presents endof-year data concerning assets (current and noncurrent) plus deferred outflows, and liabilities (current and noncurrent) plus deferred inflows, and net position (assets plus deferred outflows minus liabilities plus deferred inflows). The differences between current and noncurrent assets are discussed in the Notes to the Financial Statements.

From the data presented, readers of the Statement of Net Position are able to determine the assets available to continue the operations of the institution and how much the institution owes vendors.

i

Finally, the Statement of Net Position provides a picture of the net position (assets plus deferred outflows of resources minus liabilities plus deferred inflows of resources) and their availability for expenditure by the institution. Net position is divided into three major categories. The first category, net investment in capital assets, provides the institution's equity in property, plant and equipment owned by the institution. The next category is restricted, which is divided into three categories, nonexpendable, expendable and capital projects.
The corpus of nonexpendable, restricted resources is available only for investment purposes. Expendable, restricted resources are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted. Unrestricted resources are available to the institution for any lawful purpose.
Statement of Net Position, Condensed

June 30, 2013

June 30, 2012

Assets Current Assets Capital Assets, Net Other Assets

$ 374,569,087 1,637,202,052 84,621,630

$ 355,517,464 1,548,954,168 84,224,507

Total Assets

$ 2,096,392,769

$ 1,988,696,139

Liabilities Current Liabilities Noncurrent Liabilities

$ 132,412,134 289,022,018

$ 137,046,591 292,121,777

Total Liabilities

$ 421,434,152

$ 429,168,368

Net Position Net Investment in Capital Assets Restricted Nonexpendable Expendable Capital Projects Unrestricted

$ 1,360,617,195
71,829,738 78,265,059
3,749,702 160,496,923

$ 1,269,061,836
66,093,938 74,709,599
6,839,284 142,823,114

Total Net Position

$ 1,674,958,617

$ 1,559,527,771

Total assets increased by $107,696,630 which was primarily due to an increase of $88,247,884 in the category of Capital Assets, Net. The balance of the increase is mainly in cash and investment categories.

ii

Total liabilities decreased for the year by $7,734,216 due to regular payments on the capital lease obligations and a decrease in deposits held for other organizations. The combination of the increase in total assets of $107,696,630 and the decrease in total liabilities yields an increase in net position of $115,430,846. The increase in net position is primarily in the category of Net Investment in Capital Assets, in the amount of $91,555,359.
Statement of Revenues, Expenses and Changes in Net Position
Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Position. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally, operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.
Statement of Revenues, Expenses and Changes in Net Position, Condensed

June 30, 2013

June 30, 2012

Operating Revenues Operating Expenses

$ 779,387,613 1,225,847,104

$ 776,555,476 1,197,134,379

Operating Loss

$ -446,459,491

$ -420,578,903

Nonoperating Revenues and Expenses

463,329,987

436,951,171

Income (Loss) Before Other Revenues, Expenses, Gains or Losses

$

16,870,496

$

16,372,268

Other Revenues, Expenses, Gains or Losses

98,560,350

55,648,371

Increase (Decrease) in Net Position

$ 115,430,846

$

72,020,639

Net Position at Beginning of Year

1,559,527,771

1,487,507,132

Net Position at End of Year

$ 1,674,958,617

$ 1,559,527,771

The Statement of Revenues, Expenses and Changes in Net Position reflect a positive year, with a $115,430,846 increase in net position at the end of the year. Some highlights of the information presented on this statement are as follows:

iii

Revenue by Source For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013

June 30, 2012

Operating Revenue

Tuition and Fees

$

Federal Appropriations

Grants and Contracts

Sales and Services of Educational Departments

Auxiliary

Other

349,901,990 12,573,894
187,351,174 64,735,771
162,159,742 2,665,042

$ 336,782,523 11,807,566
210,682,795 52,484,328
161,574,733 3,223,531

Total Operating Revenue

$ 779,387,613

$ 776,555,476

Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Capital Grants and Gifts State Other
Total Capital Grants and Gifts
Total Revenues

$ 363,084,970 66,654,852 33,258,706 5,443,652 12,635,283
$ 481,077,463

$

27,990,565

70,569,785

$

98,560,350

$ 1,359,025,426

$ 362,412,399 66,515,819 9,869,853 2,631,293 13,576,621
$ 455,005,985

$ 47,226,601 8,421,770

$

55,648,371

$ 1,287,209,832

Expenses (By Functional Classification) For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013

June 30, 2012

Operating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises

$ 264,221,558 316,240,865 153,511,766 90,003,579 40,872,696 74,447,323 119,976,791 20,003,946 146,568,580

$ 258,613,180 316,607,349 152,068,293 88,317,563 41,114,384 68,821,497 109,018,801 20,141,323 142,431,989

Total Operating Expenses

$ 1,225,847,104

$ 1,197,134,379

Nonoperating Expenses Interest Expense (Capital Assets)

17,747,476

18,054,814

Total Expenses

$ 1,243,594,580

$ 1,215,189,193

iv

Operating revenues increased by $2,832,137 in fiscal year 2013 which included $13,119,467 net increase in tuition and fees and a $12,251,443 increase in sales and services. These increases were offset in large part by the $11,252,863 decrease in revenues from Federal Stimulus Funds.
Auxiliary revenues remained stable with a $585,009 increase in revenues.
Nonoperating revenues increased by $26,071,478 for the year primarily due to an increase of $23,388,853 in Gifts. Most of the increase in gifts was related to Foundation and Research Foundation gifts towards construction of the Veterinary Medical Learning Center. These gifts are recognized as nonoperating, rather than capital gifts as GSFIC retains ownership of the Vet Med Learning Center until completion.
Total operating expenses increased by $28,712,725 which included $14,706,201 in employee compensation and benefits and $11,823,788 in supplies and other services.
The $14,706,201 increase in employee compensation and benefits category were primarily in the instruction, institutional support, and auxiliary functions. The increase includes an increased cost of health insurance and retirement contributions for the employees of the University.
Statement of Cash Flows
The final statement presented by the University of Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Position.
Cash Flows for the Years Ended June 30, 2013 and 2012, Condensed

June 30, 2013

June 30, 2012

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -347,515,892 480,949,417 -94,657,096 -89,556

$ -362,337,189 469,476,067 -102,713,994 -8,481,905

Net Change in Cash Cash, Beginning of Year

$

38,686,873

272,613,748

$

-4,057,021

276,670,769

Cash, End of Year

$ 311,300,621

$ 272,613,748

v

Capital Assets
The University had several significant capital asset additions for facilities in fiscal year 2013. The $14.2 million Northwest Precinct Central Utility plant and related infrastructure addition was completed during the year. The $4.3 million Oglethorpe Dining Commons renovation, the $3.5 million Veterinary Medicine Pathology Lab renovation, and the $4.0 million Memorial Hall renovation were all completed as well. The UGA Athletic Association funded a $31.4 million expansion to the Butts-Mehre facility and $8.9 million in renovations to Sanford Stadium.
The Georgia State Financing and Investment Commission (GSFIC) provided funding for $27.9 million for facilities, renovations, and equipment. Of that amount, $5.98 million was for the Northwest Precinct Central Utility plant addition.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements.
Long-Term Liabilities
The University of Georgia had Long-Term Liabilities of $322,164,758 of which $33,142,740 was reflected as current liability at June 30, 2013.
For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements.
Economic Outlook
The national and state economy was officially declared in a recession during 2009, which led to significant decreases in state revenue collections. In response to declining state revenue collections in 2008, 2009, 2010, 2011, and 2012, all state agencies experienced significant budget reductions. The University of Georgia continued to face budget cuts in fiscal year 2013, but was able to manage a 5% cut to the Resident Instruction budget in a way that shielded the University's core academic functions from any direct impacts of this $15 million cut. The following actions by the University and the Board of Regents helped to manage the budget reductions so that core missions would be minimally impacted:
a) the Board of Regents increased undergraduate tuition by $182 per semesterfrom $3,641 per semester to $3,823 (5% increase) for in-state students and from $12,746 to $12,928 (1.5% increase) for out-of-state students,
b) the University further reduced general institutional and noncore academic expenditures, and c) the University continues to implement energy conservation measures to reduce utility costs.
Even though state revenue collections for fiscal year 2013 had a 6% increase over fiscal year 2012, the University's state support was permanently reduced by 3% for fiscal year 2014. While every effort was made to absorb this $9.1 million cut centrally through additional general fund revenue and continued efforts to reduce institutional expenses, UGA's academic and administrative units were asked to reduce their budgets by a total of $4.0 million during budget development. As fiscal year 2014 progresses, the University will take appropriate action to implement any additional expenditure reduction and cost control measures that are necessary to meet state mandated budget reductions, while maintaining the University's ability to provide core mission functions to sustain instruction, research, and public service activities.
Jere W. Morehead, President University of Georgia
vi

BASIC FINANCIAL STATEMENTS - 1 -

UNIVERSITY OF GEORGIA STATEMENT OF NET ASSETS
JUNE 30, 2013
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Receivables - Federal Financial Assistance Receivables - Other Due from Affiliated Organizations Inventories (Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments Notes Receivable, Net Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Unearned Revenue (Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Due to Affiliated Organizations
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Other Noncurrent Liabilities
Total Noncurrent Liabilities
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Capital Projects Unrestricted
Total Net Position
The notes to the financial statements are an integral part of this statement.
- 2 -

EXHIBIT "A"

$ 307,788,203
4,861,392 25,266,811 27,336,650
6,064,614 3,251,417
$ 374,569,087

$

3,512,418

72,263,852

8,845,360

1,637,202,052

$ 1,721,823,682

$ 2,096,392,769

$ 23,892,775 7,548,862 5,389,723 1,974,676
44,488,290 1,654,334
13,104,301 4,967,272
28,037,723 1,354,178
$ 132,412,134
$ 271,617,585 16,586,663 817,770
$ 289,022,018
$ 421,434,152
$ 1,360,617,195
71,829,738 78,265,059
3,749,702 160,496,923
$ 1,674,958,617

UNIVERSITY OF GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2013
OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Federal Appropriations Grants and Contracts
Federal Federal Stimulus State Other Sales and Services Rents and Royalties 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 Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues
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 (Decrease) in Net Position
Net Position - Beginning of Year
Net Position - End of Year
The notes to the financial statements are an integral part of this statement.
- 3 -

EXHIBIT "B"

$

461,454,653

-111,552,663

12,573,894

113,874,906 3,693,094
18,799,156 50,984,018 64,735,771
449,252

48,874,625 3,750,328
42,082,427 19,551,690 19,715,788 23,883,561
4,301,323 2,215,790

$

779,387,613

$

202,636,551

435,892,012

190,550,649

841,609

15,368,370

25,604,840

33,893,904

238,951,200

82,107,969

$ 1,225,847,104

$ -446,459,491

$

363,084,970

27,302,824 7,237,511
32,114,517 33,258,706
5,443,652 -17,747,476 12,635,283

$

463,329,987

$

16,870,496

$

27,990,565

70,569,785

$

98,560,350

$

115,430,846

1,559,527,771

$ 1,674,958,617

UNIVERSITY OF GEORGIA STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2013
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 Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics 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 Other Nonoperating Receipts
Net Cash Flows Provided (Used) 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 Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Purchase of 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

EXHIBIT "C"

$ 362,394,236 13,356,750
187,534,829 65,258,486
-477,234,286 -638,334,180
-25,604,840 -1,055,912 1,456,731
48,780,064 3,826,968
42,292,445 19,586,579 19,291,175 23,873,818
4,226,147 2,835,098
$ -347,515,892

$ 363,084,970 -1,222,540 99,913,559 19,173,428
$ 480,949,417

$

25,182,762

-97,455,850

-4,636,532

-17,747,476

$

-94,657,096

$

1,867,808

-1,957,364

$

-89,556

$

38,686,873

272,613,748

$ 311,300,621

- 4 -

UNIVERSITY OF GEORGIA STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2013
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income (loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Unearned Revenue Other Liabilities Compensated Absences
Net Cash Provided (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 Gift Reducing Proceeds of Gifts and Grants Received for Other Than Capital Purposes Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT "C"

$ -446,459,491
82,107,969
15,722,821 -480,828 166,993 400,819
1,923,647 -1,751,203
306,400 546,981
$ -347,515,892

$

1,329,057

$

3,575,844

$

2,500

$

73,377,588

The notes to the financial statements are an integral part of this statement. - 5 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 1. Summary of Significant Accounting Policies
Nature of Operations The University of Georgia serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity The University of Georgia 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 the University of Georgia 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. The University of Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the University of Georgia 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.
Legally separate, tax exempt Affiliated Organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential Component Units of the State. See Note 16 for additional information.
Financial Statement Presentation 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, liabilities, net position, revenues, expenses, changes in net position and cash flows.
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 Accounting Pronouncements In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or nongovernmental entities. As of June 30, 2013, the University has not entered into any arrangements that meet the qualifications to be reported as a SCA in accordance with this standard.
In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature.
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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The University changed its presentation of net assets to net position for fiscal year 2013. There were no other applicable reporting changes for the University.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the University's Investment Advisory Account which is invested in short-term, highly liquid U. S. Agencies.
Investments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Position. The Board of Regents Legal Fund, and the Board of Regents Diversified Fund are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of whom reside in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Position.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values generally are 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

To fully understand plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. These bonds constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For projects managed by GSFIC, GSFIC retains construction-in-progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction-in-progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2013, GSFIC transferred capital additions valued at $6,623,214 to the University of Georgia.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Unearned Revenues Unearned Revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Unearned Revenues also include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Position, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Position. The University of Georgia had accrued liability for compensated absences in the amount of $44,077,405 as of July 1, 2012. For fiscal year 2013, $28,902,304 was earned in compensated absences and employees were paid $28,355,323, for a net increase of $546,981. The ending balance as of June 30, 2013 in accrued liability for compensated absences was $44,624,386.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
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 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 the net investment in capital assets. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section.
Restricted - Nonexpendable: includes 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 be either 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.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Restricted - Expendable: includes resources in which the University is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties.

Expendable Restricted include the following at June 30, 2013:

Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans

$

57,330,811

9,720,143

11,214,105

Total Restricted Expendable

$

78,265,059

Restricted - Expendable - Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.
Unrestricted: Unrestricted 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 $844,888.16. 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 the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted resources include the following items which are quasi-restricted by management at June 30, 2013:

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

$

26,575,782

65,898,790

1,487,000

66,535,351

Total Unrestricted Net Position

$

160,496,923

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes The University of Georgia, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.

Classification of Revenues and Expenses

The Statement of Revenues, Expenses and Changes in Net Position classify fiscal year activity as operating and nonoperating according to the following criteria:
Operating Revenue: includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3) sales and services.
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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Nonoperating Revenue: includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
Operating Expenses: Operating expense includes activities that have the characteristics of exchange transactions.
Nonoperating Expense: includes activities that have the characteristics of nonexchange transactions, such as capital financing costs and costs related to investment activity.
Scholarship Allowances
Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Position. Scholarship allowances are the difference between the stated charge for goods and services provided by the University, and the amount that is paid by students and/or third parties making payments on the students' behalf.
Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Auxiliary Parking/Transportation and Health Service revenues of $19,551,690 and $19,715,788, respectively, are reported net of discounts and allowances of $501,055 and $1,211,276, respectively.
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.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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, 2013, the carrying value of deposits was $55,441,766 and the bank balance was $51,806,382. Of the University's deposits, $50,505,978 were uninsured. Of these uninsured deposits, $0 were collateralized with securities held by the financial institution's trust department or agent in the University's name, $50,381,620 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name and $124,358 were uncollateralized.

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The University has a formal policy for managing exposure to foreign currency credit risk by requiring a maximum balance in a foreign bank account of $100,000 U. S. currency. The University's exposure to foreign currency risk derives from deposits in foreign banks for operations of studies abroad programs. These deposits are uninsured and uncollateralized in the amount of $124,358 as follows:

Program UGA - Oxford Program UGA - Cortona Art Program UGA - Grady College of Journalism

Institution Barclay's Banca CR Firenze Societe Generale

Currency British Pound European Euro European Euro

U. S. Value $90,889 29,876 3,593
$124,358

Investments
The University of Georgia maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

The University's investments as of June 30, 2013 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Debt Securities

U. S. Treasuries

$

U. S. Agencies

Explicitly Guaranteed

Implicitly Guaranteed

Corporate Debt

Repurchase Agreements

$

Other Investments Cash Equivalent Money Market Bond/Equity Mutual Funds - Domestic Bond/Equity Mutual Funds - International Equity Mutual Funds Equity Securities - Domestic Equity Securities - International Other Equity Securities International Other - FIXED Miscellaneous Holdings Real Estate Held for Investment Purposes Real Estate Investment Fund

Investment Pools Board of Regents Legal Fund Diversified Fund Office of State Treasurer Georgia Fund 1

Total Investments

$

Fair Value

Less Than 3 months

Investment Maturity

4 - 12 months

1 - 5 Years

6 - 10 years

More than 10 Years

152,524
4,941,074 53,654,032 $
107,655 9,696,356
68,551,641 $

1,256,513 $ 9,696,356 10,952,869 $

$
949,638 18,582

36,577 $ 115,947

721,858 6,156,714
49,237

4176273 7,636,698 $
39,836

42,943 37,654,469

968,220 $

6,964,386 $ 11,968,754 $ 37,697,412

75,437 197,063
96,617 300,405 600,095 284,613
8,157 4,991
606
5,708,942 206,756

17,670,747 50,494,311
183,651,243 327,851,624

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. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia - System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits - Education Audit Division or on their web site at http://www.audits.ga.gov.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1 per share. The Georgia Fund 1 Investment Pool is an AAAf rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 43 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University's policy for managing interest rate risk is divided between Short-Term and Long-Term investments. Short-Term investments will have a maximum maturity of three years and Long-Term investments will have a maximum maturity of ten years.
The Effective Duration of the Legal Fund is 3.72 years. Of the University's total investment of $17,670,747 in the Legal Fund, $10,505,435 is invested in debt securities.
The Effective Duration of the Diversified Fund is 5.43 years. Of the University's total investment of $50,494,311 in the Diversified Fund, $16,158,179 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2013, $68,281,202 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name and $2,044,573 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk focuses on investment of loan and endowment funds which are funded by private sources. For loan and endowment funds, investments should have an average rating of "AAA". All other investments follow Board of Regents investments guidelines.
The investments subject to credit quality risk are reflected below:

Credit Quality Risk

Fair Value

AA

A

BBB

Unrated

Related Debt Investments

U. S. Agencies

$

53,654,032 $

53,654,032

$

0

Corporate Debt

107,655

31,243 $

57,207 $

19,205

Repurchase Agreements - Underlying

U. S., Agency Securities

9,696,356

9,696,356

$

63,458,043 $

63,381,631 $

57,207 $

19,205 $

0

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University's policy for managing concentration of credit risk is divided between Short-Term and Long-Term investments. For Short-Term investments, certificates of deposit and repurchase agreements should comprise 25-50%, investment in the Office of Treasury and Fiscal Services, Georgia Fund 1 should not exceed 50%, and investment in U. S. Treasury obligations or U. S. Government agency securities can be 100%. For Long-Term investment of loan and endowment funds, equities comprise 50-75%, fixed income can range between 25-50%, and cash and cash equivalents will range between 10-25%.

As of June 30, 2013, applicable investments in a single issuer where those investments exceed 5% of the total investments were as follows:

FNMA

$40,383,370

12.1%

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2013:

Student Tuition and Fees

$

6,374,554

Auxiliary Enterprises and Other Operating Activities

1,107,681

Federal Financial Assistance

4,861,392

Georgia State Financing and Investment Commission

2,935,110

Due from Affiliated Organizations

27,336,650

Other

15,623,615

Less Allowance for Doubtful Accounts

$

58,239,002

774,149

Net Accounts Receivable

$

57,464,853

Note 4. Inventories

Inventories consisted of the following at June 30, 2013:

Food Services

$

Physical Plant

Other

Total Inventories

$

1,817,417 1,160,708 3,086,489
6,064,614

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2013. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal

- 14 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

government, the loans are written off and assigned to the U. S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2013, the allowance for uncollectible loans was approximately $969,296.
Note 6. Capital Assets
Following are the changes in capital assets for the year ended June 30, 2013:

Beginning Balance July 1, 2012

Additions

Reductions

Ending Balance June 30, 2013

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

$

42,908,134 $

5,957,993

$

48,866,127

18,374,311

2,215,316

20,589,627

67,214,740

47,023,484 $

27,067,289

87,170,935

Total Capital Assets, Not Being Depreciated $

128,497,185 $

55,196,793 $

27,067,289 $

156,626,689

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

$

58,032,806 $

1,629,093,687

176,508,105

367,300,124

1,033,230

269,967,980

8,276,332 $ 77,257,674 22,448,566 23,340,869
12,032,703

$
14,657,947 497,670 151,939

66,309,138 1,706,351,361
198,956,671 375,983,046
535,560 281,848,744

Total Assets Being Depreciated

$ 2,501,935,932 $

143,356,144 $

15,307,556 $ 2,629,984,520

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

$

23,213,066 $

498,399,188

55,255,393

289,881,626

728,558

214,001,118

2,304,978 $ 38,210,679
5,498,758 23,824,300
51,125 12,218,129

7,210 $ -7,210
13,607,987 417,835 151,939

25,510,834 536,617,077
60,754,151 300,097,939
361,848 226,067,308

Total Accumulated Depreciation

$ 1,081,478,949 $

82,107,969 $

14,177,761 $ 1,149,409,157

Total Capital Assets, Being Depreciated, Net $ 1,420,456,983 $

61,248,175 $

1,129,795 $ 1,480,575,363

Capital Assets, Net

$ 1,548,954,168 $

116,444,968 $

28,197,084 $ 1,637,202,052

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 7. Unearned Revenue Unearned Revenue consisted of the following at June 30, 2013:

Prepaid Tuition and Fees Research Other Unearned Revenue

$ 17,221,282 13,247,482 14,019,526

Total Unearned Revenue Note 8. Long-Term Liabilities

$ 44,488,290

Long-Term liability activity for the year ended June 30, 2013 was as follows:

Beginning Balance July 1, 2012

Additions

Reductions

Ending Balance June 30, 2013

Current Portion

Leases Lease Obligations

$ 279,892,332 $ 1,329,057 $ 4,636,532 $ 276,584,857 $ 4,967,272

Other Liabilities Compensated Absences $ Other Liabilities

44,077,405 $ 918,236

28,902,304 $ 175,024

28,355,323 $ 137,745

44,624,386 $ 955,515

28,037,723 137,745

Total

$ 44,995,641 $ 29,077,328 $ 28,493,068 $ 45,579,901 $ 28,175,468

Total Long-Term Obligations $ 324,887,973 $ 30,406,385 $ 33,129,600 $ 322,164,758 $ 33,142,740

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $14,552,112 as of June 30, 2013. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
The University of Georgia 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.
CAPITAL LEASES
The University of Georgia occupies fifteen real properties and holds various equipment items under capital leases. The real property leases expire in fiscal years 2028, 2032, three in 2034, 2035, 2037, 2038, two in 2039, and five in 2040. The equipment capital leases expire between 2014 and 2016. Reductions in principal on capital leases were $4,636,532 with $17,747,476 in interest expense for a total of $22,384,008 in fiscal year 2013. Interest rates range from 3.26 percent to 9.00 percent. The carrying values of assets held under capital lease at June 30, 2013 were as follows:

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Description

Gross Amount (+)

Accumulated Depreciation
(-)

Net Position Held Under Capital Lease at June 30, 2013
(=)

Outstanding Balances per Lease Schedules at June 30, 2013

Equipment Buildings - (PPV Only)

$

535,560 $

297,025,752

361,849 $

173,711 $

165,481

38,206,498

258,819,254

276,419,376

Total Assets Held Under Capital Lease at June 30, 2013

$ 297,561,312 $ 38,568,347 $ 258,992,965 $ 276,584,857

All of the University of Georgia's current real property capital leases are with the University of Georgia Real Estate Foundation (UGAREF), a related entity. In August of 2001, the University of Georgia entered into a capital lease with the UGAREF, whereby the University leases the Carlton Street Parking Deck for a 30-year period that began September 30, 2001 and expires August 31, 2031. In November of 2002, the University of Georgia entered into the second capital lease with the UGAREF whereby the University leased the East Village Parking Deck for a 30-year period that began on November 1, 2002 and originally expired July 31, 2032. In August of 2010, the University of Georgia purchased this leased property. In September of 2003, The University of Georgia entered into the third capital lease with the UGAREF, whereby, the University leases the Complex Carbohydrate Research Center for a 30-year period that began on September 25, 2003 and expires September 30, 2033. The University of Georgia entered into the fourth and fifth capital leases with the UGAREF, whereby the University leases the East Campus Village dormitory complex and the East Village Commons dining hall for a 30-year period that began July 1, 2004, and expires June 30, 2034. The University of Georgia entered into a sixth capital lease with UGAREF whereby the University leases the Coverdell Center for a 30-year period that began December 9, 2005 and expires June 30, 2035. During fiscal year 2009, the University entered into the seventh and eighth capital lease with UGAREF whereby the University leases the Tate Student Center Parking Deck and Tate Student Center Expansion for 29-year periods that expire June 30, 2037 and June 30, 2038, respectively. During fiscal year 2010, the University entered into seven new leases with UGAREF whereby the University leases the Intramural Parking Deck and Performing Arts Center Parking Deck for 30-year periods that expire June 30, 2039, four houses in the new Greek Park for 30-year periods expiring July 31, 2039, and the Medical Partnership Building for a 19-year period that expires June 30, 2028. The University of Georgia entered into a capital lease with the UGAREF whereby the University leases East Campus Housing Phase II (Building 1516) for a 30-year period that began July 25, 2010 and expires June 30, 2040. The outstanding liability at June 30, 2013 on these capital leases is $276,419,377.

The University of Georgia also has various capital leases for equipment with an outstanding balance at June 30, 2013 in the amount of $165,480.

OPERATING LEASES

The University of Georgia is Lessee under a number of one-year operating leases, which generally provide for four (4) renewal option periods. 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.

Properties are leased for a variety of functions, from farm acreage to office space to parking lots.

- 17 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

FUTURE COMMITMENTS

Future commitments for capital leases (which here and on the Statement of Net Position include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2013, were as follows:

Real Property and Equipment

Capital

Operating

Leases

Leases

Year Ending June 30: 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2040

$

24,304,936 $ 6,217,762

24,232,548

24,193,738

24,181,979

24,179,427

120,837,466

120,663,593

112,471,769

61,676,067

10,002,323

Total Minimum Lease Payments

$

546,743,846 $ 6,217,762

Less: Interest Less: Executory Costs (if paid)

245,077,766 25,081,223

Principal Outstanding

$

276,584,857

The University of Georgia's fiscal year 2013 expense for rental of real property and equipment under operating leases was $7,596,200.
Note 11. Retirement Plans
The University of Georgia 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 the University of Georgia 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
- 18 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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, the University of Georgia pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these University of Georgia 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. The University of Georgia 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 University of Georgia contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions required for fiscal year 2013 were based on the June 30, 2010 actuarial valuation as follows:

Old Plan* New Plan GSEPS

14.90% 14.90% 11.54%

*10.15% exclusive of contributions paid by the employer on behalf of old plan members - 19 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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. Options are available for distribution of the member's monthly pension, at a reduced rate, to a designated beneficiary on the member's death. 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, 2013 were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010 actuarial valuation.

- 20 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

The following table summarizes the University of Georgia contributions by defined benefit plan for the years ending June 30, 2013, June 30, 2012, and June 30, 2011 (dollars in thousands):

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

2013 2012 2011

$ 230,629 $ 155,689 $ 123,062

Regents Retirement Plan

100% 100% 100%

$ 39,890,243 $ 35,415,805 $ 35,124,704

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 three approved vendors (AIG-VALIC, 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 The University of Georgia 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 2013, 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 nonforfeitable at all times.

The University of Georgia and the covered employees made the required contributions of $16,405,618 (9.24%) and $9,735,934 (6%), respectively.

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

Georgia Defined Contribution Plan

Plan Description The University of Georgia 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

- 21 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 2013 amounted to $1,891,553 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to four different selfinsured healthcare plan options. For the University System of Georgia's Plan Year 2013, the following health care options were available:
Blue Choice HMO plan (Blue Cross Blue Shield) H.S.A. Open Access POS plan (Blue Cross Blue Shield) Open Access POS plan Kaiser Permanente HMO plan
The University of Georgia 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 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 losses 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. The University of Georgia, 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.

- 22 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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.

The University of Georgia is responsible for pollution remediation at the Milledge Avenue landfill site. The University of Georgia has recorded a liability and expense related to this pollution remediation in the amount of $955,515. The liability is reflected on the Statement of Net Position in Accounts Payable and on the Statement of Revenues, Expenses and Changes in Net Position in Supplies and Other Services. The liability was determined using a 5 year budget estimate provided by Brown and Caldwell. The University of Georgia does not anticipate any significant changes to the expected remediation outlay. There are no expected recoveries that have reduced the liability. Pollution remediation liability activity in fiscal 2013 was as follows:

Beginning Balance July 1, 2012

Additions

Reductions

Ending Balance June 30, 2013

Current Portion

Pollution Remediation

Obligations

$

918,236 $

175,024 $

137,745 $

955,515 $

137,745

Note 13. 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 the University of Georgia expects such amounts, if any, to be immaterial to its overall financial position.

Litigation, claims and assessments filed against the University of Georgia (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, 2013.
Note 14. 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.

- 23 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 2013 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, 2013, there were 4,510 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2013, the University of Georgia recognized as incurred $25,261,596 of expenditures, which was net of $11,590,266 of participant contributions.
Note 15. Natural Classifications with Functional Classifications
The University's operating expenses by functional classification for fiscal year 2013 are shown below:

Functional Classification

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses

$ 98,453,709 $ 73,494,728 45,319,509 64,320 2,860,067 849,641 1,522,709 27,915,865 13,741,010

88,310,057 $ 95,606,606 42,839,486
23,296 7,095,448 1,915,530 1,156,849 59,542,003 19,751,590

14,977,348 $ 68,785,422 29,484,795
11,943 3,229,866
501,468 1,311,997 29,957,945 5,250,982

827,539 40,136,945 $ 13,647,179
36,427 597,698
15,792 724,340 17,230,899 16,786,760

$ 264,221,558 $ 316,240,865 $ 153,511,766 $ 90,003,579 $

16,436,413 5,124,008 43,893 329,045 1,728,554 224,084
14,180,624 2,806,075
40,872,696

Natural Classification

Institutional Support

Functional Classification

Plant Operations Scholarships

and

and

Auxiliary

Maintenance

Fellowships

Enterprises

Total Operating Expenses

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses

$

53,309 $

39,226,431

22,110,071

651,115

971,147

428,221 10,060,600
946,429

14,589 39,905,450 15,788,404
1,833 104,747
$ 22,268,663 36,665,451
5,227,654

$ 20,003,946

$ 62,300,017 16,237,197
8,782 180,352 589,909 6,257,041 43,397,813 17,597,469

202,636,551 435,892,012 190,550,649
841,609 15,368,370 25,604,840 33,893,904 238,951,200 82,107,969

$ 74,447,323 $ 119,976,791 $ 20,003,946 $ 146,568,580 $ 1,225,847,104

- 24 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 16. Affiliated Organizations
The University of Georgia Research Foundation, the University of Georgia Athletic Association, Inc., and the University of Georgia Foundation are legally separate, tax-exempt organizations whose activities primarily support University of Georgia. 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 these financial statements. Copies of the financial statements for the affiliated organization may be obtained from University of Georgia.
The University of Georgia Research Foundation, the University of Georgia Athletic Association, Inc., and the University of Georgia Foundation have been determined significant to the State of Georgia for the year ended June 30, 2013, and as such, are reported as discretely presented component units in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). Significant discretely presented affiliated organizations issue separate audited financial statements that can be obtained from the Board of Regents of the University System of Georgia.

- 25 -

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SUPPLEMENTARY INFORMATION - 27 -

UNIVERSITY OF GEORGIA BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30, 2013
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Unearned Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Capital Outlay Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$ 166,328,771.78 14,711,256.13 32,692,095.58 1,926,484.86 3,166,304.02
$ 218,824,912.37

$

1,928,061.90

59,748,294.09

52,651,536.66

1,447,131.98

$ 115,775,024.63

$

11,760,508.29

14,777,766.36

2,576,468.32

909,286.33

61,079,912.92

714,904.47

8,899,152.89

1,487,000.00

844,888.16

$ 103,049,887.74

$ 218,824,912.37

Actual amounts were 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.
- 28 -

UNIVERSITY OF GEORGIA SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2013

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS
CARRY-OVER FROM PRIOR YEARS
Prior Year Reserves Available for Expenditure
Total Funds Available
EXPENDITURES
Agricultural Experiment Station Athens and Tifton Veterinary Laboratories Cooperative Extension Service Forestry Cooperative Extension Forestry Research Marine Institute Marine Resources Extension Center Teaching Veterinary Medicine Experiment Station Veterinary Medicine Teaching Hospital
Total Expenditures
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, 2012
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 363,200,986.00 $ 363,200,986.00 $

0.00

912,818,952.00

801,291,329.78

-111,527,622.22

$ 1,276,019,938.00 $ 1,164,492,315.78 $ -111,527,622.22

0.00

0.00

0.00

0.00

94,618,968.93

94,618,968.93

$ 1,276,019,938.00 $ 1,259,111,284.71 $ -16,908,653.29

$ 105,974,176.00 $ 6,578,443.00
70,099,782.00 1,326,190.00
14,301,734.00 1,495,203.00 3,299,176.00
1,054,558,156.00 2,470,069.00
15,917,009.00

78,767,155.36 $ 5,890,286.79
60,074,648.17 932,787.52
12,538,182.51 1,312,836.15 2,889,779.83
981,180,405.84 2,470,069.00
13,237,340.43

27,207,020.64 688,156.21
10,025,133.83 393,402.48
1,763,551.49 182,366.85 409,396.17
73,377,750.16 0.00
2,679,668.57

$ 1,276,019,938.00 $ 1,159,293,491.60 $ 116,726,446.40

$

0.00 $

99,817,793.11 $ 99,817,793.11

96,810,352.21 116,015.71

921,712.66 118,998.69
-116,015.71 -94,618,968.93 $ 103,049,887.74

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

$

11,760,508.29

14,777,766.36

2,576,468.32

909,286.33

61,079,912.92

714,904.47

8,899,152.89

1,487,000.00

$ 102,204,999.58

844,888.16

$ 103,049,887.74

Actual amounts were 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.
- 29 -

UNIVERSITY OF GEORGIA STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013

Agricultural Experiment Station State Appropriation State General Funds Other Funds
Total Agricultural Experiment Station
Athens and Tifton Veterinary Laboratories Other Funds
Cooperative Extension Service State Appropriation State General Funds Other Funds
Total Cooperative Extension Service
Forestry Cooperative Extension State Appropriation State General Funds Other Funds
Total Forestry Cooperative Extension
Forestry Research State Appropriation State General Funds Other Funds
Total Forestry Research
Marine Institute State Appropriation State General Funds Other Funds
Total Marine Institute
Marine Resources Extension Center State Appropriation State General Funds Other Funds
Total Marine Resources Extension Center
Research Consortium State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

35,107,005.00 $

35,107,005.00 $

34,053,795.00 $

34,053,795.00

37,552,919.00

37,552,919.00

71,920,381.00

44,877,738.73

$

72,659,924.00 $

72,659,924.00 $

105,974,176.00 $

78,931,533.73

$

4,944,522.00 $

4,944,522.00 $

6,578,443.00 $

6,094,529.80

$

29,467,851.00 $

29,467,851.00 $

28,583,815.00 $

28,583,815.00

25,083,929.00

25,083,929.00

41,515,967.00

32,783,339.46

$

54,551,780.00 $

54,551,780.00 $

70,099,782.00 $

61,367,154.46

$

502,786.00 $

502,786.00 $

487,702.00 $

500,000.00

500,000.00

838,488.00

$

1,002,786.00 $

1,002,786.00 $

1,326,190.00 $

487,702.00 454,283.91
941,985.91

$

2,579,928.00 $

2,579,928.00 $

2,502,530.00 $

2,502,530.00

8,950,426.00

8,950,426.00

11,799,204.00

9,972,521.23

$

11,530,354.00 $

11,530,354.00 $

14,301,734.00 $

12,475,051.23

$

729,450.00 $

729,450.00 $

707,566.00 $

707,566.00

486,281.00

486,281.00

787,637.00

628,870.08

$

1,215,731.00 $

1,215,731.00 $

1,495,203.00 $

1,336,436.08

$

1,199,121.00 $

1,199,121.00 $

1,163,147.00 $

1,163,147.00

1,345,529.00

1,345,529.00

2,136,029.00

1,726,783.51

$

2,544,650.00 $

2,544,650.00 $

3,299,176.00 $

2,889,930.51

$

0.00 $

0.00 $

0.00 $

0.00

$

303,684,957.00 $

303,684,957.00 $

292,816,194.00 $

726,714,371.00

726,714,371.00

761,741,962.00

$ 1,030,399,328.00 $ 1,030,399,328.00 $ 1,054,558,156.00 $

292,816,194.00 693,288,951.08
986,105,145.08

- 30 -

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 $

17,140,049.31

$ 17,140,049.31 $

$

384,259.14 $

0.00 $ 0.00
0.00 $

34,053,795.00 $ 62,017,788.04
96,071,583.04 $

0.00 $ -9,902,592.96
-9,902,592.96 $

34,053,795.00 $ 44,713,360.36
78,767,155.36 $

0.00 $ 27,207,020.64
27,207,020.64 $

0.00 17,304,427.68
17,304,427.68

0.00 $

6,478,788.94 $

-99,654.06 $

5,890,286.79 $

688,156.21 $

588,502.15

$

0.00 $

3,172,052.77

$ 3,172,052.77 $

0.00 $ 0.00
0.00 $

28,583,815.00 $ 35,955,392.23
64,539,207.23 $

0.00 $ -5,560,574.77
-5,560,574.77 $

28,583,815.00 $ 31,490,833.17
60,074,648.17 $

0.00 $ 10,025,133.83
10,025,133.83 $

0.00 4,464,559.06
4,464,559.06

$

0.00 $

114,005.84

$

114,005.84 $

0.00 $ 0.00
0.00 $

487,702.00 $ 568,289.75
1,055,991.75 $

0.00 $ -270,198.25
-270,198.25 $

487,702.00 $ 445,085.52
932,787.52 $

0.00 $ 393,402.48
393,402.48 $

0.00 123,204.23
123,204.23

$

0.00 $

2,543,151.99

$ 2,543,151.99 $

0.00 $ 0.00
0.00 $

2,502,530.00 $ 12,515,673.22
15,018,203.22 $

0.00 $ 716,469.22
716,469.22 $

2,502,530.00 $ 10,035,652.51
12,538,182.51 $

0.00 $ 1,763,551.49
1,763,551.49 $

0.00 2,480,020.71
2,480,020.71

$

0.00 $

340,204.78

$

340,204.78 $

0.00 $ 0.00
0.00 $

707,566.00 $ 969,074.86
1,676,640.86 $

0.00 $ 181,437.86
181,437.86 $

707,566.00 $ 605,270.15
1,312,836.15 $

0.00 $ 182,366.85
182,366.85 $

0.00 363,804.71
363,804.71

$

0.00 $

157,031.17

$

157,031.17 $

0.00 $ 0.00
0.00 $

1,163,147.00 $ 1,883,814.68
3,046,961.68 $

0.00 $ -252,214.32
-252,214.32 $

1,163,147.00 $ 1,726,632.83
2,889,779.83 $

0.00 $ 409,396.17
409,396.17 $

0.00 157,181.85
157,181.85

$

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $

67,726,185.34

$ 67,726,185.34 $

0.00 $ 0.00

292,816,194.00 $ 761,015,136.42

0.00 $ 1,053,831,330.42 $

0.00 $ -726,825.58
-726,825.58 $

292,630,711.19 $ 688,549,694.65
981,180,405.84 $

185,482.81 $ 73,192,267.35
73,377,750.16 $

185,482.81 72,465,441.77
72,650,924.58

- 31 -

UNIVERSITY OF GEORGIA STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013

Veterinary Medicine Experiment Station State Appropriation State General Funds
Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Medicine Teaching Hospital
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

2,546,463.00 $

2,546,463.00 $

2,470,069.00 $

2,470,069.00

$

429,039.00 $

429,039.00 $

416,168.00 $

416,168.00

9,621,951.00

9,621,951.00

15,500,841.00

11,464,311.98

$

10,050,990.00 $

10,050,990.00 $

15,917,009.00 $

11,880,479.98

$ 1,191,446,528.00 $ 1,191,446,528.00 $ 1,276,019,938.00 $ 1,164,492,315.78

Actual amounts were 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.
- 32 -

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 $

0.00 $

2,470,069.00 $

0.00 $

2,470,069.00 $

0.00 $

0.00

$

0.00 $

3,042,028.59

$ 3,042,028.59 $

$ 94,618,968.93 $

0.00 $ 0.00
0.00 $

416,168.00 $ 14,506,340.57
14,922,508.57 $

0.00 $ -994,500.43
-994,500.43 $

415,924.79 $ 12,821,415.64
13,237,340.43 $

243.21 $ 2,679,425.36
2,679,668.57 $

243.21 1,684,924.93
1,685,168.14

0.00 $ 1,259,111,284.71 $ -16,908,653.29 $ 1,159,293,491.60 $ 116,726,446.40 $

99,817,793.11

- 33 -

UNIVERSITY OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013

Agricultural Experiment Station State Appropriation State General Funds Other Funds
Total Agricultural Experiment Station
Athens and Tifton Veterinary Laboratories Other Funds
Cooperative Extension Service State Appropriation State General Funds Other Funds
Total Cooperative Extension Service
Forestry Cooperative Extension State Appropriation State General Funds Other Funds
Total Forestry Cooperative Extension
Forestry Research State Appropriation State General Funds Other Funds
Total Forestry Research
Marine Institute State Appropriation State General Funds Other Funds
Total Marine Institute
Marine Resources Extension Center State Appropriation State General Funds Other Funds
Total Marine Resources Extension Center
Research Consortium State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

$

28,814.60 $

0.00 $

17,140,049.31

-17,140,049.31

$

17,168,863.91 $

-17,140,049.31 $

$

384,259.14 $

-384,259.14 $

-28,814.60 $ 0.00
-28,814.60 $
0.00 $

46,558.28 19,123.88 65,682.16
138.03

$

8,523.42 $

0.00 $

3,172,052.77

-3,172,052.77

$

3,180,576.19 $

-3,172,052.77 $

-8,523.42 $ 0.00
-8,523.42 $

4,595.59 135,677.95
140,273.54

$

0.00 $

0.00 $

114,005.84

-114,005.84

$

114,005.84 $

-114,005.84 $

0.00 $ 0.00
0.00 $

0.00 495.62
495.62

$

8,415.15 $

0.00 $

2,543,151.99

-2,543,151.99

$

2,551,567.14 $

-2,543,151.99 $

-8,415.15 $ 0.00
-8,415.15 $

382.13 5,947.48
6,329.61

$

0.00 $

0.00 $

340,204.78

-340,204.78

$

340,204.78 $

-340,204.78 $

0.00 $ 0.00
0.00 $

0.00 0.01
0.01

$

2,421.33 $

157,031.17

$

159,452.50 $

0.00 $ -157,031.17
-157,031.17 $

-2,421.33 $ 0.00
-2,421.33 $

933.56 1,928.46
2,862.02

$

28,560.65 $

0.00 $

-28,560.65 $

0.00

$

33,847.10 $

0.00 $

67,726,185.34

-67,726,185.34

$

67,760,032.44 $

-67,726,185.34 $

-33,847.10 $ 0.00
-33,847.10 $

606,267.19 230,502.99
836,770.18

- 34 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2013
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 $

-3,828.90

$ -3,828.90 $

$

0.00 $

0.00 $ 0.00
0.00 $

0.00 $ 17,304,427.68
17,304,427.68 $

46,558.28 $ 17,319,722.66
17,366,280.94 $

0.00 $ 17,319,722.66
17,319,722.66 $

0.00 $

588,502.15 $

588,640.18 $

588,640.18 $

46,558.28 $

46,558.28

0.00

17,319,722.66

46,558.28 $ 17,366,280.94

0.00 $

588,640.18

$

0.00 $

-484.29

$

-484.29 $

0.00 $ 0.00
0.00 $

0.00 $ 4,464,559.06
4,464,559.06 $

4,595.59 $ 4,599,752.72
4,604,348.31 $

0.00 $ 4,599,752.72
4,599,752.72 $

4,595.59 $ 0.00

4,595.59 4,599,752.72

4,595.59 $ 4,604,348.31

$

0.00 $

0.00

$

0.00 $

0.00 $ 0.00
0.00 $

0.00 $ 123,204.23
123,204.23 $

0.00 $ 123,699.85
123,699.85 $

0.00 $ 123,699.85
123,699.85 $

0.00 $ 0.00
0.00 $

0.00 123,699.85
123,699.85

$

0.00 $

0.00

$

0.00 $

0.00 $ 0.00
0.00 $

0.00 $ 2,480,020.71
2,480,020.71 $

382.13 $ 2,485,968.19
2,486,350.32 $

0.00 $ 2,485,968.19
2,485,968.19 $

382.13 $ 0.00

382.13 2,485,968.19

382.13 $ 2,486,350.32

$

0.00 $

0.00

$

0.00 $

0.00 $ 0.00
0.00 $

0.00 $ 363,804.71
363,804.71 $

0.00 $ 363,804.72
363,804.72 $

0.00 $ 363,804.72
363,804.72 $

0.00 $ 0.00
0.00 $

0.00 363,804.72
363,804.72

$

0.00 $

155.00

$

155.00 $

0.00 $ 0.00
0.00 $

0.00 $ 157,181.85
157,181.85 $

933.56 $ 159,265.31
160,198.87 $

0.00 $ 159,265.31
159,265.31 $

933.56 $ 0.00
933.56 $

933.56 159,265.31
160,198.87

$

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $

24,212.65

$ 24,212.65 $

0.00 $ 0.00
0.00 $

185,482.81 $ 72,465,441.77
72,650,924.58 $

791,750.00 $ 72,720,157.41
73,511,907.41 $

0.00 $ 72,720,157.41
72,720,157.41 $

791,750.00 $

791,750.00

0.00

72,720,157.41

791,750.00 $ 73,511,907.41

- 35 -

UNIVERSITY OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013

Veterinary Medicine Experiment Station State Appropriation State General Funds
Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Medicine Teaching Hospital
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Inventories 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

$

847.22 $

0.00 $

-847.22 $

668.60

$

4,586.24 $

0.00 $

3,042,028.59

-3,042,028.59

$

3,046,614.83 $

-3,042,028.59 $

$

94,734,984.64 $

-94,618,968.93 $

-4,586.24 $ 0.00
-4,586.24 $
-116,015.71 $

-243.21 -12,265.21
-12,508.42
1,040,711.35

1,487,000.00 704,383.28

0.00 0.00

0.00 0.00

0.00 0.00

Budget Unit Totals

$

96,926,367.92 $

-94,618,968.93 $

-116,015.71 $

1,040,711.35

Actual amounts were 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.
- 36 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2013
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 $

0.00 $

0.00 $

668.60 $

0.00 $

668.60 $

668.60

$

0.00 $

-30,575.65

$ -30,575.65 $

$ -10,521.19 $

0.00 $ 0.00
0.00 $
0.00 $

243.21 $ 1,684,924.93

0.00 $ 1,642,084.07

0.00 $ 1,642,084.07

1,685,168.14 $

1,642,084.07 $

1,642,084.07 $

99,817,793.11 $ 100,847,983.27 $ 100,003,095.11 $

0.00 $ 0.00

0.00 1,642,084.07

0.00 $ 1,642,084.07

844,888.16 $ 100,847,983.27

0.00 10,521.19

0.00 0.00

0.00 0.00

1,487,000.00 714,904.47

1,487,000.00 714,904.47

0.00 0.00

1,487,000.00 714,904.47

$

0.00 $

0.00 $

99,817,793.11 $ 103,049,887.74 $ 102,204,999.58 $

844,888.16 $ 103,049,887.74

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

$ 11,760,508.29 14,777,766.36 2,576,468.32 909,286.33 61,079,912.92 714,904.47 8,899,152.89 1,487,000.00
$
$ 102,204,999.58 $

$ 11,760,508.29 14,777,766.36 2,576,468.32 909,286.33 61,079,912.92 714,904.47 8,899,152.89 1,487,000.00

844,888.16

844,888.16

844,888.16 $ 103,049,887.74

- 37 -

UNIVERSITY OF GEORGIA BUDGET TO GAAP RECONCILIATION
JUNE 30, 2013

SCHEDULE "5"

Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")
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.
Prepaid student tuition and fees for services provided in the subsequent period are reported as revenues in the Budget Fund but are deferred for reporting on the Statement of Net Position.
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.
Funds placed on deposit with the Georgia State Financing and Investment Commission for use in capital outlay projects are reported as an outlay in the Budget Fund, but are included as a cash item on the Statement of Net Position.
Changes in the Fair Market Value of Investments are recognized on the Statement of Net Position, but are not reported in the Budget Fund.
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity
Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity
Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activities Fund Activity
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.
Certain receivables are not recorded in the Budget Fund but are reported as receivables and revenue for GAAP reporting.
Gifts received for construction of the Veterinary Medical Learning Center are not reported in the Budget Fund.

$ 103,049,888

1,637,202,052

8,440,060

-714,904

$

32,275,477

-32,275,477

$

82,383,789

-3,324,176

$

71,829,738

0

$

20,934,848

0

$

6,726,126

0

24,462,202 451,679 0
79,059,613 71,829,738 20,934,848
6,726,126

59,748,294 177,565
1,731,854

- 38 -

UNIVERSITY OF GEORGIA BUDGET TO GAAP RECONCILIATION
JUNE 30, 2013
Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Salaries Payable Capital Leases Payable Compensated Absences Payable Contracts Payable Other Liabilities Total Liabilities
Net Position of Business-Type Activities (Exhibit "A")

SCHEDULE "5"

$

-4,689,395

-276,584,857

-44,624,386

-5,389,723

-6,852,037

$ -338,140,398

$ 1,674,958,617

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.
- 39 -

(This page left intentionally blank)

UNIVERSITY OF GEORGIA RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2013

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2013 June 30, 2012
Compensated Absences June 30, 2013 June 30, 2012
Prepaid Salaries June 30, 2013 June 30, 2012
Adjustments Salaries/Travel Capitalized as a Part of Capital Construction Subsequent Period Adjustment Posted to Current Period in Error

SALARIES $ 639,561,599 $

TRAVEL 15,382,203

2,852,202 -2,727,687

41,453,216 -40,945,104

4,015,972 -3,606,152

-2,070,906 -4,577

-13,833

$ 638,528,563 $ 15,368,370

- 41 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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
December 5, 2013

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Jere W. Morehead, President University of Georgia
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of University of Georgia as of and for the year ended June 30, 2013, and have issued our report thereon dated December 5, 2013.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered University of Georgia's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University of Georgia's internal control. Accordingly, we do not express an opinion on the effectiveness of University of Georgia's internal control.
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.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
2013YB-10

Compliance and Other Matters
As part of obtaining reasonable assurance about whether University of Georgia's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted a certain matter that we have reported to management of University of Georgia in a separate letter dated December 5, 2013.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013YB-10

Greg S. Griffin State Auditor

SECTION III FINDINGS AND QUESTIONED COSTS

UNIVERSITY OF GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND MANAGEMENT'S CORRECTIVE ACTION PLAN
YEAR ENDED JUNE 30, 2013
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.