Georgia Institute of Technology, Atlanta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002

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-.GEORGIA INSTITUTE OF TECHNOLO(;Y

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ATLANTA; GEORGIA

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REPORT ON AUDiT

OF THE FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2002

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Russell W. Hinton State Auditor

GEORGIA INSTITIJTE OF TECHNOLOGY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENTS DISCUSSION AND ANALYSIS

3

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

13

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

14

C STATEMENT OF CASH FLOWS

15

D NOTES TO THE FINANCIAL STATEMENTS

17

SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO

BUDGET - (NON-GAAP BASIS)

1

RESIDENT INSTRUCTION

37

2

LOTTERY FOR EDUCATION

38

3

OTHER ORGANIZED ACI1VITIES

39

4 RECONCILIATION OF SALARIES AND TRAVEL

40

SECTIONII AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA INSTITIJTE OF TECHNOLOGY - TABLE OF CONTENTS -
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

R11ssE1 , W. H.-m,
STATE ALJC'ITOR
1~!6!>6-2174

DEPARTl\1ENT OF AUDITS AND ACCOUNTS
.:!54 \\J..,hmgton Strccl 'i \V. Sunc: 14 AtlJnto Georgia '10314-8400
December 20, 2002

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the Uruvers1ty System of Georgia
and Honorable G Wayne Clough, President Georgia Institute of Technology
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have audited the accompanying basic financial statements (Exh1b1ts A through D) of Georgia Institute of Technology, an orgaruzatlonal urut of the State of Georgia, as of and for the year ended June 30, 2002 These financial statements are the respons1b1hty of the Georgia Institute of Technology's management. Our respons1b1hty 1s 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 Umted States of Amenca Those standards reqmre that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of matenal nusstatement. An audit includes exam1rung, on a test basis, evidence supportmg the amounts and disclosures m the financial statements An audit also mcludes assessmg the accounting pnnc1ples used and s1giuficant esllmates made by management, as well as evaluatmg the overall financial statement presentaUon We believe that our audll provides a reasonable basis for our op1mon
As discussed m Note I, the financial statements of Georgia Institute of Technology are intended to present the financial position and changes m financial pos1t1on (mcludmg cash flows) of only that portion ofthe busmess-type activities ofthe State of Georgia that 1s attnbutable to the transactions of Georgia Institute of Technology They do not purport to, and do not, present frurly the financial pos1t1on and changes m financial pos1Uon (mcludmg cash flows) of the State of Georgia, m conforrmty with accounting pnnc1ples generally accepted m the Umted States of Amenca

02ARL-61
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In our op1mon, the basic financial statements referred to above present fauly, mall matenal respects, the financial pos1t10n of Georgia Institute of Technology as of June 30, 2002, and its changes m financial pos11ion (mcludmg cash flows) for the year then ended m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca
As descnbed m Note I, Georgia Institute of Technology adopted the prov1S1ons of Governmental Accounting Standards Board (GASB) Statements No 35, Basic Financial Statements - and Management's Discussion and Analysis - for Public Colleges and Universities, as amended by GASB Statement No. 37, Basic Financial Statements - and Management's Dzscuss1on and Ana(vszs for State and Local Governments, and GASB Statement No 38, Certain Financial Statements Note Disclosures, as of July I, 2001, to implement a new financial reportmg model
Management's D1scuss1on and Analysis 1s not a requued part ofthe basic financial statements but 1s supplementary mformat1on requued by the GASB We have applied certam !united procedures, winch consisted pnnc1pally of mqumes ofmanagement regardmg the methods ofmeasurement and presentation of this supplementary mformatlon However, we did not audit tins mformatlon and express no opm1on on 1t
Our audit was conducted for the purpose of formmg an op1D1on on the basic financial statements taken as a whole The accompanymg supplementary mformatlon (Schedules I through 4) 1s presented for purposes of additional analysis and 1s not a reqwred part of the basic financial statements of Georgia Institute ofTechnology Such mformatlon has been subjected to the aud1tmg procedures applied by us m the audit ofthe basic financial statements and, m our op1mon, based on our audit, 1s fiurly stated mall matenal respects m relation to the basic financial statements taken as a whole
Respectfully submitted,
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~ell W. Hmton State Auditor
RWHgp 02ARL-61

REQUIRED SUPPLEMENTARY INFORMATION
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GEORGIA INSTITUTE OF TECHNOLOGY
Management's Discussion and Analysis
Introduction
The Georgta Institute of Technology, also known as Georgia Tech, 1s one of the nation's leadmg research uruvers11Jes, proVIdmg a focused, technologically based education to nearly 17,000 undergraduate and graduate students Georgia Tech has many nationally recogmzed programs, all top-ranked by peers and publications alike, and 1s ranked m the nation's top ten pubhc
uruvers1t1es by U.S. News and World Report It offers degrees through the Colleges of Arclutecture, Engineenng, Sciences, Computmg, Management, and the Ivan Allen College of
Liberal Arts As a leadmg technological un1vers1ty, Georgia Tech has more than 50 mterd1sc1phnary research centers that consistently contnbute vital research and mnovatlon to Amenca's government, mdustry, and busmess
Founded m 1885 to help bwld Georgia's technological mfrastructure, Georgia Tech exceeded the expectalions of its founders by becommg a multi-faceted research un1vers1ty that serves as a source of new technologies and a dnver of economic development With a clear V1s1on of technology and leadership, the Institute proVIdes a cutting edge educalion for the 21" century
Overview ofthe Financial Statements and Financial Analysis
Georgia lnslitute of Technology 1s proud to present its financial statements for fiscal year 2002 beginmng July 1, 2001 and endmg June 30, 2002. There are three financial statements presented the Statement of Net Assets; the Statement of Revenues, Expenses and Changes m Net Assets, and, the Statement of Cash Flows Tlus chscuss1on and analysIS of the lnslitute's financial statements proVIdes an overVIew of financial actlVJl!es for the year. The financial statements differ s1gmficantly from pnor years m both the form and the accounting pnnc1ples used Fiscal year 2002 financial statements focus on financial conchlion, financial operatmg performance and cash flows, with resources class1ficd for accounting and reportmg purposes mto
four net asset categones mvested m capital assets, net of related debt, restncted-nonexpendable,
restncted-expendable, and unrestncted. Full accrual accounting, mcludmg cap1tahzat1on and deprec1alion of equipment and fixed assets, 1s now reqwred The lnslitute has elected not to restate pnor penods usmg new Generally Accepted Accounting Pnnc1ples (GAAP) mandated by Governmental Accountmg Standards Board (GASB) Statements 34 and 35 due to extensive changes, so no comparative data will be presented this year In fiscal year 2003, when pnor penod mformation 1s available, a comparative analysis Will be presented
Statement ofNet Assets
Usmg the accrual basis of accountmg, the Statement of Net Assets presents the assets, hab1ht1es, and resulting net assets of the Institute as of the end of the fiscal year Assets, by defimtlon, represent measured economic value obtained and controlled by an entity as a result of past transactions and events Tlus statement identifies the assets available to continue the operatJons of the mstltullon, debts owed by the mstJtutJon, and net assets available to contmue operations m the future
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Net assets arc d1v1ded mto three maJor categones The first category, Invested m Capital Assets Net of Related Debt, identifies the mslltullon's eqmty m property, plant and equipment The next asset category 1s Restncted Net Assets, which 1s d1V1ded mto two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources 1s only available for mvestment purposes Expendable restncted net assets are available for expenditure by the mstltullon but must be spent for purposes as determmed by donors and/or extemaJ entities that have placed time or purpose restncllons on the use of the assets The finaJ category 1s Unrestncted Net Assets, which are available for any lawful purpose of the mstnullon

The Instnute's Statement of Net Assets portrays a strong financial picture for the year ended June 30, 2002, with unrestncted net assets of over $101 m1lhon available for future operallons A summary of the Inslltute's assets, hab1ht1es and net assets follows

Statement of Net Assets, Condensed (thousands of dollars)

Assets Current Assets Non-Current Assets

$183,756 753.781

Total Assets

$937.537

Liabilities Current Liab1hlles Non-Current L1ab1hlles

$ 70,890 10.750

Total Liabilities

$ 81.640

Net Assets Invested m Capital Assets, Net of Related Debt Restncted - Nonexpendable Restncted - Expendable Unrestncted

$693,827 43,973 16,530 I 01.567

Total Net Assets

$855.897

As stated earher, no comparallve data will be shown m tlns year's financial report, however, two frequently used financial rallos illustrate the financial health of the lnslitute. First 1s the current ratio, which compares current assets (cash, short term mvestments, accounts receivable, and mventones) to current hab1hlles (accounts payable, accrued hab1ht1es, deposits held for others, and deferred revenue) The purpose oftlns ratio 1s to assess W1 entity's ab1hty to meet near term obhgatlons. The lnslltute's current ratio 1s 2 6 1 winch exceeds the good current ratio "standard" of 2 I A second, related ratio 1s the acid test or qmck ratio measunng the rela1Ionsh1p between lughly hqmd assets and current hab1hlles. The Instttute's acid test ratio of 1.9 1 1s s1gmficantly higher than the "good standard" of I I.

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Statement ofRevenues, Expenses and Changes in Net Assets

Changes m total net assets as presented on the Statement of Net Assets are based on the activity presented m the Statement of Revenues, Expenses and Changes m Net Assets. The purpose of the statement 1s to present the revenues received by the mstltutlon, both operatmg and nonoperatmg, and the expenses paid by the mstltutlon, operatmg and nonoperatmg, and any other revenues, expenses, gams and losses received or spent by the mshtutlon Generally speakmg, operatmg revenues are received for prov1dmg goods and services to the vanous customers and constituencies of the mshtut1on Operatmg expenses are those expenses paid to acqmre or produce the goods and sefV!ces proVJded m return for the operating revenues, and to carry out the m1ss1on of the mstltuhon. Nonoperatlng revenues are revenues received for winch goods and services are not proVJded, at least directly. For example, state appropnatlons are nonoperatmg revenues because they are proVJded by the Legislature to the 1nst1tut1on without the Legislature directly rece1vmg commensurate goods and serVJces for those revenues even though customers paymg for those goods and services are rece1vmg the benefits.

Total revenues for the year ended June 30, 2002 were $714 mlihon Of tins amount, $229 m1lhon (32%) came pnmanly from state appropnatlons (nonoperatmg revenue) and $326 mlihon (46%) came from gifts, grants and contracts Tmhon and fees and sales, serVJces and other revenues accounted for the remammg 22% Operating expenses for the year totaled $663.8 m1lhon Total revenues mcreased m all four maJor categones m fiscal year 2002 over 2001, as did overall expenses, reflectmg the prov1s1on of goods and serVJces m carrymg out the m1ss1on of the Institute The followmg charts display the Inshtute's revenue sources and expenses, by natural class1ficat1on and functional classification

Revenue

!Total Revenue: $714,118,625.39

Sales, Services & Other 10 8%

Turtm and Fess 106%

State Appropnatlons 324%

Gifts, Grants & Con1racts 46 2%

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Operating Expenses by Natural Classlflcatlon

Deprec1atJon 6 4%1
UUhttes 2 9%-
Scholarshlps and Fellowships 1 0%
Travel, Suppltes and Services 25 4%

Salanes and Benefits 643%

!Total Expanses: $663,780,217.81 Operating Expenses by Functional Classlflcatlon

::. :. .\I~/. AuXJharyEnterpnses

. . 59%

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Student and ,- lnstltut1onal Support
149%

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Operation and

~ Maintenance of Plant

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73%

lnstruct1on, Research, and Public Service 709%
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Statement ofCash Flows

The last statement presented 1s the Statement of Cash Flows which presents detailed mformatlon about the cash activity of the mstltutlon dunng the year The statement 1s d1V1ded mto five sections The first section deals with operatmg cash flows and reflects the net cash used by the operatmg activities of the mstltutlon The second section reflects cash flows from non-capital financmg activities This section reflects the cash received and spent for nonoperatmg, nonmvestmg, and non-capital financmg purposes The third section reflects the cash flows from mvestmg activities and shows the purchases, proceeds, and mterest received from mvestmg act1V1tles The fourth section deals with cash flows from capital and related financmg act1v1t1es This section deals with the cash used for the acqu1s1tlon and construction of capital and related assets The fifth section reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets Overall, the lnstltute's cash position 1s very strong, with over $114 m1lhon available m cash, cash eqwvalents, and hqu1d short term mvestrnents at June 30, 2002

Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars)

Cash Provided (Used) By: Operating Act1V1tles Non-Capital Fmancmg Actlvltles lnvestmg Activities Capital and Related Fmancmg Act1V1t1es

$-165,938 237,917 -38,457 -66,584

Net Change m Cash Cash, Begmnmg ofYear

$ -33,062 28.544

Cash, End of Year Capital Assets

$ -4.518

The Institute had seven s1gmficant capital asset additions for fac1ht1es m fiscal year 2002 valued at over $35 rmlhon dollars Five of these additions were funded through gifts from the Georgia Tech Foundation

676 Manetta Street (Wood Products Laboratory) Buildmg- $2 48 rmlhon 645 Norths1de Dnve (Information Technology) Bu1ldmg - $2 47 milhon 500 Tech Parkway Buildmg- $2.71 milhon Structural Engmeermg and Matenals Research Building- $6 37 milhon Aerospace Engmeermg Combustion Lab - $7.02 m1lhon

The two other additions were funded by the State through the Georgia State Fmancmg and Investment Comrmss1on (GSFIC).

State Street parkmg deck - $10 06 milhon Tenth Street chiller plant - $4 37 milhon

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GSFIC also provided fundmg for research eqmpment purchases utilized by vanous programs w1thm the Institute For add1t10nal mformatlon concerrung Capital Assets. see Notes I, 6, 8, and 9 m the notes to the financial statements
Economic Outlook
The Instltute's long-term economic outlook 1s good. Over $101 m1lhon m unrestncted net assets are available to fund new and contmumg 1mtlat1ves Restncted expendable assets, which support specific programs, of over $16 5 m1lhon are available Sponsored programs, mcludmg fac1ht1es and adm1mstrat1ve cost recovenes, contmue to grow from past mvestments m human capital and fixed assets Over the past five years the lnstltute's sponsored operations have grown by $57 m1lhon, or 28%, from $204.6 nulhon m fiscal year 1998 to $261.6 rmlhon m the year Just ended
Though the long-term outlook 1s bnght for the Institute, there are challenges to face m the near term S1gmficant among these are the followmg
Revenue collections for the State of Georgia declmed throughout fiscal year 2002 and m the first few months of fiscal year 2003. Due to these revenue shortfalls, the lnstltute's state supported budget was cut 2 4% m fiscal year 2002 For fiscal year 2003, state appropnatlons are bemg released at 97% of the approved fundmg level excludmg 1nstruct1onal budgets Tmtlon was mcreased m fiscal year 2003 to mamtam program services m the face of higher enrollments and mcreases will hkely be necessary ID fiscal year 2004 as well.
Cont1Du1Dg Education revenue declined ID fiscal year 2002 as result of the September 11, 2001 terronst attacks and the economy Early md1cat1ons for fiscal year 2003 are more favorable for a return to pnor levels and the outlook for fiscal year 2004 1s especially favorable given the lnstltute's mvestrnent m new fac1ht1es
The Institute 1s ID the rmdst of a s1gmficant construction program that will add over 1.8 m1lhon square feet of new space m the next two years The debt service on tlns construction will be $7 4 m1lhon m fiscal year 2004 and then approximately $10 m1lhon per year thereafter The net add1t1onal utlhty, mamtenance, and other costs associated with this square footage m fiscal year 2003 1s estimated to be $1 7 m1lhon, mcreasmg to an estimated $5.2 m1lhon m fiscal year 2004 Debt service will be funded from mcreases m program revenues and gifts while mcreases m bu1ldmg services costs will be funded pnmanly from state appropnatlons formula mcreases Given the state of the economy, the Institute contmues to review and revise its fundmg plan as needed The capital mvestments m new fac1ht1es have positioned the Instllute to expand its markets and compete more effectively
The research program 1s qmte strong and well d1vers1fied among governrnent and pnvate sponsors New awards m fiscal year 2002 were a record high of $279 m1lhon, thus the Institute 1s well positioned for the upcom1Dg year
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Given the Instltute's strong overall financial condition and exceptional faculty, students and staff, 11 should weather the short term financial challenges n faces Management 1s committed to
mamtammg a strong financial position while pursumg its m1ss1on to define the technological research umvers1ty of the 21 st Century

G Wayne Clough President Georgia Institute of Technology

Robert K Thompson Semor Vice President Admm1strauon and Fmance

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BASIC FINANCIAL STATEMENTS
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GEORGIA INSTITUTE OF TECHNOLOGY
STATEMENT OF NET ASSETS
JUNE 30 2002
ASSETS
Current Assets Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items lnventones
Total Current Assets
Noncurrent Assets Cash and Cash Equivalents Investments Notes Receivable, Net Caprtal Assets, Net (See Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current 1..JabllIbes Cash Overdraft Contracts Payable Salanes Payable Payroll Withholdings Accounts Payable Deferred Revenue Funds Held for Others Cap,tal Leases Compensated Absences Other 1..Jab1hties
TotaJ Current 1..Jab1l1bes
Noncurrent l.JabIhtJes Capital Leases Compensated Absences
Total Noncurrent 1..JabIlIbes
Total l.JabIlIbes
NET ASSETS
Invested in Caprtal Assets Net of Related Debt Restncied for
Nonexpendable Expendable Unrestncted
Total Net Assets
The notes to the financial statements are an integral part of ttus statement
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EXHIBIT"A"

$ 131,768,619 74
21,770,978 26 23 002.413 08
6,646,816 48 567 482 95
$ 183,756,310 51

$

92,68065

51,353,136 44

7,254,187 69

695,080,387 56

$ 753,780,392 34

$ 937,536,702 85

$

4,610,983 38

2,145,248 62

171,125 90

14,405,556 91

2,900,410 81

29,216,022 41

1, 128,67142

604,433 75

13,554 779 18

2,152,995 66

$ 70,890,228 04

$

648,521 25

10 10131984

$ 10 749 841 09
s 81,640,069 13

$ 693,827,432 56 43,972,515 42 16,530,086 15 101,566,599 59
$ 855,896,633 72

GEORGIA INSNUTE OF TECHNOLOGY STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS
YEAR ENPEP JUNE 30 2002

EXHIBIT "B"

OPERATING REVENUES
Student Turt.Jon end Fees Less Scholarship Allowances
Grants end Contracts Federal
State
Local Nongovemmentel Renta end Royalbea Sales and Services of EducabOnal Departments Auxlltery Enterprises Residence Halls Bookstore Food SeMCeS Pal'Xln;/T1111nsportatton Health Services ln1ercollegl11te Athlet.Jcs Other Orgaruzabon.s Other Operabng Revenues
Total Operating Revenun
OPERATING EXPENSES
Sel11ne11 Faculty Steff
Employee Benefits Other P raonal Servlcea T1111vel Scholarstups end Fellowshr.ps UtJlrtJes Supplies and Other Ser,ices OepreclatJon
Total Operatll'IQ Expenses
Opernng Income (Losa)
NONOPERATING BE\IENUES (EXPENSES>
State Appropnabonl Grants and Contracts
Nongovernmental Gifts Interest and Other Investment Income tntereat Exp11n&e (Capital Asaets) Other Nonoperatmg Rvenun
Net Nonoperatmg Revenues
l:ncome Before Other Revenues, Expenses Ga,ns or Losaes
Caprtal G1111nta and Gifts State Nongovernmental
Total Other Revenues
lncreese/(Oecreue) m Net Asset:a
Ne1Aueh Net Asaeli - Beg,nmng of Y ar es Ong1nally Reported Cumulabve Effed of Changes m Accountmg Pr1naple
Net Assets - Be,gmnmg of Ye r Restated

$

86 "432,459 90

-11 225 743 00

191,11630945 9 984 093 66 1 339 489 18
94 141,503 77 905 164 35
12 511,27114

28 421 586 15 969,688 97
12 759,317 98
e 708 243 91
4 173,571 09 1720,15742 1094,02010 10 568 130 84

$ 451 817 244 71

$

168,292 710 62

186 237 398 31

66 931 086 32

1 489 701 47

10,846 868 87

6,838 677 67

19,304 135 44

161513862 78

42 325.776 33

$ 683 780 217 81

$ -212 162 973 10

$ 228,954 253 00

7,662 617 85 97 775 00 11223553 -73 071 68
3 638 514 24

$ 240 412 323 94

$

28.249 350 &4

$

16 995 354 53

5 093 702 21

$

22 089 056 74

$

50 338 407 58

$ 1 244 022 756 92 -438 464 530 78
$ 805 558 226 14

Net Assets - End of Y ar The notes to the finanaal statements are an integral part of tht. statement
- 14 -

$ 855 896 633 72

GEORGIA INSTITIJTE OF TECHNOLOGY STATEMENT OF CASH FLOWS YEAR ENPEP JUNE 30 2002
CASH FLOWS FROM OPERATING ACTIVTTIES Tuition and Fees Grants and Contracts Sales and Serv1CM or Educational Departments Paymonts to Suppliers Payments to Employees Payments for SCholarshlps and Fellowships
-Loans Issued to Students and Empl0yee5
ColleCbon of Loans to Students and Employees Awol1ary Enterprise ChafgeS
Rosodence Hal~
Food Services Parklng{Tranaportation Health ServlceS Intercollegiate Athleticl Other Orgammtlons Other Recelpts (Payments)
Net cash Prov\dod (Used) by ()peratlng ,.,,.,,_
CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES State App,cpnabons Agency Fun<b Transactions GIiis and Grants Recerved to< Other ttlan Capital Purposes Other Nonoperetrng Recetptl
Net cash Flows Provided (Used) by Noncapltal Finanang Actrvrbes
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Proceeds from Sale of Capital Nsets Purchases of C.Bprtal ~sets Pnnapal Patd on Caprtal Debt and Lease Interest Paid on Capital Debt and Lease
Net cash Provided (Uaed) by Capttal and Ralaled Flnanang AdMtles
CASH FLOWS FROM INVESTING ACTMTIES Interest on lnve9trnents Proceeds rrom Sales and Mlturtties ol lnw.st.1tents (Net)
Net Cash Prov1ded (Used) by Investing AclMbes
Net lncreae/(Deaeaae) m cast,
Cssh and Cash EqU!Yalents - June 30, 2001 Less Short-Tenn Investments
C81tl and Cash EquMUents - Beg11n1ng of YNr
C8Sh Ind Cash Eq,.nvalents End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTMTlE.S
Operet,ng Income (Loss)
Ad:lustrnents to Reconale Net Income (Loss) to Net Cash PrOY>ded (Uaed) by Operabng Actrvrbes
Dapreaatlon Change In Aaaeta and Lilblllbes
'"""-p-Accounts ReceMlbles Net
N""o't"e"s"R' etteeemtvsables Net Accounts Salanes Payabte Payroll Wrthholdmg and Employer Matr:1-.ng Bene!!ts Deferred Revenue Other Llabltlbes Compensated Absences
Net cash PrtMdod (Used) by Operatlng Actlv,bo1
The notes to the ManciaI statements are an Integral part of this statement
- 15

EXHIBIT"C"

s

B6 386,038 68

296 127 300 53

3 237 651 36

-2e0 507 801 68

.354 062 627 88
-6 836,8n e1

-2 963 782 54

2 724 529 64

28,421 586 15 2 882,182 23 12 759,317 88 8 708,243 91 4 173,571 09 1 720 157 42 1 094 020 10 12 1eg G.c1 13
s -165 938 272 62

s 228 954,253 00
-193 301 08 7 780 382 65 1 378 078 SQ
s 237 917 423 46

s

4 524 87110

-70 061 367 28

-874,643 38

-73 071 58

s -86,584,211 25

s

11223553

-38 56Q 263 27

s .38 457 027 74

s -33.082,088 15

s 1~g 628,388 92
-131,084,813 50

s

28,5"3,785 42

s

518 302 73

s -212 182,973 10
42,325,ne 33
8,478 204 88 998,335 75 -747,998 83 -23Q 282 00
-3 203,409 71 -4,40611
21e1 635 se
-5 599 818 05 1,2115,564 07
812 2151 88
s -185 938 272 82

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FlNANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia Inslitute of Technology serves the state, and nat10nal comrnumues byprov1dmg Its students with academic mstruct10n that advances fundamental knowledge, and by d1ssemmatmg knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Georgia Insutute of Technology 1s one of thirty-four (34) State supported member msutuuons of lugher educauon m Georgia wluch compnse the Umvers1ty System of Georgia, an orgamzat10nal umt of the State of Georgia The accompanymg financial statements reflect the operauons of Georgia Institute of Technology as a separate reportmg entity
The Board of Regents has consutuuonal authonty to govern, control and manage the Umvers1ty System of Georgia This authonty mcludes but 1s not hm1ted to the power to des1giiate management, the ab1hty to s1gmficantly mfluence operalions, the authonty to control 1nst1tullons' budgets, the power to determme allotments of State funds to member mstitutlons and the authonty to prescnbe accountmg systems and adrmmstrauve pohc1es for member mst1tut1ons Georgia Institute of Technology does not have authonty to retam unexpended State appropnatlons (surplus) for any given fiscal year. Accordmgly, Georgi.a Inslitute ofTechnology 1s considered an organ1zalional unit of the Board of Regents of the Umvers1ty System ofGeorgia reportmg enlity for financial reporling purposes because of the significance of its legal, operallonal, and financial relat1onsh1ps with the Board of Regents as defined m Sect.Ion 2100 of the Governmental Accountrng Standards Board (GASB) od1ficat1on of Governmental Accounling and Fmanc1al Reportmg Standards
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Fmanc1a/ Statements and Management D1scuss1on and Ana(vsisfor State and Local Governments This was followed rn November 1999 by GASB Statement No 35, Basic Fmanc1a/ Statements and Management's D1scuss1on and Analysis for Public Colleges and Umvers1t1es The State of Georgia 1s required to implement GASB Statement No 34 as of and for the year ended June 30, 2002 As an organ1zat10nal umt of the State of Georgia, the Inslitute 1s also required to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No. 38 The financial statement presentation required by GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 provides a comprehensive, enllty-w1de perspective of the Instltute's assets, hab1hlles, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective prev10usly reqmred
The Institute has elected to not restate its 200 I financial statements to conform with the new financial statement presentallon, therefore comparal!ve financial rnformal!on WIii not be presented for fiscal year 2002. S1gmficant accountmg changes made rn order to comply with the new reqmrernents mclude (1) adopt10n of deprec1al!on on capital assets; and (2) recogml!on of compensated absences. Generally Accepted Accountmg Pnnc1ples (GAAP) requires that the
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GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION reportmg of swnmer school revenues and expenses be between fiscal years rather than m one fiscal year Due to the lack ofmatenal1ty, Insutuuons ofthe Uruvers1ty System ofGeorgia will continue to report summer revenues and expenses m the year in which the predommate act1V1ty takes place
BASIS OF ACCOUNTING For financial reportmg purposes, the Institute 1s considered a special-purpose government engaged only in busmess-type activities. Accordmgly, the Insutute's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accountmg, except as noted in the preceding paragraphs. Under the accrual basts, revenues are recogmzed when earned. and expenses are recorded when an obhgation has been incurred All s1gruficant mtra-msutute transactions have been ehmmated
The lnstJtute has the option to apply all Fmanc1al Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The Institute has elected to not apply FASB pronouncements issued after the apphcable date
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoptton of GASB Statement No. 34, the lnstJtute was also required to make
certam changes in accounttng prmc1ples, spectfically (I) adoption of depreciation on capital assets,
and (2) recordmg of compensated absences GASB Statement No. 34 requires certam swnmer semester revenues be recognized between fiscal years rather than the fiscal year m which the semester was predommantly conducted The Umverstty System ofGeorgia has chosen to continue to record summer revenue m the year m winch the semester was predominantly conducted Net assets at July I, 2001 were reduced by $438,464,530 78 for the cumulative effect of these changes.
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Eqmvalents consist of petty cash, demand deposits and lime deposits in authonzed financial mst1tut1ons, and cash management pools that have the general charactensllcs of demand deposit accounts
INVESTMENTS The Institute accounts for its mvestments at fau value m accordance with GASB Statement No 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools Changes m unrealized gam (loss) on the carrymg value ofmvestments are reported as a component of mvestment income m the statements of revenues, expenses, and changes m net assets
Investments m the vanous investment pools mamtamed by the lnstJtute consist m part, of U S Agency Secunues and other mortgage-backed secunlles such as collateralized mortgage obhgallons and adJustable rate mortgages These mortgage-backed secunlles are reported as U.S. Government Secunlles and Corporate Obhgallons in the note of custodial credit nsk (See Note 2 on
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GEORGIA INSTITIJTE OF TECHNOLOGY
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS Categonzat1on of Investments) Investments m the mvestment pools are transacted by an external mvestment firm llilder direction ofmvestment adVJsory agreement executed between the Institute and the mvestment management firm As of Jllile 30, 2002, the Institute had $1,503,262 35 mvested m U S Agency Secun!Jes and other mortgage-backed secunt1es
ACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fee charges to students and aux1hary enterpnse serVJces provided to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia. Accounts receivable also mclude amounts due from the Federal government, state and local governments, or pnvate sources, m connection with reimbursement ofallowable expenditures made pursuant to the Inst1tute's grant and contracts. Accollilts receivable are recorded net of estimated uncollectlble amollilts
INVENTORIES Consumable supphes are earned at the lower of cost or market on the first-m, first-out ("FIFO") basis
Resale Inventones are valued at cost usmg the average-cost basis
NON-CURRENT CASH AND INVESTMENTS Cash and mvestments that are externally restncted and cannot be used to pay current hab1ht1es are classified as non-current assets m the statements of net assets
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqws1tlon, or farr market value at the date of donation m the case of gifts For eqmpment, the Institute's cap1tahzat1on pohcy mcludes all items with a llillt cost of $5,000 00 or more, and an est1mated useful hfe of greater than one year Renovations to bu1ldmgs, mfrastructure, and land 1mprovements that exceed $100,000 00 and s1gruficantly mcrease the value or extend the useful hfe of the structure are cap1tahzed Routme repairs and mamtenance are charged to operatmg expense m the year m which the expense was mcurred Deprec1atlon 1s computed usmg the straight-line method over the estimated useful hves of the assets, generally 40 to 60 years for bwldmgs, 20 to 25 years for mfrastructure and land improvements, 10 years for hbrary books, and 3 to 7 years for equipment
To obtain the total picture of plant add1t1ons m the Uruvers1ty System, 11 1s necessary to look at the actlv1t1es ofthe Georgia State Fmancmg and Investment Comnuss1on (GSFIC) - an orgaruzatJon that 1s external to the System GSFIC issues bonds for and on behalfofthe State ofGeorgia, pursuant to powers granted to 11 m the Const1tut1on ofthe State ofGeorgia and the Act crcatmg the GSFIC. The bonds so issued constitute d1Tect and general obhgat1ons of the State of Georgia, to the payment of which the full faith, credit and taxmg power of the State are pledged.
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GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS Effective July I, 2001, the GSFIC retains construclion in progress on their books throughout the construclion penod and transfers the entire proJect to Georgia lnslitute of Technology when complete For the year ended June 30, 2002, GSFIC transferred capital add11ions valued at $16,995,354 53 to Georgia Institute ofTechnology The balance ofconstruction in progress retained by GSFIC totaled $29,690,467 30 at June 30, 2002
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and certam aux1hary act1VIl!es pnor to the end of the fiscal year but related to the subsequent accounting penod Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
COMPENSATED ABSENCES Employee vacalion pay 1s accrued at year-end for financial statement purposes. The hab1hty and expense incurred are recorded at year-end as accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Institute of Technology had accrued hab1hty for compensated absences in the amount of$22,843,837 13 as of July I, 2001. For Fiscal Year 2002, $14,367,041 07 was earned in compensated absences and employees were paid $I 3,554,779. I 8, for a net increase of $812,261 89. The ending balance as of June 30, 2002 in accrued hab1hty for compensated absences 1s $23,656,099 02
NON-CURRENT LIABILmES Non-current hab1hlles include (I) hab1hlles that will not be paid w1tlun the next fiscal year, (2) cap1tal lease obhgallons with contractual matuntles greater than one year; and (3) other hab1htJ.es that, although payable within one year, are to be paid from funds that are classified as non-current assets
NET ASSETS The Inslltute's net assets are classified as follows
Invested m capital assets, net of related debt ThIS represents the lnstJ.tute's total investment in capital assets, net of outstandmg debt obhgallons related to those capital as~ets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt (The term "debt obhgallons" as used in this defimllon does not include debt of the GSFIC as discussed above )
Restricted net assets - nonexpendable Nonexpendable restncted net assets consist of endowment and s1m1lar type funds in which donors or other outside sources have sllpulated, as a condition ofthe gift instrument, that the pnnc1pal 1s to be maintained inVIolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to
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GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS pnnc1pal The Institute may accumulate as much ofthe annual net income of an institutional fund as 1s prudent under the standard estabhshed by Code Section 44-15-7 of Annotated Code of Georgia
Restricted net assets - expendable. Restncted expendable net assets mclude resources in winch the Institute 1s legally or contractually obhgated to spend resources in accordance with restnctlons imposed by external third parties
Unrestricted net assets Unrestncted net assets represent resources denved from student twt10n and fees, state appropnatlons, and sales and services of educational departments and aux1hary enterpnses These resources are used for transactions relatmg to the educational and general operat10ns of the Institute, and may be used at the d!scretJon ofthe governmg board to meet current expenses for those purposes. Unexpended state appropnat1ons must be refunded to the Board of Regents of the Umvers1ty System of Georgia - Admm1strat1ve Central Office for remittance to the Office ofTreasury and Fiscal Services These resources also mclude aux1hary enterpnses, winch are substantially self-supporting act1V1t1es that provide services for students, faculty and staff
When an expense 1s mcurred that can be paid usmg either restncted or unrestncted resources, the InstJtute's pohcy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources
INCOME TAXES Georgia Institute ofTechnology, as a pohtlcal subd1v1s1on ofthe State of Georgia, 1s excluded from Federal income taxes under Section I 15(1) of the Internal Revenue Code, as amended
CLASSIFICATION OF REVENUES The Institute has classified its revenues as either operating or non-operating revenues m the Statement of Revenues, Expenses, and Changes m Net Assets accordmg to the following cntena
Operating revenues Operatlng revenues include actJVltles that have the charactenstlcs ofexchange transactions, such as (I) student tuition and fees, net ofscholarslnp allowances, (2) sales and services of aux1hary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnatlons, and (4) interest on institutional student loans
Non-operating revenues Non-operating revenues mclude act1V1t1es that have the charactenstJcs of non-exchange transactions, such as gifts and contnbutlons, and other revenue sources that are defined as non-operating revenues by GASB No 9, Reporting Cash Flows of Propnetary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No 34, such as state appropnat1ons and mvestment income

- 21 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SCHOLARSIDP ALLOWANCES Student tllllion and fee revenues, and certam other revenues from students, are reported at gross with a contra revenue account of scholarslnp allowances m the Statement of Revenues, Expenses and Changes m Net Assets Scholarship allowances are the difference between the stated charge for goods and services provided by the Inslitute, and the amount that 1s pwd by students and/or third parUes makmg payments on the students' behalf Certwn governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatmg revenues m the lnslitute's financial statements To the extent that revenues from such programs are used to sausfy tu11ion and fees and other student charges, the lnslitute has recorded contra revenue for scholarslnp allowances
NOTE 2 CASH AND CASH EQUIVALENTS: OTHER DEPOSITS, AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State ofGeorgia (and thus Georgia Institute ofTechnology) cannot be placed m a depository paymg mterest longer than ten days without the deposltoryproVJdmg a surety bond to the State. In heu of a surety bond, the depository may pledge as collateral any one or more of the followmg secunlies as enumerated m the Official Code of Georgia Annotated Secl!on 50-17-59.
I Bonds, bill, certificates ofmdebtedness, notes, orotherchrect obhgalions ofthe Uruted States or of the State of Georgia
2 Bonds, bills, cerlificates of mdebtedness, notes, or other obhgalions of the counlies or muruc1pahlies of the State of Georgia
3 Bonds of any pubhc authonty created by the laws of the State of Georgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for tins purpose
4 Industnal revenue bonds and bonds of development authonlies created by the laws of the State of Georgia
5 Bonds, bills, cerlificates of mdebtedness, notes, or other obhgalions of a subs1d1ary
corporalion ofthe Uruted States government, winch are fully guaranteed by the Umted States government both as to pnnc1pal and mterest, or debt obhgalions issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal lntcrmcchate Crecht Bank, tbe Central Bank for Cooperalives, the Farm Credit Banks, tbe Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
6 Guarantee or msurance ofaccounts proVJded by the Federal Deposit Insurance Corporalion

- 22 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 2 CASH AND CASH EOUlVALENTS, OTHER DEPOSITS, AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES As authonzed in the Official Code of Georgia Annotated Secl!on 50-17-53, the State Depository Board has adopted pohc1es winch allow agencies ofthe State ofGeorgia (and thus Georgia Institute of Technology), the opt10n of exempting demand deposits from the collateral reqmrements

The Treasurer ofthe Board ofRegents 1s responsible for all details relalive to fwruslung the reqmred depos1toryprotect10n for all umts of the Umvers1ty System of Georgia

CATEGORIZATION OF DEPOSITS The lnstltute's cash deposits are categonzed by nsk as follows:

Category 1 - Amounts covered by depository insurance or collateralized with secuntles (at fair value) held by the Institute or by its agent in the lnst1tutc's name

Category 2 - Amounts collateralJZed with secunt1es (at fair value) held by the pledging financial inst1tullon's trust department or agent in the lnslltute's name

Category 3 - Amounts collateralIZed with secuntles (at faIT value) held by the pledging financial institution, or by its trust department or agent but not ID the lnstJtute's name, and amounts uncollateral1zed

Cash Deposits as of June 30, 2002 are as follows

Cash Deposits Investment Portfolio
Accounts
Total Cash Depos,ts

Carrying
Amount

Bank
Balances

Risk Catcgoncs

S-4.611,671 93 S 7,697,588 51 s 184,6!0 99 s

000 $7.512,97752

-124 997 27 -124.997 27

I17 02

s~ ZJ~ ~~9 ~g S 757~ ~2J 2~ s 1~ z~s ui s_ __,o.,.o.,.o s z512 222 s2

CATEGORIZATION OF INVESTMENTS The lnstltute's investments are categonzed as to credit nsk withm the three categones descnbed below

Category I - Insured or registered, or secunt1es held by the Inst:ttute or its agent ID the Instltute's name.

Category 2 - Uninsured and unregistered, with secunl!es held by the counter party's trust department or agent m the lnstltute's name

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GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EQUIVALENTS. OTHER DEPOSITS. AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS Category 3 - Unmsured and unregistered, with secunues held by the counter party, or by its trust
department or agent, but not m the Inslltute's name

At June 30, 2002, the Instttute's mvestments consisted of the followmg

Type of Investments
Cotm00nStock Corporate Bonds U S Government Secunues
and Corporate Obhgat1ons
Totals

Risk ~t~gon~
s 90,07252 s 840,288 ss s
2,995,775 40
5 3)3 3) 9 6)7 )5) 4)
s 2~ Ja~ Bl St~ 4~J ~I~ J~ s

Investments Not SubJect to CatcgonzatJ.ons Board of Regents
Shon-Tenn Fund Total Return Fund Investment Portfolio Accounts Mutual Funds Real Estate State Investment Pools

Total Investments

Canymg

J

Amount

000 $ 930,361 07 2,99s,ns 40

2 622 464 72 0 00 S 13,548,601 19

5,025,852 20 37,847,753 30
80,321 11 1,458 II
)26,742,767 54
~183 246 753 4S

Funds mvested m an mvestment pool managed by another governmental enuty are not reqwred to be categonzed smce the Instttute did not own any specific, 1denttfiable mvestment secunttes ofthe pool.

NOTE 3 ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2002

Student Tu1t1on and Fees Auxiliary Enterpnses and Other Operatmg Acttv11tes Federal, State, and Private Funds

$ 2,146,327 81 2,077,287 39
42.342,876.23

$46,566,491 43

Less Allowance for Doubtful Accounts Net Accounts Receivable

1,793.100 09
$44,773,391 34

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GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 4 INVENTORIES

Inventones consisted of the followmg at June 30, 2002

Physical Plant Other

$ 243,993 36 323.489 59

Total

$ 567,482.95

NOTE 5 NOTES/LOANS RECEIVABLE

Notes/Loans receivable at June 30, 2002, prunanlycons1st ofstudent loans made through the Federal Perk.ins Loan Program (the Program) The Program provides for cancellauon of a loan at rates of I 0% to 30% per year up to a maximum of I 00% 1fthe parUc1pant complies with certam prov1s1ons The Federal government reimburses the Institute for amounts cancelled under these prov1S1ons As the Institute determmes that loans are uncollectlble and not eligible for reimbursement by the Federal government, the loans are wntten off and assigned to the U S Department of Education The Institute has provided an allowance for uncollecUble loans, wluch, m management's op1mon, 1s sufficient to absorb loans that will ultimately be wntten off

NOTE 6 CAPITAL ASSETS

The balance at July I, 2001 was adjusted for accountmg changes reqmred m 1mplemenung GASS Statements 34 and 35 as disclosed m Note I. Followmg are the changes m capital assets for the year endedJune30,2002

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GEORGIA INSTITlITE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 6 CAPITAL ASSETS

AdJusted Balance July I, 200!

Add1t19nc:;

Rcducuons

,o Balance
June 2002

Capital Assets, Not Being Depreciated Land and Land Improvements Construction Work-In-Progress
Capnahzed Collect1ons

S 29,335,742 64 4,046,929 18 S 17,484,398 28
3,350 335 00

S 29,335,742 64 21,531,327 46
3,350,335 00

Total Capital Assets Not Being Depreciated

S 36 733,006 82 s 17 484 398.28

s 54,217,405 JO

Capital Assets, Being Depreciated Infrastructure Building and Building Improvements Fac1ht1es and Other Improvements
Equipment CapnalLeases Library Collect1ons

S 32,575,585 78 s 4,3 7 I ,860 00

s 36,947,445 78

586,532,783 06 13,072.812 42
253,492,921 64 2,166,913 77
61 039 HI 63

39,303,860 68 S 664,050 30
25,946.560 50 1,187,156 57
4, '21 013,00

63,571 00 6,983,381 96
6,69358

625,773,072 74 13,736,862 72
272,456,100 18 3,354,070 34
65 42H61 05

$948 880 358 30 S 75,864 501,05 s 7,053,646 54 SJ OI7,69IJI2 81

Less Accumulated Deprccultlon Infrastructure Buildings end Building Improvements Fac1ht1es and Other Improvements
Equipment Capital Leases Library Collect1ons

s 7,257,534 62 s 829,171 74

s 8,086,706 36

142,824,776 99 5,930,607 45
141,384,500 94
350,589 58
41 545 655 43

14,377,810 22 $ 359,489 12
23,135,635 I 9 290,045 71
3 333,624 35

42,085 56 4.742,43 I 85
6 693.58

157,160,501 65 6,290,096 57
159,777.704 28 640.635 29
44 872 586 20

S339,293 665 OJ S 42,325,776 33 s 4 ?21.::10 99 S 376,828J30 35

Toral Capital Assets, Being Depreciated, Net

ss 5609,586 693 29 s 33 538 724 72 s 2,262 435 s 640,862,982 46

Capital Assets, Net

$646 312 700 11 s 5I023 123 00 S 2 262 435 55 s 695 080 387 56

NOTE 7 DEFERRED REVENUE

Deferred revenue consisted of the followmg at June 30, 2002.

Prepaid Twtlon and Fees Research Other Deferred Revenue

$ I 6,266,840 25 9,734,819.54 3.214.362 62

Totals

$29 216 022,41

NOTE 8 LONG-TERM LIABILITIES

Long-term hab1!1ty activity for the year ended June 30, 2002, was as follows

- 26 -

GEORGIA INSTITlITE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 8 LONG-TERM LIABILITIES

Leases Lease Obhgat,ons
Other Liab1 hues Compensated Absences
Total Long-Tenn ObhgatJons

Balance
July). 200J
s 1,040,441 81
22 S43 837 13 S~JS~ 22S 2~

Add1uons
s 1,187,156 57
J4 367 04J 07
SI~ ~~j 122~

Rcducnons
s 974,643 38
13.554.77918 SI~ ~~2 ~~~ ~~

Balance
June '9 2002
s 1,252,955 00
2, 656 099 02
S2~2Q2Q~~02

Current Pon1on
s 604,433 75
13,554.779.JB
SJ~ 1~2 iii ~J

NOTE 9 SIGNIFICANT CONSTRUCTION COMM:ITMENTS

Georgia InstJtute of Technology had s1gruficant unearned, outstanding, construct10n or renovation contracts executed m the amount of$7,025,321.32 as ofJune 30, 2002. This amount IS not reflected m the accompanymg basic financial statements

NOTE 10 LEASE OBLIGATIONS

CAPITAL LEASES Capital leases are generally payable in mstallments ranging from monthly to annually and have terms expmng m vanous years between 2003 and 2007 Expenses for fiscal year 2002 were $1,047,715 06 ofwh1ch $73,071.68 represented mterest Total pnnc1pal pmd on capital leases was $974,643 38 for the fiscal year ended June 30, 2002. Interest rates range from 5 percent to 11 percent The followmg 1s a summary of the carrymg values of assets held under capital lease at June 30, 2002.

Eqmpment

$ 2.7!3.435,05

CertaJn capital leases provide for renewal and/or purchase options Generally purchase ophons at bargam pnces of one dollar are exerc1sable at the exprratlon of the lease terms

OPERATING LEASES Georgia Institute of Technology's noncancellable operating leases haV1ng remmnmg terms of more than one year expire m vanous fiscal years from 2003 through 2008 CertaJD operatmg leases provide for renewal options for penods from one to three years at their fmr rental value at the time of renewal All agreements are cancelable 1f the State of Georgia does not proVIde adequate fundmg, but that 1s considered a remote poss1b1hty. In the normal course of business, operating leases are generally renewed or replaced by other leases Operatmg leases are generally payable on a monthly basis Examples ofproperty under operatmg leases are copiers and other small busmess eqmpment.

Description of Related Party Leases In 1994, Georgia Institute of Technology entered mto a real property operatmg lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office space renewable each year

- 27 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 10 LEASE OBLIGATIONS
OPERATING LEASES
Description of Related Party Leases The cwrent agreement 1s for July I, 2002 through June 30, 2003 for monthly fees of $15,559 20 The agreement does contain a renewal option Under this agreement, Georgia Insutute of Technology 1s obligated to pay Georgia Tech Research Corporallon $ I97,716.92 m fiscal year 2003
In I995, Georgia Institute of Technology entered mto a real property operatmg lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office space renewable each year. The current agreement 1s for July I, 2002 through June 30, 2003 for monthly fees of$105,055 82. The agreement does contain a renewal option. Under this agreement, Georgia lnstitute of Technology 1s obhgated to pay Georgia Tech Research Corporation $1,260,669 84 m fiscal year 2003.
In 1995, Georgia Institute of Technology entered mto a real property operating lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office space renewable each year The current agreement 1s for July 1, 2002 through June 30, 2003 for monthly fees of$125,870 00 The agreement does contain a renewal option. Under th.ls agreement, Georgia Institute of Technology 1s obhgated to pay Georgia Tech Research Corporation $386,316 19 in fiscal year 2003
In 2000, Georgia Insutute of Technology entered mto a real property operating lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office space renewable each year The current agreement 1s for July 1, 2002 through June 30, 2003 for monthly fees of$8,325 80 The agreement does contam a renewal option. Under th.ls agreement, Georgia Institute ofTechnology 1s obhgated to pay Georgia Tech Research Corporation $99,909.60 m fiscal year 2003
In 2002, Georgia lnstitute of Technology entered mto a real property operating lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office/warehouse space from July I, 2002 through December 31, 2002 for monthly fees of$3,730.06. The agreement does not contain a renewal option Under th.ls agreement, Georgia Institute ofTechnology 1s obhgated to pay Georgia Tech Research Corporation $44,760.72 m fiscal year 2003
In 2002, Georgia Institute of Technology entered mto a real property operating lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office and research space from July I, 2002 through June 30, 2003 for monthly fees of$93,677.00 Under th.ls agreement, Georgia Institute of Technology is obhgated to pay Georgia Tech Research Corporation $1,124,124 00 m fiscal year 2003.
In 2002, Georgia Institute of Technology entered into a real property operating lease with the Georgia Advanced Technology Ventures, a related party, for office space renewable each year. The current agreement 1s for May I, 2002 through September 30, 2002 for monthly fees of$12,462 92
- 28 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE IO LEASE OBLIGATIONS

OPERATING LEASES

Description of Related Party Leases The agreement does contain a renewal option Under tlus agreement, Georgia Institute of Technology 1s obligated to pay Georgia Advanced Technology Ventures $37,388.76 m fiscal year 2003

Noncancellable operallng lease expenses m 2002 were $10,285,893.10 for real property

SUMMARY OF LEASE OBLIGATION Future commitments for capital leases (winch here and on the Statement ofNet Assets mclude other mstalhnent purchase agreements) and for noncancellable operatmg leases havmg remammg terms m excess of one year as of June 30, 2002, were as follows

Capital Leases

Operatmg Leases

Year Endmg June 30 2003 2004 2005 2006 2007
Total Mmunurn Lease Payments

$ 675,274.35 $ 5,464,021 27 374,469.06 296,021.20 27,266 54 1,952 00
$ 1,374,983 15 $ 5 464 021.27

Less: Interest

122,028.15

Pnnc1pal Outstandmg NOTE 11 RETIREMENT PLANS

S I 252 955.00

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia Institute ofTechnology part1c1pates m the Teachers Ret1rement System ofGeorgia (TRS), a cost-shanng mulllple-employer defmed benefit pension plan established by the General Assembly of Georgia for the purpose of prov,dmg retirement allowances and other benefits for teachers of the State ofGeorgia TRS provides service rellrement, d1sab1hty retuement, and survivor's benefits for ,ts members m accordance with State statute The Teachers Re!Jrement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts.

-29 -

GEORGIA INSTITlITE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 11 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Employees of Georgia Institute ofTechnology who are covered by TRS are reqmred by State statute to contribute 5% of their gross earmngs to TRS. Georgia Institute of Technology makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees m accordance with State statute and as adVJsed by their mdependent actuary For fiscal year 2002, the employer contribution rate was 9 24% for covered employees Employer contributions for the current fiscal year and the precedmg two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Reqmred Contribution

2002 2001 2000

100/c, 100% 100%

$14,821,929 46 $18,792,120 88 $19,346,820 05

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a smgle-employer defined contribution plan, 1s an optional retirement plan established and admm1stered by the Board of Regents of the Umvers1ty System of Georgia, under which 1t may purchase annuity contracts for the purpose of proVJdmg retirement and death benefits for eligible faculty and pnnc1pal adm1mstrators Benefits depend solely on amounts contributed to the plan plus mvestrnent earmngs Benefits are payable to part1c1patlng employees or their benefic1anes m accordance with the terms of the annmty contracts.

Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System Employer contributions are established by statute and may be amended only by the General Assembly ofthe State of Georgia. The employer contributes 9.62% ofthe part1c1patmg employee's eamable compensation Employees contribute 5% of their earnable compensation Amounts attnbutable to all plan contributions are fully vested and non-forfeitable at all times

Georgia Institute of Technology and the covered employees made the required contributions of $11,855,993 71(962%) and $6,161,653.21 (5%), respectively

- 30-

GEORGIA INSTITTJTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 11 RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Georgia Institute of Technology participates in the Georgia Defined Contnbution Plan (GDCP) wluch 1s a single-employer defined contnbution plan established by the General Assembly of Georgia for the purpose of proVIding retirement coverage for State employees who are temporary, seasonal, and part-l!me and are not members of a pubhc retirement or pens10n system. GDCP 1s adm1mstered by the Board of Trustees of the Employees' Retirement System of Georgia
Benefits
A member may retrre and elect to receive penod1c payments after attamment ofage 65. The payment
will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees Ifa member has less than$ 3,500.00 credited to his/her account, the Board ofTrustees has the opl!on ofreqwnng a lump sum dtstnbul!on to the member m lieu ofmaking penodic payments Upon the death of a member, a lump sum dtstnbutJon equaling the amount credtted to his/her account will be paid to the member's designated beneficiary. Benefit prov1s1ons are established by State statute.
Contributions and Vesting Member contnbul!ons are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contnbut1ons ContnbutJon rates are established by State statute Earmngs are credited to each member's account m a manner established by the Board of Trustees. Upon termmation of employment, the amount of the member's account 1s refundable upon request by the member.
Total contnbutlons made by employees dunng fiscal year 2002 amounted to $659,864 61 winch represents 7.5% of covered payroll. These contnbutlons met the reqwrements of the plan.
NOTE 12 RISK MANAGEMENT
Georgia Institute ofTechnology 1s a participant m the Board ofRegents ofthe Umvers1ty System of Georgia Health Benefits Plan. which 1s a self-insurance program of health and dental benefits for employees and retirees of the Umvers1ty System of Georgia. Georgia lnstitute ofTechnology and part1c1patlng employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage The Health Benefits Plan 1s included in the financial statements ofthe Board of Regents of the Umvers1ty System of Georgia - AdnumstratJve Central Office All units of the Umvers1ty System of Georgia share the nsk of loss for claims of the Health Benefits Plan The Health Benefits Plan 1s considered a self-sustaining nsk fund that provides health coverage for 1ts members up to a maximum hfetrrne benefit of$2,000,000 00 per person and dental coverage up to an annual maxrmum of$1,000 00 per person The Board of Regents has contracted with Blue Cross Blue Shield ofGeorgia to process claims m accordance with the Health Benefits Plan as estabhshed by the Board of Regents

- 31 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 12 RISK MANAGEMENT
The Department of Achmmstralive Services (DOAS) has the respons1b1hty for the State of Georgia of making and carrying out dec1s1ons that will m1mm1ze the adverse effects ofacc1dental losses that involve State government assets The State believes 11 1s more economical to manage its nsks internally and set aside assets for claim settlement Accordmgly, DOAS processes claims for nsk of loss to which the State 1s exposed, includmg general hab1lity, property and casualty, workers' compensalion, unemployment compensalion, and law enforcement officers' indernmficalion Linuted amounts of commercial insurance are purchased applicable to property, employee and automobile liab1hty, fidelity and certain other nsks. Georgia Institute of Technology, as an organ1zalional unit of the Board of Regents ofthe Umvers1ty System ofGeorgia, 1s part ofthe State of Georgia reporting enlity, and as such, 1s covered by the State of Georgia nsk management program adrmmstered by DOAS Premiums for the nsk management program are charged to the vanous state orgamzatlons by DOAS to proV1de claims seTV1cing and claims payment
A self-insured program ofprofess1onal liability for its employees was established by the Board of Regents of the University System of Georgia under powers authonzed by the Official Code of Georgia Annotated Secl!on 45-9-1. The program msures the employees to the extent that they are not rrnmune from liability against personal liability for damages ansmg out of the performance of their du!ies or in any way connected therewith The program 1s adrmmstered by DOAS as a SelfInsurance Fund.
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 expenditures wluch are disallowed under grant terms. The amount ofexpenditures wluch may be disallowed by the grantor cannot be determined at this time although Georgia Institute ofTechnologyexpects such amounts, 1f any, to be rrnmaterial to its overall financial pos11ion
L1t1galion, chums and assessments filed against Georgia Institute ofTechnology (an orgamza!ional umt ofthe Board ofRegents ofthe Umvers1ty System ofGeorgia), 1fany, are generally considered to be aclions against the State of Georgia Accordingly, s1giuficant liligalion, 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, 2002.
NOTE I 4 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents of the Umvers1ty System of Georgia has established group health and life msurance programs for regular employees ofthe Umvers1ty System ofGeorgia. It 1s the policy ofthe Board ofRegents to permit employees ofthe Umvers1ty System ofGeorgia eligible for retrrement or that become permanently and totally disabled to continue as members of the group health and life
- 32 -

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 14 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

insurance programs Employees who are ehgible for retirement or d1sab1hty llilder the cntena estabhshed by the Teachers Retirement System ofGeorgia and who have at least ten years ofsen'1ce with the Umvers1ty System of Georgia are ehgible for these post-employment health and hfe insurance benefits Orgamzatlonal llillts of the Board of Regents of the Umvers1ty System of Georgia pay the employer portion for group insurance for affected ind1v1duals

As of Jllile 30, 2002, there were 1,075 employees who had reured or were disabled that were rece1vmg these post-employment health and hfe insurance benefits. For the year ended June 30, 2002, Georgia lnslltute ofTechnology recogmzed as incurred $3,404,233 60 ofexpenditures, which was net of$1,471,807 94 ofpart1c1pant contnbutlons

NOTE 15 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The lnstltute's operating expenses by funcuonal class1ficat1on are shown below

Statement ofOperatmg Expenses - Natural vs FLmCbooal Cl.a:ss1ficatwns For the f15eal Year Ended Jtmc 30, 2002

Funcbonal Clwafigtmn

Natural ClPs\fi>ribcm

IJ\WCbon

Enrw:h

Public ScMg

Acadeln1c
Support

Student
Serow

S.lancs faculty Slllff
Employee B<nefits Other Personal Services Travel Scholmlups and
Fcl\0\\-~hrps Ut1hacs Supplies and Other
Serv,ccs
Deprcctabon
Total Opcraung Expenses

s s s S 69,482,977 82 S 88,337,502.23

7,323,790 44

2,602,635 95

35,338 89

42,315,136 93 62,600,491 33 10,786,169 52 14,118,057 29

8.246,712 29

17,954,005 54 28,121,821 13

3,930.835 64

3,921,348 91

I,703,040 44

525,157 44

102,17008

738,865 28

20,398 64

19,967 25

1,934,033 28

6,782,748 48

1,127,691 45

323,809 67

288,391 49

7,146,806 04

176,891.29

18,17642

33,370.277 67
4 008.5)0 28

51,607,674 00
I3,6,)5 700,69

20,307,143 91
407.283 HI

5,730,609 53
4.583,!<45 39

9,356,604 09
I 322,634 04

SJZ 736 905 00 $731.384 222 23 s 44 619 9"i6 47 s 31 JOO 405 JH s 29 222 M 49

Natural ctwufic:atmn
Salanes Faculty Staff
Employee B<nefits Other Pcnonal Sttv\CCS Travel Scholarships and
Fellowsh1ps llhht1cs Supplies and Other
Serv>Ccs Deprec1at1on
Total Op=ung Expense,

lnshtubonal
S\mport

f~nmJll ~S)f'&i~

Plant

Opcrabonl and Scholanlnps

Aux1hary

Mamtenancc and Fcllowshn,s Entgpnscs

Total
Opentmg
Expensg

s 367,713 97 19,171,075 36 4,583,610 62 82,90613 238.858 65
13,390 17

s 142,751 32 18,063,033 44 4,327,296 26 68,983 58
8,274,053 42

s 6,838,677 67

S 10,936,722 15
2,389,127 78 23665
82,352 27
3,674,818 10

$168,292,710 62 186,237,398 31 66,931,086 32 \.489,701 47 10,846,868 87
6,838,6TT 67 19,304,13544

9 918,194 86
11,506,I02 99

14,398,964 74
2,171 500 l3

16,824,393 98 161,513,862 7R
4 670,499 00 42,325 TIP 33

s ~~ BBi B~~ Z~ s ~z ~~ ~B2 2 s~.BJa ~zz ~z s JB ~ZB 1~2 2J ~J ZIW~l7 Bl

- 33 -

SUPPLEMENTARY INFORMATION - 35 -

GEORGIA INSTITUTE OF TECHNOLOGY SCHEDULE OF RE\/ENUES AND EXPENDITURES COMPARED TO
BUDGET - fNON-GAAP BASIS} RESIDENT INSTRUCTION
YEAR ENDED JUNE 30 2002

SCHEDULE "1"

REVENUES
State Appropnat,ons Other Revenues Retained

BUDGET

ACTUAL (1)

VARIANCEFAVORABLE (UNFAVORABLE)

$ 193,714,294 00 $ 193,714,294 00 $

376,852,107 00

317,900,613 86

000 -58 951 493 14

$ 5701566.401 00 $ 511,614 907 86 $ _ __;:-58c=....:,95;:..1;.:_.4""9.:;.3_;_14.:..

EXPENDITURES
P8TSOnal SeMces Educat,on, General and Departmental SeMCes Sponsored Operations
Operating Expenses Educabon, General and Departmental Services Sponsored Operebons
Caprtal Outlay Speaal Funding lrutiabve Office of M1nonty Business Enterprise Research Consortium

$ 238,876,TT2 00 $ 227,834,127 57 $

76,848,518 00

80,183,105 10

78, TTB,392 00 95,151,482 00 49,209,623 00
6,524,320 00 487,50000
24,689,794 00

75,732,679 51 91,398,517 OB 10,283,597 97
6,924,658 39 500,00000
16,316,307 45

11,042,644 43 -3,334,587 10
3,045,712 49 3,752,964 92 38,926 025 03 -400,338 39
-12,500 00 8,373,486 55

Excess of Revenues over Expendrtures

S 5701566.401 00 $ 509,172,993 07 S_ __;:6cc1,.::c39:::3:,_,40=-7.:::93::.

$

s_ _ 2 441 914 79

~2:.;44;:;:.:1:.,:9:,:1,;:4.:,7.::,9

(1) Actual amounts were prepared on a preso,bed basis of accounbng that demonstrates compliance v.,th budgetary statutes and regulabons of the State of Georg.,, which Is a comprehenS1Ve basis of accounbng other than generally accepted accounbng pnnaples

See notes to the financ,al statements

-37 -

GEORGIA INSTITUTE OF TECHNOLOGY SCHEDULE OF REVENUES AND,EXPENDITURES COMPARED TO
BUDGET /NON-GAAP BASISl LOTTERY FOR EDUCATION
YEAR ENDED JUNE 30. 2002

SCHEDULE "2"

FUNDS AVAILABLE REVENUES
State Appropriabons CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance

BUDGET

ACTUAL (1)

VARIANCE FAVORABLE (UNFAVORABLE)

$ 4,873,566 00 $ 4,873,566 00 $

000

20,000,000 00

000

-20,000,000 00

$ 24,873,566 00 $ 4,873,566 00 $ _ __,2:::0::,:,0c::;00::.,,.:;000::.=..:00:=-

EXPENDlTURES
Equipment, Technology and Constructton Trust Fund
Special Funding lntltattVes Student lnformabon System

$ 4,720,016 00 S 4,814.23813 $

153,550 00

61.010 65

20,000,000 00

000

-94,22213 92,539 35 20,000,000 00

Excess of Revenues over Expenditures

$ 24,873,566 00 S 4,875,248 78 $ _ _1:.::9::.:,Sc::;98::.,,:::,31~7_,2=.2

$

-168218 s ____._1.;;;BB=2.;.18::.

(1) Actual amounts were prepared on a prescnbed basis of accounbng that demonstrates compltance wrth budgetary statutes and regulabons of the State of Georgia, whtch s a comprehensIVe bass of accounting other than generally accepted accounbng pnnaples

See notes to the flnanc,al statements

38

GEORGIA INSTITUTE OF TECHNOLOGY
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - fNON-GAAP BASISl OTHER ORGANIZED ACTIVITIES
YEAR ENDED JUNE 30. 2002

SCHEDULE "3"

FUNDS AVAILABLE
REVENUES State Appropnabons Other RevellUes Retamed
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance

BUDGET

ACTUAL (1)

VARIANCEFAVORABLE (UNFAVORABLE}

$ 30,366,393 00 $ 30,366,393 00 $

135,013,852 00

112,135,313 04

000 -22,878,538 96

28,638,041 00

000

-28 638 041 00

$ 194,018,286 00 $ 142,501,706 04 $ -51,516,579 96

EXPENDITURES
Personal Services Educat,on, General and Departmental Services $ Sponsored Operebons
Operebng Expenses Educabon. General and Departmental Services Sponsored Opera\JOnS
Agncullurel Research Advanced Technology Development Center Seed Caprtal Fund - ATDC Center for Assrsbve Technology and Environmental
Access (Formerly CRT, Inc Contract) Student lntormabon System

26,281,913 00 $ 44,098,803 00
29,343,740 00 30,645,697 00
1,832,330 00 22,921,209 00
3,000,000 00
7,256,553 00 28,638,041 00

24,852,508 95 $ 44,004,207 35
26,813,377 29 20,969,727 96
1,799,558 81 19,722,50416
1,411,981 36 2 836 07718

1,429,404 05 94,59565
2,530,362 71 9,675,969 04
32,77119 3,198,704 84 3,000,000 00
5,844,571 64 25,801,963 82

Excess of Revenues over Expend:tures

$ 194.018.286 00 $ 142,409,943 06 $ 51,608,342 94

$

s_ _ 91 762 98

...,;9:,:1,.;7,;;62;;,,,:;:98;;,

( 1) Actual amounts were prepared on a presaibed bas,s of accounbng tha1 demonstrates c:ompl:ance wrth budgetary s1aMes and regulabons of the State of Georg:a, wh:ch :s a comprehensive bas:s of accounbng other than generally accepted acx:ounbng pnncoples

See notes to the finencoal sta1ement&

-39-

GEORGIA INSTITL[[E OF TECHNOLOGY RECONCILIATION OF SALARIES AND TRAVEL
, YEAR ENDED JUNE 30. 2002

SCHEDULE "4"

Totals per Annual Supplement

Accruals - Payroll June 30, 2002 June 30, 2001

Prepaid Salanes June 30, 2002 June 30, 2001

Compensated Absences June 30, 2002 June 30, 2001

AdJustments

Shared Services on Jointly Staffed Personnel

Fort Valley State Universrty

Kar,

Adrtyamoy

Georgia College and State University

D1etnch, Ame

Gleason, Michael L

Yao,

Jeng-Foung

Georgia State University

O'Farrell, Laura

Georgia Southern Universrty

Zhang, Jin-yuan

State University of West Georgia

Leavitt, Andrew

Malone, Kareen R

Southern Polytechnic State Unrversrty

Dillon, Meighan I

SALARIES

TRAVEL

$ 354,064,464 79 $ 10,846,868 87

171,125 90 -166,717 79

-2, 148,470 65 1,696,814 27

21,975,010 70 -21,220,471 OB

12,000 00
24,000 00 12,00000 12,000 00
3,768 00
24,584 80
34,000 00 12,000 00
24 00000

See notes to the financial statements

-40

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

GEORGIA INSTITUTE OF TECHNOLOGY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-503-01-01

Previously Reported Corrective Action Implemented

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA INSTITUTE OF TECHNOLOGY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CAPITAL ASSETS Inadequacies m Operation of Property Management System Fmdmg Control Number. FS-503-02-01
For the year under reV1ew, audit sarnphng and other procedures were utlhzed to venfy the vahd1ty and accuracy of the eqmpment mventory records as presented for audit An equipment mventory sample of one hundred fifty ( I 50) items was randomly selected from the subs1d1ary equipment mventory records. Fifty (50) eqmpment items reported by the Institute as havmg been deleted or disposed of dunng the fiscal year were also selected for testmg. Additionally, as ofJuly I, 2001, the Umvers1ty System of Georgia rmplemented a new Capital Asset Gmde. One of1ts many changes was to allow uruts of the Uruverslty System to remove "small value" eqmpment from their capital asset records by raising the cap1talizat1on threshold for eqmpment items from $ I ,000.00 to $5,000.00 As part ofour testmg procedures, we examined the hsting of"small value" items deleted to venfy that no equipment items meeting or exceedmg the $5,000.00 threshold had been rmproperly deleted
The results ofour testmg disclosed the followmg:
(I) Two (2) items from our eqwpment sample could not be located
(2) Adequate documentation could not be proV!ded for thirteen (13) items, equalmg $622,895.07, reported as bemg disposed ofby the Institute.
(3) Twenty-three (23) items, equalmg $158,212.26, were deleted incorrectly as part ofsmall value deletions. These items had ind1V1dual item values greater than $5,000.00 each.
These defic1enc1es occurred because of management's finlure to adequately morutor and mamtain eqwpment mventory records The Institute should strengthen internal accountmg controls over the eqwpment mventory process.