Audit report, state of Georgia, Georgia Military College, Milledgeville, Georgia, year ended June 30, 1996

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STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

AUDITREPORT STATE OF GEORGIA GEORGIA Mll..ITARY COLLEGE Mll..LEDGEVILLE, GEORGIA YEARENDEDJUNE 30, 1996

GEORGIA MILITARY COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALLFUND GROUPS

2

B . COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALLFUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

5

D NOTES TO THEFINANCIAL STATEMENTS

6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 CASH ANDCASH sourvALENTS

18

2 ~STMENTS

19

3 ACCOUNTSRECENABLE

20

4 SCHEDULE OF REVENUES

CURRENT FUNDS

21

5 SCHEDULE OF EXPENDITURES BY OBJECT

CURRENT FUNDS

22

6 MEMBERSHIP ON BOARD OF TRUSTEES

23

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 7, 1997

HonorableZell Miller, Governor Members of the General Assembly of Georgia Members of the Board ofTrustees of Georgia Military College
and Major General Peter 1. Boylan, President
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) of Georgia Military College as of andfor the year ended June 30, 1996. These financial statements are the responsibility of the College's management. Our responsibility is to express an opinion on these financial statementsbased on our audit.
Except as discussed inthe following paragraph, we conducted our auditin accordance with generally accepted auditing standards. Thosestandards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opiruon,
The College could not provide adequate subsidiary fixed asset records or other evidence supporting the Plant FundInvestment in Plantof $7,980,427.84 as shown on the Combined Balance Sheet. Accordingly, we were unable to satisfy ourselves as to the accuracy of this amount as reflected on the financial statements as of June 30, 1996.
In our opinion, except for the effects on the financial statements of adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the Investment in Plant as discussed in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Georgia Military College as of June 30, 1996, and the changes in fund balances and the current operatingfunds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.
96ARL-63X

Our audit was made for the purpose offorming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Schedules 1 through 6) is presented for purposes of additional analysis and is not a required part of the financial statements of Georgia Military College. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, suchinformation is fairly presented in allmaterial respectsin relation to the financial statements taken as a whole.
Respectfully submitted,
t1~
Claude L. Vickers State Auditor
CLV:dt 96ARL-63X

FINANCIAL STATEMENTS - 1-

GEORGIAMILITARY COLLEGE COMBINED BALANCE SHEET
ALL FUND GROUPS JUNE 30, 1996

ASSETS
Cashand Cash Equivalents Investments Accounts Receivable (Net of Allowance
for DoubtfulAccounts) Inventories Due from Other Fund Groups Investment in Plant
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Salaries Payable Benefits Payable Student Deposits Deferred Revenue Tuition and Fees BondsPayabie Deposits Heldin Custodyfor Others Due to Other Fund Groups Compensated Absences Capital LeaseObligations
Total Liabilities
Fund Balances Endowment Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS UNRESTRICTED RESTRICTED

$ 1,013,632.67 $

161,040.01

606,207.33 300,166.96 1,184,931.04

2,046,620.25

$ 3,104,938.00 $ 2,207,660.26

$

431,573.91

383,020.51

64,220.22

23,607.00

n6,048.07

2,541.00 $
92,742.41

1,197,666.00

$ 1,n3,753.12 $ 1,197,666.00

$ 1,009,994.26 $ 1,331,184.88 $ 1,331,184.88 $ 1,009,994.26
$ 3,104,938.00 $ 2.207,660.26

The notesto the financial statements are an integral part of this statement. -2-

EXHIBIT"A"

ENDOWMENT FUNDS

PLANT FUND

AGENCY FUNDS

TOTAL (Memorandum
Only)

$ $ 345,981.82

$

12,734.96

7,980,427.84

21,200.75 $ 32.46

1,195,873.43 345,981.82
2,652,860.04 300,166.96
1,197,666.00 7,980,427.84

$

345,981.82 $ 7,993,162.80 $

21,233.21 $ 13.672.976.09

$

21,000.00

$

278,108.70 $ 299,108.70 $

$

345,981.82

$ 7,694,054.10

$ 345,981.82 $ 7,694,054.10

$ 21,233.21 21,233.21 $

431,573.91 383,020.51 64,220.22 23,607.00
776,048.07 21,000.00 23,774.21
1,197,666.00 . 92,742.41
278,108.70
3.291,761.03

$ 345,981.82 . 7,694,054.10 1,009,994.26 1,331,184.88
$ 10,381,215.06

$

345,981.82 $ 7,993,162.80 $

21.233.21 $ 13,672.976.09

-3-

The notes to the financial statements are an integral part of this statement. 4

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

GEORGIA MILITARY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT "0"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY Georgia Military College was created as a public authority and is an instrumentality ofthe State of Georgia anda public corporation. The Board ofTrusteesis composed ofthe mayor ofthe City ofMilledgeville and six additional members, one of which is elected from each of the six municipal voting districts ofthe Cityof Milledgeville. The government, control and management ofGeorgiaMilitary College is vested in the Board of Trustees. Georgia Military College receives any designated funds appropriated by the General Assembly through the State Board of Regents. In order to incur debt, the Board of Trustees must first receive permission from the Georgia StateFinancing and Investment Commission, as required for all State authorities. Accordingly, Georgia Military College is considered a component unit ofthe State of Georgiareportingentity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards BoardCodification of Governmental Accounting and Financial Reporting Standards.

FUND ACCOUNTING

.

In orderto ensure observance of limitations and restrictions placed on the use of the resources available to the

College, the accounts of the College are maintained in accordance withthe principles offund accounting. This

is the procedure bywhich resources for various purposes are classified for accounting and reporting purposes

into funds that are in accordance with activities or objectives specified. Separateaccounts are maintained for

each fund; however, inthe accompanying financial statements, funds that have similar characteristics have been

combined into fund groups. Accordingly, allfinancial transactions have been recorded and reported by fund

group.

Within each fund group, the College's fund balance allocations and designations represent those portions of the fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, or College policies.

Fund groups and funds presented in the accompanying financial statements are as follows:

CURRENT FUNDS

UNRESTRICTED - Thefund used to account forthose economic resources over whichthe College retains full control to use for purposes of performing the primary functions of the College, e.g., instruction, research, auxiliary enterprises, and student activities.

RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.

- 6-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1996

EXHIBIT "D"

NOTE 1: Sill.1MARY OF SIGNIFICANT ACCOUNTING POLICIES

FUND ACCOUNTING

ENDOWMENT FUNDS

The fund used to account for gifts made to the GMC Trustees Endowment Fund and The Sibley Librarian

Chair Endowment Fund. These endowment funds are subject to the restrictions of the gift instruments

requiring that the principal be invested in perpetuity and income only may be utilized. Endowment funds

are stated at market value.

.

PLANT FUND

The fund used to account for funds expended for and thus invested in College properties, including retirement of indebtedness incurred to finance additions to the Plant Fund.

AGENCY FUNDS

The fund used to account for resources held by the College as custodian or fiscal agent for individual students, faculty, staff members, and organizations.

BASIS OF ACCOUNTING The financial statements of Georgia Military College have been prepared on the accrual basis of accounting. No depreciation on capital assets has been provided which is allowable under generally accepted accounting principles applicable to public colleges and universities. The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement income or a statement of revenues and expenses.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits and temporary investments in authorized financial institutions.

INVESTMENTS

.

Investments are recorded at market or in the case of gifts at fair market value on the date of the gift. Funds

received by the College as endowments or for restricted purposes are invested according to conditions

stipulated by the donor, grantor, or in accordance with the Board of Trustees authorizing resolutions. Gains

and losses on investment transactions are accounted for in the funds where such assets are recorded.

ACCOUNTS RECEIVABLE Accounts receivableconsist of reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. The College has recorded its accounts receivable for Student Accounts net of allowance for doubtful accounts as follows:

- 7-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT liD"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTS RECEIVABLE Gross Receivables Allowance for Doubtful Accounts
Net Receivables

s 835,631.79
-280,000.00
s 555.631.79

INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet usingthe first-in, first-out method.

Inventories of goods for resaleare valued at cost usingthe first-in, first-out method.

MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not .represent consolidated financial information andare presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial positionin conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data.

NOTE 2: CUSTODIAL CREDITRISKS OF CASHDEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the StateofGeorgia cannotbe 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 anyone or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.

(2) Bonds, bills, certificates of indebtedness, notes, or otherobligations of the countiesor municipalities ofthe State of Georgia.

(3) Bondsof anypublic authority created bythe laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bondsfor this purpose.

(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

- 8-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEr-..ffiNTS
JUNE 30, 1996

EXHIBIT liD"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTr-..ffiNTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 principaland interest, or 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.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1996, are categorized below in order to provide informationabout the extent to which such deposits are exposed to custodial credit risk:

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the College or by its agent in the College's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the College's name.

Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution, or by its trust department or agent but not in the College's name, and amounts uncollateralized.

Cash Deposits InvestmentPortfolioAccounts
TotalCash Deposits

Carrying Amount

Bank Balances

Risk Categories 2

s s 1,190,075.85 s 1,597,924.53 1,597,924.53 s

83.561.24

83,561.24

83.561.24

0.00 s

s 1.273 637 09 s 168148577 s 168148577 s

000 s

3 0.00
000

CATEGORIZATION OF INVESTMENTS Investments are summarized and classified as to custodial credit risk within the three categories described below:

Category 1 - Insured or registered, or securities held by the College or its agent in the College's name.

Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the College's name.

- 9-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1996

EXfllBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
CATEGORIZATION OF INVESTMENTS Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the College's name.
The carrying amounts of investment balances as of June 30, 1996, are categorized below:

Land, buildings, and equipment are stated at cost as of the date of acquisition, insurance valuations, if applicable, or fair market value at date of the gift. Depreciation on physical plant and equipment is not recorded.

NOTE 4: CAPITAL LEASES

Georgia Military College acquires certain land and equipment through multi-year capital leases with varying terms and options. As of June 30, 1996, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30
1997 1998 1999 2000 2001
Total Future Minimum Lease Payments
Less: Amounts Representing Interest
Present Value ofFuture Minimum Lease Payments

$ 97,116.04 161,255.31 51,332.46 3,636.00 2.727.00
$ 316,066.81
37,958.11
$ 278,108.70

- 10 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXIllBIT "D"

NOTE 5: RISK MANAGEMENT
TheDepartment 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 Statebelieves it is moreeconomical 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 lawenforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The College, as part of the StateofGeorgia reporting entity, is coveredby 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.
NOTE 6: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Georgia Military College participates in the TeachersRetirement System of Georgia (TRS), a cost-sharing multiple-employer public employee retirement system (PERS) established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. . The College's payrollfor the year ended June 30, 1996, for employees coveredby TRS was $2,670,276.63. The College's total payroll for all employees was $7,186,771.69.
Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attainedthe age of 60 years and has at least ten years of creditable service, (2) has at least 30 years of creditable service, regardless of age, or (3) has attained the age of 55 years and has at least 25 years of creditable service. For those members with 30 years of service or those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. Any member who has between25 and 30 years of creditable service and is at least 55 years of age shall receive a benefit which is reduced bythe lessor of 1/12 of 7% for each monththe member is below age 60, or by 7% for eachyearor fraction thereofbywhich the member has.less than 30 years of service. The normal retirement pensionis payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
- 11 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1996

EXIllBIT "0"

NOTE 6: RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Contributions Required and Contributions Made Employees of the College who are covered by TRS are required to pay 5% of their gross earnings to TRS. The College makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees as advised bytheirindependent actuary. For fiscal year 1996, the employer contribution rate was 11.81%for covered employees. The interest rate assumption (rate of return on investments) was 7.50%.

Totalcontributions to the plan made during fiscal year 1996 amounted to $448,872.55, ofwhich $315,359.65 was made bythe College and$133,512.90 was made by employees. These contributions represented 11.81% (College) and 5% (employees) of covered payroll.

Funding Status and Progress

Pension Benefit Obligation

.

The amount of the total pension benefit obligation is based on a standardized measurement established by

Statement NO.5 of the Governmental Accounting Standards Board (GASB) that is required to be used for

reporting purposes. The standardized measurement is the actuarial present value of credited projectedbenefits.

This pension valuation method reflects the present value of estimated pension benefits that will be paid in

future years as a result of employee services performed to date and is adjusted for the effects of projected

salary increases and any step-rate benefits. A standardized measure of the pension benefit obligation was

adopted bythe GASB to enable readers of the PERS financial statements to assessthat PERS funding status

on a going-concern basis, assess progress made inaccumulating sufficient assets to pay benefits when due, and

make comparisons among similar PERS.

Thetotal unfunded pension benefit obligation ofTRS as ofJune 30, 1995, whichwas the latest information available, was as follows:

Total pension benefit obligation

$ 17,442,607,000.00

Net assets available for benefits, at cost

15,857,066,000.00

Unfunded pension benefit obligation

$ 1.585,541.000.00

Themeasurement of the total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1995. Net assets available for benefits werevalued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers.

Retirement System Contributions Total contributions from all employers to TRSfor the year ended June 30, 1996, were $607,274,559.00. The College's contribution for the year ended June 30, 1996, of $315,359.65 was actuarially determined and represented .0519% of total contributions madeby all participating employers.

- 12 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "D"

NOTE 6: RETIREMENTPLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Trend Information Historical trend information is presented in the TRS June 30, 1996, financial report. This information gives an indication of the progress madein accumulating sufficient assets to pay benefits when due.
NOTE 7: LEAVB POLICIES
Employees earn annual leave ranging from ten daysto twenty days per year depending upon the employees' length of continuous service with maximum accumulation of twenty days. Employees are paid for unused accumulated annual leaveupon retirement or termination of employment.
Employees earnone andone-quarter days of sick leave eachmonth witha maximum accumulation offorty-five days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
NOTE 8: 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 anyexpenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims andassessments filed against Georgia Military College are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the Stateof Georgia are disclosed in the State of GeorgiaComprehensive Annual Financial Report for the fiscal year ended June 30, 1996.
NOTE 9: PRIOR PERIOD ADJUSTMENTS
In prior years, capital expenditures of $603,033.03 were incorrectly charged to balance sheet accounts in Unrestricted Current funds and were not correctly reflected as expenditures on the financial statements and as additions to Net Investment in Plant. In addition, capital lease acquisitions of$29,674.21 were not correctly recorded as additions to Net Investment in Plant.
In fiscal yearended June 30, 1996, adjustments relating to prior periods were madeto the financial statements to correct the fund balances of the affected funds.

- 13 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "D"

NOTE 10: SIGNIFICANT TRANSACTIONS
On September 8, 1994, Georgia Military College conveyed by deed of ownership two parcels of propertyto theBoardofRegents of the University System of Georgia. TheBoardof Regents agreed to lease the property to the College for a period of fifty years. This transaction was completed so that general obligation bond funding through the Georgia State Financing and Investment Commission (GSFIC) could be obtained by the Board ofRegentsto make capital improvements on properties now leasedby GeorgiaMilitary College.
As of June30, 1996, threeconstruction projectsat Georgia Military College were beingmanaged by GSFIC.
GMC-l Construction ofa New Academic Building GMC-2Renovation of Sibley ConeLibrary GMC-3 Renovation of Old State Capitol Building
GSFIC has committed $3,195,000.00 in Series 1994B Bond Issue funds for projects GMC-l and GMC-2. State Lottery proceeds of$3,500,000.00 will be utilized for project GMC-3.
NOTE 11: SIGNIFICANT SUBSEOUENT EVENT
In April 1997, the College received the final determination from the U. S. Department ofEducation(USDOE) on a Title IV Federal Assistance Program review conducted on February 12-16, 1996. USDOE determined that the College should refund a total $56,603.00 to providers of student financial assistance for improper disbursements of Federal andStatefinancial aid funds. The College has been requested to refund $32,362.00 to USDOE for the Pell Grant, College Work-Study andSupplemental Education Opportunity Grant programs; $6,032.00 to lenders of the Federal Subsidized Stafford Loan; and $18,209.00 to providers of State grant programs.
NOTE 12: BONDINGINFORMATION
The President and all employees of Georgia Military College are bonded under a PublicEmployees Blanket Bond written bytheEmployers Insurance of Wausau, their Bond No. 1450-02-110723, on whichthe premium was paid to October 1, 1996. Under thisagreement, the public employee dishonesty coverageinsures Georgia Military College to a maximum of$I,OOO,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees. The faithful performance of duty coverage insures the College to a maximum of $1,000,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and propertyreceived by virtue oftheir position or employment.
All employees of Georgia Military College are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 011675 2 and 626 012294 4, on which the premiums were paid to October 1, 1996. Underthese additional public employee dishonesty coverages, the policies insure the CoUege to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully.

- 14 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1996

EXIllBIT "D"

NOTE 13: ENROLLMENT

Theequivalent full-time student enrollment for the junior college division of GeorgiaMilitary College was as follows:

Regular Term Fall Quarter, 1995 Winter Quarter I, 1996 Winter Quarter II, 1996 Spring Quarter, 1996

3,455 2,150 3,581 3,239

Average

Summer School, 1995

The enrollment by grade for the secondary school division of GeorgiaMilitary College for the 1995 - 1996 academic year was as follows:

Sixth Grade

80

Seventh Grade

75

Eighth Grade

67

Ninth Grade

66

Tenth Grade

53

Eleventh Grade

41

Twelfth Grade

-4.l

Total Enrollment

- 15 -

SUPPLEMENTARY INFORMAnON - 17 -

GEORGIA MILITARY COLLEGE CASHAND CASH EQUIVALENTS
JUNE 30, 1996

SCHEDULE "1"

NONINTEREST BEARING ACCOUNTS
CenturyBank and Trust, Milledgeville, Georgia
Central and Southern Bank, Milledgeville, Georgia
The Coastal Bank of Georgia, St Marys, Georgia
FirstState Bank and Trust, Valdosta, Georgia
First Union National Bank, Augusta, Georgia
NationsBank, East Point, Georgia
SunTrust Bank, Macon, Georgia
INTERESTBEARING ACCOUNTS
CenturyBank and Trust, Milledgeville, Georgia
N.O.W. Account (2.80%) N.O.W. Account (3.50%)
First UbertyBank, Macon, Georgia
N.O.W. Account (2.55%)
NavyFederal CreditUnion, Kingsbay, Georgia
N.O.W. Account (2.02%)
OTHER
Cash on Hand Petty Cash

$ 118,907.00 15,144.61 10,926.10 5,008.81 45,861.37 7,431.71 7,708.54 $ 210,988.14

$

24,197.19

940,047.37 $ 964,244.56

13,015.73

1,827.42

979,087.71

5,797.58 $ 1,195,873.43

See notesto the financial statements.

- 18-

GEORGIA MILITARY COLLEGE INVESTMENTS JUNE 30. 1996
InvesbnentAccounm Century Bank and Trust, Milledgeville, Georgia Investment Portfolio Accounts Cash Corporate Bonds Mutual Funds U. S. Government Securities

SCHEDULE "2"

$

83,561.24

4,449.02

109,912.66

148,058.90

$

345,981.82

See notes to the financial statements.

- 19-

GEORGIA MILITARY COLLEGE ACCOUNTS RECEIVABLE JUNE 30, 1996

SCHEDULE "3"

Federal Grants and Contracts Instruction Student Aid
State Grants and Contracts Student Aid
Student Accounts College Madison Sandersville Secondary School Fort Gordon Fort McPherson Kings Bay Naval Base Moody Air Force Base Robins Air Force Base Less: Allowance for Doubtful Accounts
Other

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

17,159,90

$

905,102,82

1,141,224,63

137,725,99 2,548,42 6,296.78 8,035,62
496,783.11 13,757,97 936.12
166,953.33 2,594.45
-280,000.00
33,415.64

292.80 $

AGENCY FUNDS

TOTAL

$

17,159,90

905,102,82

1,141,224,63

32.46

137,725,99 2,548,42 6,296.78 8,035,62
496,783.11 13,757.97 936.12
166,953,33 2,594.45
-280,000.00
33.740.90

$

606,207.33 $ 2,046,620.25 $ ====3=:2.=46= $ 2,652,860.04

See notes to the financial statements.

-20

GEORGIA MILITARYCOLLEGE
SCHEDULE OF REVENUES
CURRENT FUNDS
YEAR ENDED JUNE 30 1996

SCHEDULE "4"

Local Appropriations Tax Allotment utilities Allotment
other RlM!rlues Retained Tuition end Fees Matriculation other
Less: Discounts Less: UncoIlecl8b1e Accounts
Federal Grants end Contracts Instruction Student Aid
Stete Grants and Contracts Through the Board of Regents of the University System of Georgia For Rental Payments For Lottery Proceeds Student Aid
Private Gills, Grants, end Contracts Student Aid
Endowment Income Institutional Support Student Aid
Sales end 5eIvices of Auxiliary Enterprises
Other Sources Administrative Cost Alla.Yances Bad Debt Recovery cash OIIer-5hort Game Gate Receipts Insurance Recoveries Interest Earned Rents Returned Check Fees Other

COLLEGE

UNRESTRICTED

SECONDARY LOTTERY FOR

SCHOOL

EDUCATION

TOTAL

RESTRICTED COLLEGE

TOTAL

$ 165,462.71 5,936.89
$ 171,399.60

$ 165,462.71 5,936.89
$ 171,399.60

$ 165,462.71 5,936.89
$ 171,399.60

$ 9,696,440.33 $ 399,178.28
$ 10,095,618.61 $
-65,810.40 -371,452.56
$ 9,658,355.65 $

886,015.56 84,490.00
970,505.56
-24,804.25 -11,173.38
934,527.93

39,657.84

$ 10,562,455.89 483,668.28
$ 11,066,124.17
-90,614.65 -382,625.94
$ 10,592,883.58

$ 10,582,455.89 483,668.28
$ 11,066,124.17
-90,614.65 -382,625.94
$ 10,592,883.58

39,657.84 $ 2,292,845.43

39,657.84 2,292,845.43

1,034,952.00 $

200,000.00

1,034,952.00 200,000.00

6,136,031.92

1,034,952.00 200,000.00
6,136,031.92

90,195.63

90,195.63

866,983.18

866,983.18

2,411.97 3,729.40

2,411.97 3,729.40
866,983.18

4,336.00 34,388.55 -2,299.13
5,248.60 24,150.00 26,964.06
349.45 7,746.00 94,040.79

3,156.49 9,018.53
350.00 1,679.81

$ 10,720,263.15 $ 2,023,342.60 $

4,336.00 37,545.04 -2,299.13 14,267.13 24,150.00 26,964.06
349.45 8,096.00 95l20.60

4,336.00 37,545.04 -2,299.13 14,267.13 24,150.00 26,964.06
349.45 8,096.00 95l20.60

200,000.00 $ 12,943,605.75 $ 8,525,214.35 $ 21,468,820.10

$ 10,720,263.15 $ 2,194,742.20 $ 200,000.00 $ 13,115,005.35 $ 8,525,214.35 $ 21,640,219.70

seenotes to the financial'statements.

- 21

GEORGIA MILITARy COLLEGE
SCHE[)UlE OF EXPENDITURES By OBJECT
CURRENT FUNDS
YEAR ENDEp JUNE 30 1996

SCHEDULE "5"

COLLEGE

UNRESTRICTED

SECONDARY LOTIERY FOB

SCHOOL

EDUCATION

TOTAL

RESTRICTED COLLEGE

TOTAL

PERSONAL SERVICES

8aJaries and Wages Employer'a Contributionafer:
F.I.C.A Relilement Group Insurance

$ 6,045,667.18 $ 1,141,104.51

449,320.76 182,087.31 168.599.14

84,105.72 127,076.08
67,492.49

$ 7,186,771.69
533,426.48 309,163.39 236,091.63

$ 7,186,771.69
533,426.48 309,163.39 236.091.63

$ 6,845,674.39 $ 1.419,778.80

$ 8,265,453.19

$ 8,265,453.19

OPERATING EXPENSES

TnMlI

$

Motor Vehicle Expense

SUpplies and Materials

Repailaand Maintenance

UtiIilie&

Rents(Other than RealEstate)

Insurance and Bonding

Tuitionand SCholarships

CollegeWork-study Program

Scholarships, FeUawahips, Prizes, Awards and Other

Other Operating Expen&es

Publications and Printing

Equipment

Non-IIlWlntory

Software

Reat EstateRentals

Telecommunications

Per Diem,Feesand Contracts

Per Diem and Fees

Contracts

EqUipment

Inventory

Expense Allocation

102,882.16 14,857.42
539,771.41 $ 523,702.13 207,316.35
33,873.71 104,355.18

55,482.67 26,336.56 25,951.96
14,840.00

714.14 462,427.53 309,338.59 134,603.21

94,797.88 19,133.74 14,229.70

314,215.08 365,882.27
8,144.50 116,839.61

16,865.31 5,214.19

88,440.14 342,420.16

11,816.00

391,139.53 486.836.87

42,060.96 -486,836.87

$ 102,882.16 14,857.42
595,254.08 550,038.69 233,268.31
33,873.71 119,195.18

$ 102,882.16 14,857.42
595,254.08 550,038.69 233,268.31
33,873.71 119,195.18

714.14 $

7,064.20

557,225.41 8,515,738.18

328,472.33

2,411.97

148,832.91

7,778.34 9,072,963.59
330,884.30 148,832.91

331,080.39 365,882.27 .
8,144.50 122,053.80

331,080.39 365,882.27
8,144.50 122,053.80

88,440.14 354,236.16

88,440.14 354,236.16

433,200.49 0.00

433,200.49 0.00

~
CAPITALOLITLAY OtherCo&t& Suppliesand Materials Repail& and Maintenance Equipment Non-Inventory Per Diem, Feesand Contracts Per Diemand Fees Contracts

$ 4,547,759.99 $ 160.107.90

$ 4,387,652.09 $ 8,525,214.35 $ 12.912,866.44

$

6,808.96 $

42,236.89

2,968.00

6,750.00 142.462.45

6,808.96 42,236.89
2,968.00
6,750.00 142.462.45

$

6,808.96

42,236.89

2,968.00

6,750.00 142,462.45

201,226.30 $ 201,226.30

$ 201,226.30

$ 11,393,434.38 $ 1,259,670.90 $ 201,226.30 $ 12,854,331.58 $ 8,525,214.35 $ 21,379,545.93

seenotes to the financial &!atemants.

-22 -

GEORGIA MILITARY COLLEGE MEMBERSHIP ON BOARD OF TRUSTEES
YEAR ENDED JUNE 30.1996
BOARD MEMBERS ADDRESS
Dr. James E. Baugh, Chairman P. O. Box 1900 Milledgeville, Georgia 31061
Dr. Thomas L. Davidson, Jr., Vice Chairman 300 N. Jefferson Street Milledgeville, Georgia 31061
Ms. Carolyn T. Thomas, Secretary-Treasurer 241 N. Irwin Street Milledgeville, Georgia 31061
Mr. B. John Collins 3798 Sussex Drive Milledgeville, Georgia 31061
Mr. David M. Grant
P. O. Box 776
Milledgeville, Georgia 31061
Mr. Randall A New 445 Underwood Road Milledgeville, Georgia 31061
Rev. Horace O. Ray, Sr. 630 S. Warren Street Milledgeville, Georgia 31061

SCHEDULE -6"

See notes to the financial statements.

- 23-

SECTION II FINDINGS ANDIMPROPER OR QUESTIONED COSTS

GEORGIA :MILITARY COLLEGE SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
PRIOR YEAR
FEDERAL FINANCIAL REPORTS Incorrect Student Payment Summary Report Federal Financial Assistance Pell Grant Program (CFDA 84.063) Audit Control Number 590-96-01
The audit report for the year ended June 30, 1993, noted that the College reported $747,859.00 in fiscal year
1993 Pell Grant expenditures on the Student Payment Summary report which was filed with the U. S. Department of Education. However, the College actually incurred a total of $802,135.00 in Pell Grant Program expenditures or $54,276.00 in excess of the authorized amount reflected on the SPS report.
During fiscal year 1994, the College initiated the appropriate steps in conformity with Federal statutes for obtaining approval from U. S. Department of Education to increase the fiscal year 1993 Pell Grant
authorization by $54,276.00. During fiscal year 1996, the U. S. Department of Education (USDOE) approved
the increase in the 1993 Pell grant award; however, USDOE subsequently rescinded this approval pending outcome of a program review. As of the date ofthis audit, this matter had not been resolved.
PRIOR YEAR/CURRENT YEAR
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies In Operation of Property Management System Financial Statements Audit Control Number 590-96-02
The audit reports for the years ended June 30, 1989 through June 30, 1995, noted that the College was unable to provide detailed fixed assets records which support the Plant Fund Investment in Plant balances as reported on the Combined Balance Sheet. For the year under review, the College was unable to provide subsidiary fixed asset records or other historical cost evidence supporting the balances reported for general fixed assets.
The College should take appropriate action to provide for an adequate property management system for general fixed assets which would include subsidiary records that adequately reflect an inventory of land, buildings and equipment owned by the College. Such records should include but not be limited to (1) date acquired, (2) acquisitioncost, (3) estimated replacement cost, (4) location and description. Detailed records should be maintained for all deletions and additions to the Plant Fund. .
- 1-

GEORGIAMILITARY COLLEGE SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
CURRENT YEAR
CASH AND CASH EQUIVALENTS Inadequate AccountingProcedures Financial Statements Audit Control Number 590-96-03
For the year under review, the College's accounting procedures were insufficient to provide for adequate internal control over the bank reconciliation process. The following deficiencies were noted:
(1) The monthly bankreconciliations were not performed for the payroll account until after fiscal year end.
(2) The monthly bank statements were not reconciled with amounts recorded on the general ledger and included unidentified variances for every reconciliation. An unidentified variance of $2,707.97 remained at June 30, 1996.
These deficiencies were the result of management's failure to establish internal control procedures over cash andbankreconciliations that are necessary to adequately safeguard and report the cash and cash equivalents of the College. The College should establish appropriate internal controls to ensure that bank statements are reconciled with the accounting records monthly and that needed adjustments are recorded on a timely basis.
REVENUES/RECEIVABLES/RECEIPTS Inadequate Controls Over AccountsReceivable Financial Statements Audit Control Number 590-96-04
For the yearunder review, audit tests revealed that Georgia Military College did not have adequate subsidiary records to support accounts receivable balances reported on the financial statements. The subsidiary records for accounts receivable were found to be incomplete and were not reconciled with the general ledger control account.
This condition occurred because management failed to provide procedures for balancing subsidiary records with the general ledger. Georgia Military College should establish controls to ensure that the accounts receivable reported in the financial statementsare properlysupported by.subsidiary records.
REVENUES/RECEIVABLES/RECEIPTS Deficiencies in Collection of Tuition and Fees Financial Statements Audit Control Number 590-96-05
For the yearunderreview, an examination of the procedures for collecting tuition and fees by Georgia Military College were found to be inadequate in several areas. The following deficiencies were noted:
- 2-

GEORGIA MILITARY COLLEGE SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
CURRENT YEAR
REVENUESIRECEIVABLESIRECEIPTS Deficiencies in Collection ofTuition and Fees Financial Statements Audit ControlNumber 590-96-05
(1) Secondary school students may select from four repayment plan options, all ofwhich require payment in full by April 30thof each fiscal year. However, an unpaid balance of$8,035.62 remained due from secondary school studentsat year end.
(2) College students are required to paytuition andfees during registration unlessfinancial aid is pending. In those situations the College requires that students sign a 30 day promissory note at the beginning of eachquarter until financial aid is received. However, students are not required to renew these notes during the quarter afterthe initial 30 day period has expired. Iffinancial aid is not forthcoming, these notes have no standard repayment terms. An unpaid balance of $827,596.17 remained due from College students at year end.
As a result of these deficiencies, a total of $382,625.94 for student accounts receivable was written off as uncollectible. In addition, $280,000.00 reported as Allowance forDoubtful Accounts represents approximately 34% of outstanding student accountsreceivable for Georgia Military College at year end.
Procedures should be strengthened by the College in regard to collecting student accounts receivable. The outstanding student receivables should be aged and allbalances should be verified. Outstanding receivables incurred by current students should be collected and correctly posted prior to the award of any additional aid. The College should consider placing all receivables incurred by former studentswith a collection agency, and legal means should be used to collect all studentreceivables, ifnecessary.
FEDERAL FINANCIAL REPORTS Incorrect Student Payment Summary Report Federal Financial Assistance Federal Pell GrantProgram (CFDA 84.063) Audit Control Number 590-96-06
For the yearunder review, the Student Payment Summary (SPS) report forthe U. S. Department ofEducation reflected that the College made $1,106,384.00 in Federal Pell Grant Program expenditures. This amount represented the College's authorized amount for the Pell Grant award for fiscal year 1996. However, the College actually incurred a total of$l, 147,397.00 in 1996Pell GrantProgram expenditures or $41,013.00 in excess of the authorized amount.
In the subsequent fiscal year, the College was reimbursed for the total Pell Grant Program expenditures of $1,147,397.00; however, thePell Grant authorization was not increased and remains at $1,106,384.00. The U. S. Department of Education should review this matter to determine the proper amount of authorization and funding for which GeorgiaMilitary College is eligible.
- 3-