Audit report, state of Georgia, Georgia Military College, Milledgeville, Georgia, year ended June 30, 1999

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REVIEWREPORT

STATEOF GEORGIA

GEORGIA MILITARY COLLEGE

MILLEDGEVILLE, GEORGIA

YEARENDEDJUNE 30, 1999

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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

GEORGIA MILITARY COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHlBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

. 1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

18

2 RECONCILIATION OF SALARIES AND TRAVEL

20

3 RECONCILIATION OF PER DIEM AND FEES

21

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

SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
December 7, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Trustees of Georgia Military College
and Major General Peter J. Boylan, President
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) ofGeorgia Military College as of and for the year ended June 30, 1999, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation ofthe management of Georgia Military College.
A review consists principally ofinquiries of College personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
Our review was made for the purpose ofexpressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The year 2000 supplementary information on Schedule"1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. The accompanying financial schedules (Schedules 2 and 3) are presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied

99ARL-66X

in the review of the financial statements and we are not aware of any material modifications which should be made thereto.
Respectfully submitted,
d).~~
ussell W. Hinton State Auditor
RWH:gp 99ARL-66X

FINANCIAL STATEMENTS - 1-

GEORGIA MILITARY COLLEGE COMBINED BALANCE SHEET
ALL FUND GROUPS JUNE 30.1999

CURRENT FUNDS UNRESTRICTED RESTRICTED

ENDOWMENT FUNDS

ASSETS

Cash and Cash Equivalents

$

Investments

Accounts Receivable (Net of Allowances for Doubtful Accounts)

Inventories

Prepaid Items

Investment in Plant

527,560.87 $
2,225,053.63 424,886.45 2,032.63

485,552.01 $
231,926.67

590,393.16

Total Assets

$

3,179,533.58 $ 717,478.68 $ 590,393.16

Total Liabilities and Fund Balances

$

3,179,533.58 $ 717,478.68 $ 590,393.16

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -2-

EXHIBIT "A"

PLANT FUNDS

INVESTMENT

UNEXPENDED

IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

0.00

$

_ _ _ _ _ $ 9,129,179.01

34,634.95 $

1,047,747.83 590,393.16
2,456,980.30 424,886.45 2,032.63
9,129,179.01

$

0.00 $ 9,129,179.01 $ 34,634.95 $ 13,651,219.38

$

0.00

$ 326,273.72

$

607,512.40

406,507.00

326,273.72

28,270.15

$ 182,430.30

34,634.95

1,011,038.78 150,000.00 34,634.95 162,914.06 182,430.30

$

0.00 $ 508,704.02 $ 34,634.95 $ 2,909,581.36

$ 8,620,474.99

$

0.00

$

0.00 $ 8,620,474.99

$

590,393.16

8,620,474.99

717,478.68

813,291.19

$ 10,741,638.02

$

0.00 $ 9,129,179.01 $ 34,634.95 $ 13,651,219.38

-3-

GEORGIA MILITARY COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30.1999

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
Endowment Net Increase/(Decrease) in Fair Value of Investments Adjustments
Prior Years' Expenditures/Accounts Payable Expended for Plant Facilities
Current Funds
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Refunded to Foundation Adjustments
Prior Years' Revenues/Accounts Receivable Expended for Plant Facilities
Noncapitalized
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Capital Projects
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1.1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

$ 14,833,630.46 $ 2,907,290.70
2,892,536.57 96,002.61
53,636.77
-2,845.01

$ 14,830,785.45 $ 5,949,466.65

$ 13,250,440.13 $ 6,239,899.93
1,414,042.26 4,647.00
3,556.44

$ 14,668,038.83 $ 6,244,546.93

$

-10,938.46

$

151,808.16 $

-295,080.28

661,483.03

1,012,558.96

FUND BALANCES JUNE 30.1999

$

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.

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

813,291.19 $ =====7=1=7=,4=7=8=.=6=8=

EXHIBIT nBn

ENDOWMENT FUNDS

PLANT FUNDS

INVESTMENT

UNEXPENDED

IN PLANT

TOTAL (Memorandum
Only)

$

$

88,056.00

49,198.71

$

137,254.71 $

0.00
$ 0.00 $

$ 14,833,630.46 2,907,290.70 2,892,536.57 184,058.61

53,636.77 49,198.71

-2,845.01

74,751.84

74,751.84

74,751.84 $ 20,992,258.65

$

95,296.62

$

$

95,296.62 $

$
1,053.42 1,053.42 $

0.00 $

19,490,340.06 1,414,042.26 4,647.00 95,296.62

3,556.44

1,053.42

0.00 $ 21,008,935.80

$

41,958.09 $

548,435.07

10,938.46 9,885.04 $

$ -----.;;0..0;0~

74,751.84 $

-16,677.15

-9,885.04

8,545,723.15

10,758,315.17

$

590,393.16 $ =====0=.0=0= $ 8,620,474.99 $ 10,741,638.02

-5-

GEORGIA MILITARY COLLEGE STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES.
AND OTHER CHANGES YEAR ENDED JUNE 30. 1999

EXHIBIT"C"

Net Increase/(Decrease) in Fund Balances

$

s===== 151,808.16 $ -295,080.28 $====-=1..4...3...,272.12

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -6-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Georgia Military College was created as a public authority and is an instrumentality of the State of Georgia and a public corporation. The Board of Trustees is composed of the mayor of the City of Milledgeville and six additional members, one of which shall be elected from each of the six municipal voting districts of the City ofMilledgeville. The government, control and management of Georgia Military College shall be vested in the Board of Trustees. Georgia Military College shall receive any designated funds appropriated by the General Assembly through the State Board ofRegents. In order to incur debt, the Board of Trustees must first receive permission from the Georgia State Financing and Investment Commission, as required for all state authorities. Accordingly, Georgia Military College is considered a component unit of the State of Georgia reporting entity 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 Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the College, the accounts ofthe College are maintained in accordance with the principles offund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial 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 - The fund used to account for those economic resources over which the College retains full control to use for purposes of performing the primary functions of the College, e.g., instruction, auxiliary enterprises, student activities, etc.
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.

-7-

GEORGIA Mll.JTARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
WNE30.1999

EXHIBIT"D"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ENDOWMENT FUNDS
The fund used to account for gifts that are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized.
PLANT FUNDS
UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes.
INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the College. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the College less the amount of any indebtedness to others.
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 isa 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 of income or a statement of revenues and expenses.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions.

-8-

GEORGIA MILITARY COLLEGE
NOTESTOTHEFWANC~STATEMENTS
JUNE 30, 1999

EXHIBIT"D"

. NOTE 1: SUMMARY OF SIGNIFICANT ACCQUNTWG POLICIES

INVESTMENTS Investments are reported at fair value. 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 receivable consist 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 in the Unrestricted - Current Funds net of allowance for doubtful accounts as follows:

Gross Receivables Allowance for Doubtful Accounts

$ 2,909,335.30 -452,355.00

Net Receivables

$ 2.456,980.30

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

Inventories of goods for resale are valued at cost using the first-in, first-out method.

NOTES PAYABLE Notes payable are written promises to pay a certain sum ofmoney on a specified future date and may arise from sales, financing or other transactions. Georgia Military College signed a promissory noted during the year under review on a long-term Note Payable to help finance various construction projects.

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

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bondto the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

-9-

GEORGIA MILITARY COLLEGE
NOTES TO THE FWANCIAL STAIEMENIS
JUNE 30.1999

EXHIBIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, 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, 1999, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:
Category 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the College or by its agent in the College's name.
Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the College's name.
Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the College's name, and amounts uncollateralized.

-10 -

GEORGIA MILITARY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1999

EXHIBIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS

Carrying Amount

Bank Balances

Risk Categories

2

3

Cash Deposits

$ 1,043,322.83 $ 1,368,863.76 $ 364,355.13 $

Investment PortfolioAccounts

48,070.70

48,070.70

48,070.70

0.00 $ 1,004,508.63

Total Cash Deposits

$ 1.091.393.53 $ 1.416,934.46 $ 412.425.83 $

0.00 $ 1,004.508.63

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

Category I - 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.

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, 1999, are categorized below:

T}l1e of Investment
U. S. Government Securities
Investments Not Subject to Categorizations:
Investment Portfolio Accounts Mutual Funds
Total Investments

Risk Categories

1

2

3

Carrying Amount

$===='0=:.0=0 $ 102.350.04 $,====0=:.0=0 $ 102,350.04

439.972.42 $ 542.322.46

NOTE 3: INVESTMENT IN PLANT

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 of physical plant and equipment is not recorded.

The following is a summary of Investment in Plant fixed assets as of June 30, 1999:

- 11 -

GEORGIA MILITARY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999

EXHIBIT"D"

NOTE 3: INVESTMENT IN PLANT

Land Buildings Equipment
Total Investment in Plant
NOTE 4: OPERATING LEASES

$ 318,842.39 3,704,307.24 5,106,029.38
$ 9.129,179.01

Georgia Military College has entered into certain agreements to lease buildings and land which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date ofthe original term ofthe lease, the College has the option ofrenewing the lease on a year-to-year basis. Future minimum lease payments for operating leases as of June 30, 1999, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30
2000 2001 2002
Total Future Minimum Lease Payments
NOTE 5: CAPITAL LEASES

$ 116,539.73 105,284.40 26.321.10
$ 248.145.23

Georgia Military College acquires certain land and equipment through multi-year capital leases with varying terms and options.

As of June 30, 1999, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30
2000 2001 2002 2003 2004
Total Future Minimum Lease Payments
Less: Amounts Representing Interest
Present Value ofFuture Minimum Lease Payments

$ 84,392.44 53,876.39 40,111.28 26,448.74 2.796.51
$ 207,625.36
25.195.06
$ 182.430.30

- 12-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT"D"

NOTE 6: DEFICIT FUND BALANCE

The Student Activity Fund and the Auxiliary Enterprises Fund, both a part of Unrestricted Current Funds, have deficit fund balances of$951,940.78 and $462,247.21, respectively, which are not readily apparent from the financial statements.

NOTE 7: RISK MANAGEMENT

The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The College, as part of the State of Georgia reporting entity, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

NOTE 8: RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia Military College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

Funding Policy Employees of the College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to IRS. The College makes monthly employer contributions to IRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1999, the employer contribution rate was 11.95% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1999 1998 1997

100% 100% 100%

$ 460,218.78 $ 415,333.00 $ 356,094.90

-13 -

GEORGIA MILITARY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1999

EXHIBIT "D"

NQTE9: LEAVEPoucrns

Employees earn annual leave ranging from ten days to twenty days each year depending upon the employees' length of continuous State service with maximum accumulation of twenty days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment.

Employees earn one and one quarter days of sick leave each month with a maximum accumulation of fortyfive days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.

Certain employees who retire with a minimum of three months ofunused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.

NOTE 10: CONTINGENCrnS

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 which are disallowed under grant terms. The amount ofexpenditures 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 and assessments filed against Georgia Military College, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1999,
NOTE 11: TUITION AND FEE WAIVERS

Tuition and Fee Waivers of$1,003,820.90 were issued by Georgia Military College during fiscal year 1999. This amount is not readily apparent from the financial statements.

NOTE 12: ENROLLMENT

The equivalent full-time student enrollment for the junior college division of Georgia Military College was as follows:

Regular Term Fall Quarter, 1998 Winter Quarter I, 1998 Winter Quarter II, 1999 Spring Quarter, 1999

2,775 1,764 3,322' 3,080

Average

Summer School, 1998

- 14-

GEORGIA MILITARY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT"D"

NOTE 12: ENROLLMENT

The enrollment by grade for the secondary school division of Georgia Military College for the 1998-1999 academic year was as follows:

Sixth Grade

67

Seventh Grade

64

Eighth Grade

57

Ninth Grade

62

Tenth Grade

56

Eleventh Grade

45

Twelfth Grade

~

Total Enrollment

- 15 -

SUPPLEMENTARY INFORMATION
-17 -

GEORGIA MILITARY COLLEGE

SCHEDULE "1"

SCHEDULE OF REQlJIRED SupPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1999

The year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the College's operations beyond calendar year 1999. Georgia Military College has completed an inventory of computer systems and other electronic equipment that may be effected by the year 2000 issue and that are necessary to conducting institutional operations. The following stages have been identified as necessary to implement year 2000 compliant systems.

Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.

Assessment Stage - The actual process ofidentifying all systems and individual components of systems to check for compliance.

Remediation Stage - The time when changes are made to systems and equipment.

Validation/Testing Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.

It will be necessary for the College to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.

Georgia Military College has identified the following systems requiring year 2000 remediation:

SYSTEMS

STATUS

New Student Systems Software (Datatel)
HP 9000 Server for new Student Records Software
486 PCS Upgrade
New PC's for currently non-compliant non-486's
New Server Hardware
Upgrade/New Software
Upgrade of Server Software (Novell 3.2)

Validation/Testing Stage Completed
Validation/Testing Stage Completed
Validation/Testing Stage Completed
Assessment Stage Completed
Validation/Testing Stage Completed
Validation/Testing Stage Completed
Validation/Testing Stage Completed

See accompanying notes and Independent Accountant's Combined Report on Review ofFinancial Statements and Supplementary Information.
- 18-

GEORGIA MILITARY COLLEGE

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1999

SYSTEMS

STAWS

PC Compliance Inventory
Network Compliance/Bookstore & Cafeteria Point of Sale System
Datatel and related software Compliance
Other Software Compliance

Validation/Testing Stage Completed
Validation/Testing Stage Completed
Validation/Testing Stage Completed
Validation/Testing Stage Completed

Because ofthe unprecedented nature of the year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. While management is confident that the College will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the College does business will be year 2000 ready.

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 19-

GEORGIA MILITARY COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1999

SCHEDULE "2"

Totals per Annual Supplement
Accruals June 30,1999 June 30, 1998
Other Unidentified Variance

SALARIES
$ 8,623,539.28 $

TRAVEL 59,796.52

406,507.00 -417,435.38

-340.11

430.74

$ 8,612,270.79 $=====60=,=22=7=.2=6=

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
- 20-

GEORGIA MILITARY COLLEGE RECONCILIATION OF PER DIEM AND FEES
YEAR ENDED JUNE 30, 1999

SCHEDULE "3"

Totals per Annual Supplement
Adjustments Datatel Donaldson, Garrett & Associates Fordham & Company
Lee, Anne R.
Manpower Miller, Paula B. Peachstate Nursing Tate, Willie
Other Unidentified Variance

TYPE PAYMENT
Consultant Surveyor Architect Consultant Contract Labor Consultant Contract Labor Contract Labor

FEE AMOUNT

EXPENSE AMOUNT

s

33,419.36 $

10,778.76 $

TOTAL 44,198.12

5,070.00 450.00
1,000.00 1,000.00
917.53
2,031.25 400.00

1,898.46
294.70 162.47

6,968.46 450.00
1,000.00 1,294.70
917.53 162.47 2,031.25 400.00

559.75

559.75

$

44,847.89 $

57,982.28

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
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SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA MILITARY COLLEGE
AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF-PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-590-97-01 FS-590-97-02 FS-590-98-01 FS-590-98-02 FS-590-98-03 FS-590-98-04 FS-590-98-05 FS-590-98-06 FS-590-98-07 FS-590-98-08 FS-590-98-09

Further Action Not Warranted - See FS-590-98-09 Further Action Not Warranted - See FS-590-98-07 Previously Reported Corrective Action Implemented Partially Resolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

INVENTORIES Inadequate Segregation ofDuties Finding Control Number: FS-590-98-02

The College has modified the purchasing and receiving procedures to ensure a distinct division of duties in the procurement process whereby one individual orders and another individual accepts goods/services; however, problems still remain in some areas with the same person ordering and receiving goods. This division of duties will be stressed at each formal budget meeting to promote adherence to published policy.

A representative ofthe Business Affairs/Business Office was on site to oversee the annual physical inventory process at five of the six bookstore locations for FY 1999. We will plan to attend and review the physical inventory at each location in FY 2000.

REVENUES/RECEIVABLES/RECEIPTS Inadequate Segregation ofDuties Finding Control Number: FS-590-98-03

The College implemented the use of a second cash register in the Milledgeville campus bookstore. Each employee transacts business from his/her own cash drawer and is balanced daily. Procedures have been revised to ensure that overages or shortages are investigated sufficiently and approved by an administrator outside the bookstore. Voids are approved by someone other than the person operating the cash drawer. The bookstore prints a copy of the "voided" ticket and attaches a copy with the daily transmittal submitted to the Business Office. The College will implement procedures which have been implemented at Milledgeville at all Distant Learning Centers.

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GEORGIA MILITARY COLLEGE AuPITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
GENERAL LEDGER Inadequate Endowment Agreements/No Separate Accountability Finding Control Number: FS-590-98-08
All endowments created since 1998 have had formal endowment agreements. A number of endowment agreements established prior to 1995 did not have adequate formal agreements. At this time several endowments established prior to 1995 are being researched with descendants, personal papers, and court records to determine the intent of those endowments. When the College determines it is impossible to fully document the donor's intent ofthe endowment, it will consider, on a case-by-case basis, moving the funds to a restricted account.
Century Bank and Trust and Georgia Military College have established procedures to ensure that the incorrect distribution of scholarship endowment does not reoccur. The Goldstein Scholarship must continue to be shown in two separate endowments since we cannot add funds to the corpus of the Foundation scholarship (Title III) endowment, which closed in February 1991; additional contributions to it must be shown in the College's scholarship endowment. (The College cannot add funds because it was matched with federal funds.) The College is working with Century Bank and Trust to obtain income and change in fair market value for each endowment. A separate general ledger account for each endowment will be established to properly record the activity of each endowment fund.
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number: FS-590-98-09
The College completed a 100% physical inventory during FY 1999; however, acquisition costs and dates were not included in the new inventory when it was entered in the new system. These will be researched and added during FY 2000. Inventories will be conducted semi-annually beginning in FY 2000. The College has not yet identified the funds necessary to obtain outside, professional assistance to properly assess the valuation of the older buildings owned by Georgia Military College. The College will attempt to fund this project in FY 2001 budget.
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SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA MILITARY COLLEGE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-590-99-0l
The College was unable to provide subsidiary fixed assets records or other historical cost evidence supporting the balance for general fixed assets. Proper internal controls necessitate the maintenance ofsubsidiary records for general fixed assets along with periodic comparisons of physical counts with those subsidiary listings.
This condition resulted from management's failure to adequately monitor and implement procedures to ensure that all general fixed assets are properly recorded and accounted for.
The College should take appropriate action to provide for an adequate property management system for general fixed assets which would include subsidiary records that reflect an inventory of land, buildings, and equipment owned by the College. Such records should include but may not be limited to (l) acquisition date, (2) acquisition cost, (3) estimated replacement cost, (4) location and description, and (5) identifying number. Detailed records should be maintained for all deletions and additions to the Plant Fund. The College should also implement procedures to periodically reconcile physical inventory counts offixed assets to the subsidiary records.