GEORGIA MILITARY COLLEGE - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIDITS 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 SCHEDULE 1 RECONCILIATION OF SALARIES AND TRAVEL 18 SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 October 20, 2000 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 fmancial statements (Exhibits A through D) of Georgia Military College as of and for the year ended June 30, 2000, 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 of the management of Georgia Military College. A review consists principally ofinquiries ofCollege 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, with the exception ofthe matter described in the fourth paragraph, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. The College could not provide adequate subsidiary fixed asset records or other evidence supporting the Plant Fund Investment in Plant of $9,145,285.04 as shown on the Combined Balance Sheet. Accordingly, we were unable to satisfy ourselves as to the accuracy ofthis amount as reflected on the financial statements as of June 30, 2000. OOARL-68X Our review was made for the purpose of expressing 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 accompanying financial schedule (Schedule 1) is presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications which should be made thereto. Respectfully submitted, RWH:gp OOARL-68X Rus ell W. Hinton State Auditor FINANCIAL STATEMENTS - 1- GEORGIA MILITARY COLLEGE COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30, 2000 ASSETS Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances for Doubtful Accounts) Inventories Prepaid Items Investment in Plant CURRENT FUNDS UNRESTRICTED RESTRICTED $ 1,049,098.19 $ 670,424.97 1,137,161.21 416,644.71 2,032.63 Total Assets $ 2,604,936.74 $=====6=7=0=,4=2=4=.=9=7= LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Salaries Payable Notes Payable Student Deposits Deferred Revenue Tuition and Fees Other Deposits Held in Custody for Others Compensated Absences Capital Lease Obligations Total Liabilities Fund Balances Endowment Net Investment in Plant Restricted Unrestricted Total Fund Balances $ 790,867.48 405,634.01 36,406.34 131,200.13 150,000.00 152,006.20 $ 1,666,114.16 $ 670,424.97 $ 938,822.58 $ 938,822.58 $ 670,424.97 Total Liabilities and Fund Balances $ 2,604,936.74 $ ====6=7=0=,=4=2=4=.=9=7= 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" ENDOWMENT FUNDS PLANT FUNDS INVESTMENT IN PLANT AGENCY FUNDS TOTAL (Memorandum Only) $ $ 738,999.06 _ _ _ _ _ $ 9,145,285.04 47,665.72 $ 1,767,188.88 738,999.06 1,137,161.21 416,644.71 2,032.63 9,145,285.04 $ 738,999.06 $ 9,145,285.04 $ 47,665.72 $ 13,207,311.53 $ 297,320.41 $ 136,902.34 $ 434,222.75 $ $ 47,665.72 47,665.72 $ 790,867.48 405,634.01 297,320.41 36,406.34 131,200.13 150,000.00 47,665.72 152,006.20 136,902.34 2,148,002.63 $ 738,999.06 $ 8,711,062.29 $ 738,999.06 $ 8,711,062.29 $ 738,999.06 8,711,062.29 670,424.97 938,822.58 $ 11,059,308.90 $ 738,999.06 $ 9,145,285.04 $ 47,665.72 $ 13,207,311.53 - 3- GEORGIA MILITARY COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES ALL FUND GROUPS YEAR ENDED JUNE 30. 2000 REVENUES AND OTHER ADDITIONS Unrestricted Current Fund Revenues Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income Endowment Other Net Increase/(Decrease) in Fair Value of Investments Adjustments Prior Years' Expenditures/Accounts Payable To Reconcile Accounts Receivable Subsidiary Records with General Ledger 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 To Reconcile Accounts Payable Subsidiary Records with General Ledger Total Expenditures and Other Deductions Net Increase/(Decrease) for the Year FUND BALANCES JULY 1. 1999 CURRENT FUNDS UNRESTRICTED RESTRICTED $ 16,802,262.41 $ 3,401,301.89 2,948,969.94 152,323.33 27,539.66 39,459.22 28,618.97 156,610.11 $ 16,987,491.49 $ 6,569,594.04 $ 15,226,366.04 $ 6,665,980.04 1,318,607.26 5,219.87 228,906.61 -54,552.16 88,080.19 $ 16,861,960.10 $ 6,616,647.75 $ 125,531.39 $ -47,053.71 813,291.19 717,478.68 FUND BALANCES JUNE 30. 2000 $ 938,822.58 $ =====6=7==0=,4-=2=4=.=9=7== 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- EXHIBIT "B" ENDOWMENT FUNDS PLANT FUNDS INVESTMENT IN PLANT TOTAL (Memorandum Only) $ 93,930.00 54,978.92 $ $ 148,908.92 $ $ 16,802,262.41 3,401,301.89 2,948,969.94 246,253.33 27,539.66 39,459.22 54,978.92 28,618.97 156,610.11 90,587.30 90,587.30 90,587.30 $ 23,796,581.75 $ $ 303.02 0.00 $ 21,892,346.08 1,318,607.26 5,219.87 303.02 174,354.45 88,080.19 $ 303.02 $ 0.00 $ 23,4 78,910.87 $ 148,605.90 $ 90,587.30 $ 317,670.88 590,393.16 8,620,474.99 10,741,638.02 $ 738,999.06 $ 8,711,062.29 $ 11,059,308.90 - 5- GEORGIA MILITARY COLLEGE STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES YEAR ENDED JUNE 30, 2000 EXHIBIT 'C' Net Increase/(Decrease) in Fund Balances $ 125,531 ,39 $ -47,053,71 $ =====-=7=8=,4=7=7=,=6=8= 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 Mil-ITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNlFICANT 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 ofthe 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 of Regents. In order to incur debt, the Board ofTrustees 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 ofthe 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 ofthe 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 of fund 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 ofthe 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 MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIDIT"D" NOTE I: 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 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 of physical 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 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 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 ofGeorgia, 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 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING 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 ofreimbursements 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 $ 1,661,579.21 -524,418.00 Net Receivables $ 1.137,161.21 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 note in a prior year 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 ofthis 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 bond to the State. In lieu of a surety bond, the -9- GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES depository may pledge as collateral anyone or more ofthe 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 ofthe 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 ofGeorgia. (3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. (4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe 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. As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia the option of exempting demand deposits from the collateral requirements. 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, 2000, 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. - 10- GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS CATEGORIZATION OF DEPOSITS Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trustdepartment or agent but not in the College's name, and amounts uncollateralized. Cash Deposits Investment Portfolio Accounts Total Cash Deposits Carrying , Amount Bank Balances Risk Categories 2 3 s $ 1,762,663.88 $ 2,189,814.31 395,273.77 $ s 0.00 1,794,540.54 107,677.46 107,677.46 100,000.00 s s s s 1.870 341.34 2297.491.77 495273.77 7,677.46 7677.46 $ 1,794,540.54 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. 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, 2000, are categorized below: Type of Investment Risk Categories 1 2 Corporate Bonds $ U. S. Government Securities 0.00 $ . 30,710.50 $ 126,165.25 $.==~0.0~0 $ 156,875.75 $ Investments Not Subject to Categorizations: Investment Portfolio Accounts Mutual Funds Total Investments Carrying 3 Amount 0.00 $ 30,710.50 126,165.25 0.00 $ 156,875.75 474,445,85 $ 631.321.60 - 11 - GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 3: INVESTMENT IN PLANT Land, buildings and equipment are stated at cost as ofthe date of acquisition, insurance valuations, if applicable, or fair market value at date of the gift. Depreciation ofphysical plant and equipment is not recorded. The following is a summary of Investment in Plant fixed assets as of June 30, 2000: Land Buildings Equipment $ 318,842.39 3,704,307.24 5,122,135.41 Total Investment in Plant $ 9,145.285.04 NOTE 4: OPERATING LEASES 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 of renewing the lease on a year-to-year basis. Future minimum lease payments for operating leases as of June 30, 2000, 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 2001 2002 2003 2004 $ 304,999.44 218,761.14 192,440.04 16,440.97 Total Future Minimum Lease Payments $ 732,641.59 NOTE 5: CAPITAL LEASES Georgia Military College acquires certain equipment through multi-year capital leases with varying terms and options. As of June 30, 2000, future minimum lease payments under capital leases are as follows: - 12- GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNI? 30, 2000 EXHIBIT "D" NOTE 5: CAPITAL LEASES Fiscal Year Ending June 30 2001 2002 2003 2004 $ 66,543.83 52,778.72 28,894.86 1,169.98 Total Future Minimum Lease Payments $ 149,387.39 Less: Amounts Representing Interest 12,485.05 Present Value of Future Minimum Lease Payments $ 136,902.34 NOTE 6: DEFICIT FUND BALANCES The Auxiliary Enterprises Fund and the Student Activities Fund, both a part ofUnrestricted Current Funds, have deficit fund balances of $956,653.20 and $914,831.06, respectively, which are not readily apparent from the financial statements. NOTE 7: RISKMANAGEMENT The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects ofaccidental 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: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Georgia Military College participates in the Teachers Retirement System of Georgia (TRS), a costsharing 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 - 13- GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 8: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description 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 TRS. The College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2000, the employer contribution rate was 11.29% 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 2000 1999 1998 100% 100% 100% $ 465,093.54 $ 460,218.78 $ 415,333.00 NOTE 9: LEAVEPOUCffiS 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 forty-five 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 ofthree months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia. NOTE 10: CONTINGENCffiS 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 of expenditures which may be disallowed by the grantor - 14- GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 10: CONTINGENCIES 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 ofGeorgia. 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, 2000. NOTE 11: TUITION AND FEE WANERS Tuition and fee waivers of $790,295.46 were issued by Georgia Military College during fiscal year 2000. 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, 1999 Winter Quarter I, 1999 Winter Quarter Il, 2000 Spring Quarter, 2000 2,816 1,810 3,109 2,804 Average Summer School, 1999 The enrollment by grade for the secondary school division of Georgia Military College for the 19992000 academic year was as follows: Sixth Grade Seventh Grade Eighth Grade Ninth Grade Tenth Grade Eleventh Grade Twelfth Grade 47 61 62 64 50 53 -IL Total Enrollment - 15 - SUPPLEMENTARY INFORMAnON - 17 - GEORGIA MILITARY COLLEGE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2000 SCHEDULE "1" Totals per Annual Supplement Accruals June 30, 2000 June 30, 1999 Other Unidentified Variance SALARIES $ 8,998,726.73 $ TRAVEL 69,944.91 405,634.01 -406,507.00 618.25 $ 8,998,471.99 $==~=69=,9=44=.9=1= See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 18- SECTIONll 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, 2000 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-590-98-02 FS-590-98-03 FS-590-98-04 FS-590-98-07 FS-590-98-08 FS-590-98-09 FS-590-99-01 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective ActionlResponses Further Action Not Warranted - See FS-590-99-01 Partially Resolved - See Corrective ActionlResponses CORRECTIVE ACTIONIRESPONSES GENERAL LEDGER Inadequate Endowment Agreements/No Separate Accountability Finding Control Number: FS-590-98-08 The College has worked with Century Bank and Trust to establish the fair market value and change in income for each endowment. The subsidiary records listing each individual endowment support the activity in the General Ledger. All endowments created since 1998 have had formal endowment agreements. A number of endowments established prior to 1995 do not have formal agreements. The College has researched with descendants, personal papers, and court records to determine the donor's intent of the endowment. However, we have been unable to fully document the donor's intent. The College will ask the Georgia Military College Board ofTrustees to impose restrictions on the investment ofprincipal, use ofincome, and/or termination ofthe endowments where no formal agreement exists. GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-590-99-01 The College completed a 100% inventory and converted to a new inventory system during fiscal year 2000. The task of acquiring acquisition cost and acquisition date has been more time-consuming than originally expected. The College anticipates completion of the task by January, 2001. - 1- GEORGIA MILITARY COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTIONIRESPONSES GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-590-99-01 The College has not yet identified the funds necessary to obtain outside, professional assistance to properly assess the historical value ofthe older buildings owned by Georgia Military College. The College will attempt to fund this project in the fiscal year 2002 budget. -2- SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS GEORGIA MILITARY COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 FINANCIAL STATEMENT FINDINGS AND QUESTIONED CQSTS GENERAL LEDGER Discrepancies between Subsidiary Records and General Ledger Finding Control Number: FS-590-00-0l The College's subsidiary records for accounts receivable and accounts payable did not agree with the general ledger as presented for review. Extensive procedures were performed to attempt to locate the variances. Correcting adjustments were made to the College's general ledger for the discrepancies of $156,610.11 for accounts receivable and $88,080.19 for accounts payable and are reflected in the financial statements as adjustments to fund balance. This condition resulted from management's failure to adequately monitor subsidiary records and ensure that discrepancies between subsidiary records and the general ledger were located and corrected in a timely manner. The College should establish controls and procedures to ensure that the subsidiary accounting records are compared to the general ledger on a regular basis and that any discrepancies are investigated and corrected in a timely manner. GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-590-00-02 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 of subsidiary records for general fixed assets along with periodic comparisons of physical counts with those subsidiary records. 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 (1) 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 of fixed assets to the subsidiary records.