Georgia Military College, Milledgeville, Georgia, report on review of the financial statements for the fiscal year ended June 30, 2002

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~STATE OF GEORGIA-

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DEPARTMENT,OF _AUDITS AND ACCOUNTS

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GEORGIA MILITARY COLLEGF

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MILLE' DG' EVILLE,'. GEORGIA

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REPORT ON REVIEW , 1

OF,,THE FINANCIAL STATEMENTS

\ FOR THE FISCAL YEAR ENDED JUNE 30, 2002
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Russell1W. Hinton State Auditor

GEORGIA MILITARY COLLEGE -TABLE OF CONTENTS-

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPOR1 ON REVIEW OF BASIC
FINANCIAL STATEM!oN rs AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENTS DISCUSSION AND ANALYSIS

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BASIC FINANCIAL STATEMENTS

EXIIIBITS

A SI ATEM[NT OF NET ASSETS

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B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSFTS

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C STATEMENT OF CASH FLOWS

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D NOTES TO THE FINANCIAL STATEMENTS

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SUPPLEMENTARY INFORMA fJON

SCHEDULES

RECONCILIATION OF SALARIES AND TRAVEL

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2 RECONCILIATION OF PER DIEM AND FEES

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SECTION II AlIDIT[E'S RESPONSE 10 PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SUMMARY SCHEDULE OF PRJOR YEAR FINDINGS AND QUESTIONED cos rs

SECTION I FINANCIAL

R11,,L1.L \V. H1,rroN
STArE" AUOITQA !404) 056 217A

DEPARTl\1ENT OF AUDITS AND ACCOUNTS
254 Wc.1,hmgLOn ~lrC'ct S W Suite 214 AIIJnlJ Georg1J 10334-8400
November 6. 2002

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Trustees of Georgia M1htary College
and MaJor General Peter J Boylan, President
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have reviewed the accompanymg basic financial statements (Exh1b1ts A through DJ of Georgia M1htary College. an orgamzat10nal umt of the State of Georgia, as of and for the year ended June 30, 2002, m accordance with Statements on Standards for Account mg and Review Services issued by the Amencan Institute of Certified Pubhc Accountants All mformat1on mcludcd m these financial statements 1s the representat10n of the management of Georgia M1htary College
A review consists pnnc1pally of mqumes of College personnel and analytical procedures applied to financial data It 1s substantially less m scope than an audit m accordance with audttmg standards generally accepted m the United States of Amenca, the obJect1ve of which 1s the express10n ofan optmon regardmg the financial statements taken as a whole Accordmgly, we do not express such an opm10n
Based on our review, we are not aware of any matenal modt ficattons that should be made to the accompanymg financial statements m order for them to be m conformtty with accountmg pnnc1ples generally accepted m the Umted States of Amenca
As descnbed m Note 1. Georgia M1htary College adopted the prov1s10ns of Governmental
Accountmg Standards Board (GASB) Statement No 35, Basic Financial Statement~ - and Management~ D1scusswn and Ana(vs1s - for Puhhc Colleges and Univers111es, as amended by GASB Statement No 37, Basic Financial Statements - and Management's D1scu~swn and Ana(vs1s for State and Local Government~, and GASB Statement No 38. Certam Financial Statement~ Note D1sclo~ures, as of July I, 2001, to implement a new financial reportmg model

02ARL-66

Management's D1scuss10n and Analysis 1s not a reqmred part of the baste financial statements but 1s supplementary mformat10n required by the GASB We have apphed certam hm1te<l procedures, which consisted pnnc1pally ofmqumes ofmanagement regardmg the methods ofmeasurement and presentation ofth1s supplementary mformat10n. and we are not aware of any matenal mod1ficat10ns that should be made thereto
Our review was made for the purpose of expressmg hm1ted assurance that there are no matenal mod1ficat10ns that should be made to the financial statements m order for them to be m conformity with accountmg pnnc1plcs generally accepted m the Umtcd States of Amen ca The accompanymg supplementary mformat10n (Schedules 1 and 2) 1s presented for add1t1onal analysis purposes Such mformallon has been subjected to the mqumes and analytical procedures applied m the review ofthe financial statements, and we are not aware of any matenal mod1ficat1ons that should be made to such data
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REQUIRED SUPPLEMENTARY INFORi\1A1 ION - 1-

GEORGIA MILITARY COLLEGE
Management's Discussion and Analysis
Introduction
Georgia M1htary College, established by the Georgia General Assembly m 1879. 1s a pubhc, mdcpendent mstltut10n governed by a Board ofTrustees elected by the c1t1zens ofM1lledgev1lle In 1990, Georgia M1htary College's pubhe status was reaffirmed by a vote ofthe state legislature From 1879 until 1956, Georgia M1htary College was the high school servmg M1lledgev1lle and Baldwm County Today Georgia M1htaryCollcge's High School/M1ddle School D1v1s10n mcludes 6th through 12th grade students The Jumor college department was established m 1930 In add1t10n to the campus located m M11lcdgev1lle, the College D1v1s1on mcludes Distant Learnmg Centers at five locat10ns m Georgia Atlanta, Augusta, Columbus, Valdosta, and Warner-Robms Also, It has two extens10n centers located m nearby Sandersville and Madison Best known for the military environment and comm1ss1omng program for cadet students at the M1lledgev1lle Campus, the compos1uon of the student body has been broadened m recent years to mclude c1v1han and nontrad1t1onal students The College D1v1s1on of Georgia Military College awards three degrees The Associate m Arts degree, The Associate m Science degree, and The Associate m Applied Science degree, with areas of concentral!on m nmeteen d1sc1plmes The Comm1ss1on on College of the Southern Assoc1at10n of Colleges and Schools accredits both the High School/M1ddlc School D1v1s1on and the College D1v1s1on The ultimate goal of the College 1s to enable its students to become responsible, productive c1llzens who make a positive difference m the commumt1es where they choose to hve and work
Overview ofthe Financial Statements and Financial Analysis
Georgia Military College 1s proud to present its financial statements for fiscal year 2002 The emphasis ofd1scuss10ns about these statements will be on current year data There are three financial statements presented the Statement of Net Assets, the Statement of Revenues, Expenses and Changes m Net Assets, and, the Statement of Cash Flows This d1scuss1on and analysis of the College's financial statements provides an overview of its financial acllv1t1es for the year Georgia M1htary College has elected to not restate pnor penods for purposes ofprov1dmg the comparative data for this Management's D1scuss1on and Analysis smce eomparat1ve mformatlon 1s not required m the year of implementation However, m future years. when pnor penod mformat1on 1s ava1lablc, a comparative analysis will be presented
Statement ofNet Assets
The Statement ofNet Assets presents the assets, hab1ht1es, and net assets ofthe College as of the end of the fiscal year The Statement ofNet Assets 1s a pomt ofllme financial statement The purpose of the Statement of Net Assets 1s to present to the readers of the financial statements a fiscal snapshot of Georgia M1htary College The Statement ofNet Assets presents end-of-year data concernmg Assets (current and non-current), L1ab1hlles_(current and non-current), and Net Assets (assets mmus hab1hlles) The difference between current and non-current assets will be discussed m the notes to the financial statements
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From the data presented, readers of the Statement of Net Assets arc able to dctenmne the assets available to contmuc the operations of the mstltutwn They are also able to determme how much the mstltullon owes vendors, investors and lcndmg mstltutwns.

Fmally, the Statement ofNet Assets provides a picture of the net assets (assets mmus hab1httes) and their availab1hty for expenditure by the mst1tut10n Net assets arc d1v1ded mto three maJor categones The first category, mvested m capital assets, net ofdebt, provides the ms11tut1on's cqwty m property, plant and eqmpment owned by the instttu!Ion The next asset category 1s restnctcd net assets, which 1s d1v1ded mto two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources 1s only available for mvestment purposes Expendable restnctcd net assets are available for expenditure by the mstttu!Ion but must be spent for purposes as determmed by donors and/or external en!Ittes that have placed time or purpose restncttons on the use of the assets The final category 1s unrcstncted net assets Unrestnctcd assets are available to the mstttutwn for any lawful purpose of the ms!Itutton

Statement of Net Assets, Condensed (thousands of dollars)

Assets Current Assets Capital Assets, Net Other Assets

S 4,760 12,818 84

Total Assets

$ 17,662

Liabilities Current L1ab1httes Non-Current Liab1h!Ies

$ 2,483 382

Total Liabilities

S 2,865

Net Assets Invested in Capital Assets, Net of Debt Restncted - Nonexpendable Rcstncted - Expendable Unrestncted
Total Net Assets

$ 12,550 634 547
1,066
$ 1~.:z2z

Statement ofRevenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the act1v1ty presented in the Statement of Revenues, Expenses and Changes in Net Assets The purpose of the statement 1s to present the revenues received by the mstttut1on, both operatmg and nonoperatmg, and the expenses paid by the mslltutton, operatmg and nonoperatmg. and any other revenues, expenses, gams and losses received or spent by the mslltutton. Generally speaking operating revenues are received for prov1dmg goods and services to the vanous customers and constltuenc1es of the

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inst1tul1on Operating expenses are those expenses paid lo acquire or produce the goods and services provided in return for the operating revenues, and to carry out the m1ss10n of the inslitut10n Nonoperating revenues are revenues received for which goods and services are nol provided

Statement of Revenues, Expenses and Changes in Net Assets, Condensed (thousands of dollars)

Operating Revenues Operating Expenses

$ 17,497 20,400

Operating Loss

$ -2,903

Nonoperating Revenues and Expenses

2,518

Increase/Decrease in Net Assets

$ -385

Net Assets at Beginning of Year, as Onginally Reported

$ 11,198

Cumulative Effect of Changes in Accounting ?nnc1ple

3.984

Net Assets at Begmrung ofYear Restated

$ 15.182

Net Assets at End of Year

S 14,797

The Statement of Revenues, Expenses and Changes in Net Assets reflects a negative year w11h a decrease m the net assets at the end of the year The decrease in net assets 1s the direct result of the change to Governmental Accounting Standards Board Statement 34 that requires colleges, such as Georgia M1htary College, to depreciate buildmgs and equipment Some h1ghhghts of the mformallon presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows

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Revenue By Source (thousands ofdollars) For The Year Ended June 30, 2002

Operating Revenue Tmt1on and Fees Grants and Contracts Auxiliary Other
Total Operating Revenue
Nonopcrating Revenue Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Total Revenues

$ 6,704 7,964 2,534 295
$ 17 497
$ 2,250 30 -65
303
$ 2,5 I 8
$ 20.015

Expenses (thousands of dollars) For The Year Ended June 30, 2002

Operating Expenses Instruellon Academic Support Student Services Inst1tullonal Support Plant Operations and Mamtenance Scholarships and Fellowships Aux1hary Enterpnscs Deprec1at1on

$ 7,909 1.015 2,277 3,142 1,568 1,066 2,766 657

Total Operating Expenses

$ 20,400

Statement ofCash Flows

The final statement presented by the College 1s the Statement ofCash Flows The Statement ofCash Flows presents detailed information about the cash aellv1ty of the institution dunng the year The statement 1s d1v1ded mto five parts The first part deals with operating cash flows and shows the net cash used by the operatmg ac11v11les of the mslltullon The second secl!on reflects cash flows from non-capital financing acllv11lcs Tlus section reflects the cash received and spent for nonoperatmg,

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non-mvestmg, and non-capital financmg purposes The th1rd secllon reflects the cash flows from mvestmg act1v1t1es and shows the purchases, proceeds, and mterest received from mvestmg act1v1t1es The fourth sect10n deals with cash flows from capital and related financmg act1v1t1e~ This secllon deals with the cash used for the acqu1s1t10n and construct10n ofcapital and related items The fifth sect10n reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets

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

Cash Provided (Used) By Operatmg Acllv1t1es Non-Capital Fmancmg Act1v111es Investmg Act1v1t1es Capital and Related Fmancmg Act1v111es

$ -1,748 2,614 -9 -318

Net Change m Cash Cash, Begmnmg of Year

$ 539 1,601

Cash, End of Year

$ Z.lAfl

Capital Asset~

Although the College had no capital asset add1t10ns for fac1h!Jes dunng fiscal year 2002, the plannmg and m1t1al 1mplcmcntatlon steps were underway at the end of the year for a new academic bm ldmg to replace Whitfield Hall Procurement of the portable classrooms and the necessary site work had been 1mtiated as the first phase of the New Academic Bmldmg ll proJect This portable classroom complex replaces classrooms bemg lost due to Whitfield Hall's demohllon The final design of the new athletic complex was neanng completion with construction scheduled to begm m early December This complex 1s the second phase of the New Academic Bmldmg Pro1ect II and 1s also required because of the loss of Whitfield Hall Design of the New Academic Bmldmg ll was well underway and construct10n of the bu1ldmg 1s scheduled to begm dunng fiscal year 2003

Planning for the procurement of a portable classroom complex at our Valdosta location was underway with projected completion m the first half of Fiscal Year 2003 This expansion was necessary to support growmg student enrollments at that location

For add1t1onal mformatlon concemmg Capital Assets, see Notes I, 5, 7, and 8 m the notes to the financial statements

MaJor General Peter J Boylan, President Georgia Military College

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BASIC FINANCIAL STATEMENTS -9-

GEORGIA MIUTARY COLLEGE STATEMENT OF NET ASSETS
JUNE 30 2002
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial AsSlstance Other Prepaid Items lnventones
Total Current Assets
Noncurrent Assets Investments Capital Assets, Net (See Note 5)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current L1ab1l1t1es Salanes Payable Accounts Payable Deferred Revenue Funds Held for Others Capital Leases Compensated Absences Notes Payable Other Liab1lrt1es
Total Current L1ab11ltles
Noncurrent L1ab1hties Caprtal Leases Notes Payable Deferred Revenue
Total Noncurrent 1.iab1hbes
Total L1ab1hbes
NET ASSETS
Invested in Caprtal Assets, Net of Related Debt Restncted for
Nonexpendable Expendable Unrestncted
Total Net Assets
See Independent Accountant's Combined Report on Review of BaSlc Financial Statements and Supplementary lnformabon
Toe notes to the financial statements are an integral part of this statement - 11 -

EXHIBIT"A"

$ 2,140,016 65 560,136 35
287,251 01 1,394.41605
2,350 32 375 567 52
$ 4 759.737 90

$

83,530 18

12,817,855 49

$ 12,901,38567

$ 17,661,123 57

$

440,037 33

875,725 44

826,713 30

65,214 51

37,907 14

147,489 88

43,925 28

4562446

$ 2 482 637 34

$

85,785 07

146,241 21

150 000 00

$

382,026 28

$ 2,864,663 62

$ 12,550,218 24 633,666 53 546 928 93
1,065,646 25
$ 14,79645995

GEORGIA MILITARY COLLEGE
STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2002

EXHIBIT"B"

OPERATING REVENUES
Student Turllon and Fees
Less Scholarship Allowances
Grants and Contracts Federal State Nongovernmental
Auxiliary Enterpnses Residence Halls Bookstore Food Services Intercollegiate Alhlebcs
Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salanes Faculty Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreaabon
Total Operabng Expenses
Operating Income (Loss)
NONOPERATING REVENUES !EXPENSES)
Grants and Contracts State Nongovernmental
Gifts Interest and Other Investment Income Other Nonoperatmg Revenues
Net Nonoperatmg Revenues
lncrease/(Decrease) ,n Net Assets
Net Assets Net Assets - Beginning of Year. as Onginally Reported Cumulahve Effed. of Changes m Accounting Pnnciple
Net Assets - Beg1nmng of Year, Restated
Net Assets - End of Year
See Independent Accountant's Combined Report on Rev,ew of Ba5'c F,nanoal Statements and Supplementary Information
The notes to the financial statements are an integral part of this statement - 12 -

$ 14.065.489 08 -7.361,76215
4,900,769 33 2,990.808 83
72.271 20
257,082 90 1,426,841 61
814.945 44 35,220 84
294 84665
$ 17,496,513 73
$ 5,374,979 67 4,468,021 45 1,899.724 83 93,574 62 1,638,842 56 680.374 41 5,589,937 85 656 924 91
$ 20,400,380 30
$ -2,903,866 57
$ 2,245,350 00 5,08615
30,400 00 -65,652 72 303,025 27
$ 2,518,208 70
$ -385 657 87
$ 11,197,84922 3,984,268 60
$ 15182117 82
s 141195:459 95

GEORGIA MILITARY COLLEGE
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30 2002
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Au,a.hary Enlerpnse Charges Residence Halls Bookstore Food Services lntercoUegiate Athletlcs Other Receipts (Payments)
Net Cash Provided (Used) by Operabng AcllVl~S
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Agency Funds Transadklns Gifts and Grants Received for Other than Gaprtal Purposes Other Nonoperatmg Receipts
Net Gash Flows ProVlded (Used) by Noncapllal F1nancmg ActMtJes
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purd"lases of Capital Assets Pnndpal Paid on Capital Debt end Lease
Net Cash ProVKted (Used) by Gap1tal and Related Rnandng Ad1v1ltes
CASH FLOWS FROM INVESTING ACTMTIES Interest on Investments Purdlase of Investments
Net Gash Provided (Used) by lnvesbng AdlVl~S
Net lnaease/(Deaease) in Gash
Cash and Cash Equivalents - Begrnmng of Year
Cash and Cash Equ1VBlents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operabng Income (Loss)
AdJustments to Recooclle Net Income (Loss) to Net Gash
ProVKled (Used) by Operatlflg Activ11ies Deprecabon Change Ill Assets and L1ab1libes Accounts ReceM1bles, Net lnventones Prepaid Items Accounts Payable Salanes Payable Payroll W1thholdmg and Employer Matchmg Benefits Deferred Revenue Other LtabihOes Compensated Absences
Net Cash Provided (Used) by OperatlllQ AdM~s
See Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnformatmn
The notes to the financial statements are an Integral part of this statement
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EXHIBIT "C"

$ 7,174,881 75 7,665,827 46 -7,963,374 85 -9 825 554 78 -1,636,842 56
259 846 64 1,427 167 95
814,945 44 35,220 84
299 673 36
$ -1 748 208 75

s

49,150 16

2,293,340 14

271 870 51

$ 2 614 360 81

s

-97 644 74

-220 054 71

$ -317 699 45

s

30 054 61

-39 550 00

$

-9 495 39

$ 538 957 22

1 601 059 43

$ 211401016 65

$ -2 903,866 57
656,924 91
66399 18,568 60
-372 86 282,679 75
45,381 48 -638 63
177,621 98 2,763 74
-27 935 14
$ -1 748 208 75

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GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia M1htary College serves the state, and nat10nal commurutles by prov1dmg its students with academic mstrucuon that advances fundamental knowledge, and by d1ssemmatlng knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Georgia M1htary College was created as a pubhc authonty and 1s an mstrumentahty of the State of Georgia and a pubhc corporation. The Board of Trustees 1s composed of the mayor of the City of M11ledgev11Ie and six add1t1onal members, one of which shall be elected from each of the six mumc1pal votmg d1stncts ofthe City ofM1lledgev1lle. The government, control and management of Georgia M1htary College shall be vested m the Board of Trustees Georgia M1htary College shall receive any designated funds appropnated by the General Assembly through the State Board of Regents In order to mcur debt, the Board ofTrustees must first receive pemuss1on from the Georgia State Fmancmg and Investment Comrmss1on, as requued for all state authontles Accordmgly, Georgia M1htary College 1s considered a component umt ofthe State ofGeorgia reportmg entity for financial reportmg purposes because of the s1gruficance of its legal, operational and financial relat1onsh1ps with the State of Georgia These reportmg entity relat1onsh1ps are defined m Section 2100 oflhe Governmental Accountmg Standards Board Codification ofGovernmental Accountmg and Fmancial Reportmg Standards
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Financial Statements and Management D1scusswn and Ana(vs1sfor State and Local Governments Tlus was followed m November 1999 by GASB Statement No 35, Basic Financial Statements and Management's D1scusswn and Ana(vs1s for Public Colleges and Universities The State of Georgia 1s reqmred to rmplement GASB Statement No 34 as of and for the year ended June 30, 2002 As an organ1zatlonal unit ofthe State of Georgia, the College 1s also required to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 The financial statement presentation reqmred by GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 provides a comprehensive, ent1ty-w1de perspecl!ve of the College's assets, hab1ht1es, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspecu ve prev10usly reqmred
The College has elected to not restate its 2001 financial statements to conform with the new financial statement presentation, therefore comparallve financial mformauon WIii not be presented for fiscal year 2002 A s1gmficant accountmg change made m order to comply with the new requirements was adoption of depreciat10n on capital assets Generally Accepted Accountmg Pnnc1ples (GAAP) requues that the reportmg of summer school revenues and expenses be between fiscal years rather than m one fiscal year. Due to the lack of matenahty, Georgia M1htary College will continue to report summer revenues and expenses m the year m winch the predommate act1V1ty takes place

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GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING For financial reportmg purposes, the College 1s considered a special-purpose government engaged only m busmcss-type ac1Iv11Ies Accordmgly, the College's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accountmg, except as noted m the precedmg paragraphs Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obhgallon has been mcurred All s1gmficant mtra-wllege transact10ns have been ehmmated
The College has the opuon to apply all Fmanc1al Accountmg Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The College has elected to not apply FASB pronouncements issued after the apphcable date
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adopllon ofGASB Statement No 34, the College was also reqmred to make certam changes m accountmg pnnc1ples, specifically adopt10n of depreciallon on capital assets GASB Statement No 34 reqmres certam summer semester revenues be recogm.ed between fiscal years rather than the fiscal year m which the semester was predommantly conducted The College has chosen to contmuc to record summer revenue m the year m which the semester was predommantly
conducted Net assets at July I. 2001 were increased by S3,984,268 60 for the cumulative effect of
these changes
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Eqmvalcnts cons1st of petty cash, demand deposits and llme deposits m authonzed financial msutuuons
INVESTMENTS The College accounts for its investments at fau value m accordance with GASB Statement No 3 I, Accozmting and Financ,a/ Reporting for Certain Investments and for External Investment Pools Changes m unrealized gam (loss) on the carrymg value ofmvestments arc reported as a component of mvestment mcome m the statements ofrevenues, expenses, and changes m net assets
ACCOUNTS RECEIVABLE Accounts receivable consists oftmuon and fee charges to students and auxzhary entcrpnse services provided to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude amounts due from the Federal government, state and local governments, or pnvate sources, m connecl!on with reimbursement of allowable expenditures (mcludmg tmllon and fees) made pursuant to the College's grant and contracts Accounts receivable are recorded net of esllmated uncollect1ble amounts

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GEORGIA MILTTARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Consumable supplies are earned at the lower of cost or market on either the first-m, first-out ("FIFO") basis
Resale Inventones are valued at cost usmg the average-cost basis
NON-CURRENT CASH AND INVESTMENTS Cash and mvcstrnents that are externally restncted and cannot be used to pay current liabilities are classified as non-current assets m the statements of net assets
CAPITAL ASSETS Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation m the case of gifts For equipment, the College's capllalizallon pohcy mcludes all items with a umt cost of $5,000 00 or more, and an estimated useful life of greater than one year Renovations to buildmgs, mfrastructure, and land improvements that exceed $10,000 00 and s1gmficantly mcrease the value or extend the useful hfe of the structure are cap1tali7ed Routme repairs and rnamtenance are charged to operatmg expense m the year m which the expense was mcurred Deprec1allon 1s computed usmg the stra1ght-lme method over the estimated useful lives of the assets, generally 40 to 60 years for buildmgs, 20 to 25 years for mfrastructure and land improvements, IO years for library books, and 3 to 7 years for equipment
DEFERRED REVENUES Deferred revenues mclude amounts received for tuition and fees and certam aux1hary acllv11les pnor to the end of the fiscal year but related to the subsequent aecountmg penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned
COMPENSATED ABSENCES Employee vacatmn pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable m the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Georgia M1htary College had accrued hab1lity for compensated absences m the amount of $175,425 02 as of July I, 2001 For Fiscal Year 2002, $195,845 40 was earned m compensated absences and employees were paid $223,780 54, for a net decrea~e o[S27,935 14
NON-CURRENT LIABILITIES Non-current liab1lit1es mclude (I) hab1lilles that will not be paid w1thm the next fiscal year, (2) capital lease obligations with contractual rnatunlles greater than one year, and (3) other liab1lit1es that, although payable w1thm one year, are to be paid from funds that are class, tied as non-current assets

- 16 -

GEORGIA MILrrARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNlFICANT ACCOUNTING POLICIES
NET ASSETS The College's net assets are classified as follows
Invested m cap1tal assets. net of related debt This represents the College's total mvestment m capital assets, net of outstandmg debt obhgat10ns related to those capital assets To the extent debt has been mcurred but not yet expended for capital assets, such amounts arc not mcluded as a component of 1mested m capital assets, net ofrelated debt
Restricted net assets - nonexpendable Nonexpendablc restncted net assets consist of endowment and similar type funds m which donors or other outside sources have stipulated, as a cond1t1on ofthe gift mstrument, that the pnnc1pal 1s to be mamtamed mv10late and m perpctmty, and mvestcd for the purpose of producmg present and future mcome, which may either be expended or added to pnnc1pal The College may accumulate as much ofthe annual net mcome of an mstltutlonal fund as 1s prudent under the standard estabhshed by Code Section 44-15-7 of Annotated Code of Georgia
Resmcted net assets - expendable Rcstnctcd expendable net assets mclude resources m which the College 1s legally or contractually obhgated to spend resources m accordance with restnct1ons imposed by ell.temal third parties
Unrestricted net assets Unrestncted net assets represent resources denved from student tmllon and fees, grants and contracts, and sales and services of aux1hary cntcrpnses These resources are used for transactions relatmg to the cducallonal and general operations of the College, and maybe used at the d1scre1Ion of the govemmg board to meet current expenses for those purposes These resources also mcludc aux1hary enterpnscs, which are substantially self-supportmg act1v1t1es that provide services for students, faculty and staff
When an expense 1s mcurred that can be paid using either restncted or unrestncted resources, the College's pohcy 1s to first apply the expense towards unrcstncted resources, and then towards rcstncted resources
INCOME TAXES Georgia M1htary College, as a pohtlcal subd1v1S1on of the State of Georgia. 1s excluded from Federal income taxes under Secllon 115(1) of the Internal Revenue Code, as amended
CLASSIFICATION OF REVENUES The College has classified its revenues as either operating or non-operatmg revenues m the Statement of Revenues, Expenses, and Changes m Net Assets accordmg to the followmg cntena
Opera/mg revenues Operatmg revenues mclude ac\\v1t1es that have the charactenstlcs of exchange transact10ns, such as (1) student tmtlon and fees, net of scholarship allowances, (2) sales and services of aux1hary cnterpnses, and (3) most Federal, state and local grants and contracts and Federal appropnallons
- 17 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES Non-operating revenues Non-opcratmg revenues mclude activities that have the charactenstics of non-exchange transactions, such as gifts and contnbutions, and other revenue sources that are defined as non-operating revenues by GASB No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entitles That Use Proprietary Fund Accounting, and GASB No 34, such as mvestment mcome
SCHOLARSHIP ALLOWANCES Student tmt10n and fee revenues. and certam other revenues from students, are reported at gross with a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses and Changes m Net Assets Scholarslup allowances are the difference between the stated charge for goods and services proVIded by the College, and the amount that 1s paid by students and/or tlurd parties making payments on the students' behalf Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatmg revenues m the College's financial statements. To the extent that revenues from such programs are used to satisfy tultlon and fees and other student charges, the College has recorded contra revenue for scholarship allowances
NOTE 2 CASH AND CASH EOUNALENTS. OTHER DEPOSITS, AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State of Georgia (and thus Georgia M1htary College) cannot be placed ma depository paymg mterest longer than ten days without the depository prov1dmg a surety bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more of the followmg secunties as enumerated m the Official Code of Georgia Annotated Section 50-17-59
I. Bonds. bill, certificates of indebtedness, notes, or other direct obhgatlons ofthe Umted States or of the State of Georgia
2 Bonds, bills, certificates of indebtedness, notes, or other obhgatlons of the counties or mumc1pahties of the State of Georgia
3 Bonds of any pubhc authonty created by the laws of the State of Georgia, prov1dmg that the statute that created the authonty authonzcd the use of the bonds for this purpose
4 lndustnal revenue bonds and bonds of development authontJes created by the laws of the State of Georgia

- 18 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

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

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5 Bonds, bills, certificates of mdebtedness, notes, or other obhgat10ns of a subs1d1ary corporalion ofthe Umted States government, which are fully guaranteed by the Uruted States government both as to pnnc1pal and mterest, or debt obhgalions issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Credit Bank, the Central Bank for Cooperalives, the Farm Credit Banks, the Federal Home Loan Mortgage Assoc1auon, and the Federal National Mortgage Associalion

6 Guarantee or msurance ofaccounts provided by the Federal Deposit Insurance Corporalion

As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia (and thus Georgia M1htary College), the oplion of excmptmg demand deposits from the collateral reqwrements

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

Category I - Amounts covered by depository msurance or collaterahzed with secunlies (at fair value) held by the College or by its agent m the College's name

Category 2 - Amounts collaterahzed with secunlles (at faJT value) held by the pledgmg financial mslitutlon's trust department or agent m the College's name

Category 3 - Amounts collaterahzed with secunlies (at fair value) held by the pledgmg financial mslitulion, or by its trust department or agent but not m the College's name, and amounts uncollaterahzed

Cash Deposits as of June 30, 2002 are as follows

CJsh Deposits Investment Portfolio
Accounts
Total C~h Deposits

CJrrymg Amount

Bank
Balances

81,;;k Categones
2

$ 2,146,291 65 S 2,555,340 24 s 301,86 I 99

$ 2,253,478 25

)%84916

156.849 )6

1(10.000 QO $ 56,849 16

$ .iJ!lJ. I:112 ~ I S.,UU,189.40 S~ti.22 $ ~ti 5.4_2 ~ s 2 ~f' :1Z~ ~~

- I9 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EQUIVALENTS, OTHER DEPOSITS: AND INVESTMENTS

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

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

Category 2 - Uninsured and unregistered, with secunhes held by the counter party's trust department or agent in the College's name

Category 3 - Uninsured and unregistered, with secunlies held by the counter party, or by its trust department or agent, but not in the College's name

At June 30, 2002, the College's mvestrnents consisted of the following

Type of Investments

Corporate Bonds

S

U S Government Sccunucs

TotJls

s

lnv~tments Not Subject to Categoruations Invcrnncnt Portfolio Accounts
Mutual Funds

Total lnvcsttncnts

R1c;k Categones

2

1

Carrymg
Amount

31,98693 $ 5 !.543 25
81 530 I a s

0 00 $

O(Kl S

ooo s.~_ ___.o..oo., s

31,98693 S154325
sJ.sJo 1s

393,287 19 S 47{1 R17.37

NOTE 3 ACCOUNTS RECElVABLE

Accounts receivable consisted of the following at June 30, 2002

Student Tu1t1on and Fees Federal, State, and Pnvate Funds

$1,291,771.29 628,553 01

Less Allowance for Doubtful Accounts Net Accounts Receivable

$ 1,920,324 30 238.657 24
$ 1,681,667.06

- 20-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 4 INVENTORIES

Inventones consisted of the following at June 30, 2002

Bookstore

$ 375,56752

NOTE 5 CAPITAL ASSETS

The balance at July I, 2001 was adjusted for accounting changes reqmred in implementing GASB Statements 34 and 35 as d1scloscd in Note I Following are the changes in capital assets for the year ended June 30, 2002.

AdJustcd
Balance
/ul~ I, l!.!Q I

6dd1t1ons

Rcduct10[!~

Balance June 30, 2002

Capital Assets. Not Ocmg Dcprcc1atcd

Land and Land Improvements

$

Cap1taJ17ed Collcct10ns

384,650 00 63,18735

$ 384,650 00 61,18735

Total Capital Assets Not Bcmg Deprecmtcd

s 447 837 35

s 447 8~7 35

Capital Assets, Being Dcprcc1atcd Bu1ldmg and Bu1ldmg Improvements Equrpment Library Collccuons

$ 15,419,72958
609,552 44 s
1414254,~

$ 11,444,236 28 $

66,615 79
61,96274 s 128,585 53 s

$ 15.419,729 58 676,168 23
3 984 00 I 47~,240 QO
3,284 00 s 11,568,~37 81

Less Accumulated Dcprcciauon Bu1ld1ngs and Bu1ldmg Improvements S
tqu1pmcnt Library Collcct1ons

3,170,883 40 s
263,258 35
1,1 I I 737 QI

s 4 <45 878 7 s

511.283 01 85,735 20 59 906 70 $
656 924 91 $

s 3,682,166 41
348.993 55
3 284 00 I 1~7,659 71
3,284 00 s 5 198,819 67

Total Cap1tJI Assets, Bcmg Dcprcc1Jtcd,

r-.<1

s 12,898,357 52 S

C.aprtal Assets. Net

s 13,346 194 87 S

-5l8 ~32 38 $
-528 33918 s

Q00 s l217Q Q18 14 000 s~ sl7 855 42

NOTE6 DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2002

Prepaid Tm!Ion and Fees Other - Non-Current

$ 826,713 30 150,000 00

Totals

S 976,713,10

- 21 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 7 LONG-TERM LIABILITIES

Long-term hab1hty activity for the year ended June 30, 2002, was as follows

Balance Jul~ I ,QQI

Addn1onc;

Rcdl!!c!IQD~

Balance June 30, 2QQ2

Current fQCIQD

Le..ses Lease Obhgauons

s s 180,~7 ~I $ 22 44~ JH $ 151,72768

l~H2221 $ F,2!1714

Other Liab1ht1cs Compensated Absences

s 175,425 02 s 195,~45 40 $ 223,780 54 s 147,489 88 s 147,489 88

Other Long-Tenn L1ab1ht1es
s

~4,l!i!i 21172
44l 81

s

125 845 40

$

7 7~1 lQ 300 5ll 84

s

190 166 49
ll2 6~6 31

s

4l,2;:.:i ~8 19I 41~ 16

Total Long-Tenn Obhgat,ons S J22 l9Q]2 $ 29128778 s 4~2 322 il s 461 348 58 s 229 322.30

NOTES LEASE OBLIGATIONS

CAPITAL LEASES Georgia M1htary College has vanous capital leases for eqmpment with an outstandmg balance at June 30, 2002 m the amount of$123,692 21

OPERATING LEASES Georgia M1 htary College's noncancellable operatmg leases havmg remammg terms ofmore than one year expire m vanous fiscal years from 2003 through 2015 Certam operatmg leases provide for renewal options for penods from one to three years at their fair rental value at the time of renewal In the normal course ofbusmess, operatmg leases are generally renewed or replaced by other leases Operatmg leases are generally payable on a monthly basis Examples of property under operatmg leases arc copiers and other small busmess eqmpment

Noncancellablc operatmg lease expenses m 2002 were $261,671 IO for real property

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

- 22 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 8 LEASE OBLIGATIONS

SUMMARY OF LEASE OBLIGATION

Capital Leases

Operating Leases

Year Ending June 30 2003 2004 2005 2006 2007 2008 through 2012 2013 through 2015

s $ 43,187 11 241,095 00

64,647 93

41,03167

12,989 47

700 00

11,91098

90000

4,021 97

90000

4,800 00

3 150 00

Total M1mmurn Lease Payments

$ 136,757 46 $ 292,576.61

Less Interest

13,065 25

Pnnc1pal Outstanding

$ 12,,3,&22 21

NOTE 9 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia M1htary College part1c1pates in the Teachers Relirement System of Georgia (TRS), a costshanng mult1ple-employer defined benefit pension plan estabhshed by the General Assembly of Georgia for the purpose of providing relirement allowances and other benefits for teachers of the State of Georgia TRS provides service retirement, d1sab1hty retJrement, 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 Georgia M1htary college who are covered by TRS are required by State statute to contnbute 5% of their gross earnings to TRS Georgia M1htary College makes monthly employer contnbu!ions 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 2002. the employer contnhut1on rate was 9 24% for covered employees Employer contnbul!ons for the current fiscal year and the preceding two fiscal years are as follows

- 23 -

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 9 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy

Fiscal Year

Percentage Contnbuted

Reqmred Contnbullon

2002 2001 2000

100% 100% 100%

$ 555,101 46 $ 522,165 64 $ 465,093.54

NOTE IO RISK MANAGEMENT

The Department of Adrnm1stra1Ive Services (DOAS) has the respons1b1hty for the State of Georgia ofmakmg and carrymg out dec1s10ns that will mm1m1ze the adverse effects ofaccidental losses that mvolve State government assets The State believes 11 1s more economical to manage its risks mtemally and set aside assets for claim settlement Accordmgly, DOAS processes claims for nsk of loss to which the State 1s exposed, mcluding general hab1hty, property and casualty, workers' compensallon, unemployment compensation, and law enforcement officers' mdemmficatmn L1m1tcd amounts of commercial msurance are purchased applicable to property, employee and automobile hab1hty, fidehty and certain other nsks Georgia M1htary College 1s part of the State of Georgia rcportmg enuty, and as such, 1s covered by the State of Georgia nsk management program admm1stered by DOAS Premrnms for the nsk management program are charged to the vanous state orgamzatmns by DOAS to provide claims serv1cmg and claims payment.

NOTE 11 CONTINGENCIES

Amounts received or receivable from grantor agencies are subJecl to audit and adJustment by grantor agencies This could result m refunds to the grantor agency for any expenditures which are disallowed under grant terms The amount ofexpenditures which maybe disallowed by the grantor cannot be detenmncd at this lime although Georgia M1htaryCollege expects such amounts, 1fany, to be 1mmatenal to its overall financial pos11Ion

L111gauon, claims and assessments filed agamst Georgia M1htary College, 1f any, are generally considered to be acllons agamst the State of Georgia Accordmgly, s1gmficant hllgauon, claims and assessments pending against the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2002

Dunng fiscal year 2002, upon advise of the Attorney General's Office, Georgia M1htary College reqmred that all full-time einployees parllc1pate m the 1 eacher Rellrement System of Georgia Previously, part1c1pallon was elective by full-time employees As a result of that change, a number

- 24-

GEORGIA MILITARY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 11 CONTINGENCIES

of former full-lime employees and "eonstruclively qualified" faculty members were ehh'lblc to "purchase" pnor service credit (based on employment at Georgia M1htary College) m Teacher Retirement System of Georgia and Georgia M1htary College became responsible for its share ofthe purchase Georgia M1htary College's potential hab1hty for its share of the purchase has been estimated at $887,000 00

NOTE 12 NATIJRAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The College's operatmg expenses by funclional class1ficalion are shown below

Stat.emL'fll ofOpcnt.mg Expenses - Natural vs Funct1ooal C~1ficat100s For tht. F15Ul Yew Ended June 30, 2002

runcuonal C.lass1ficat1on

Natural Cla.wficatmn

ID'-JIVCUon

Acadc:m1c Support

SllKknl SC'f"\.'1CCS

lnst1tunonal Support

Salanes
faculty ~taff bmployec Uendits Travel ScOOlan.h1P3 and fe\lowsh1ps Ut1lmcs ~upphcs and Other
~'TVK. l."S
Dcpreciat10n
Total Operating l:.xpenscs

s s 5,212.956 62

77,581 74 $ 84,439 ll

122,264 96

588,418 60

s 1,400,436 72

1,284,908 s9

1,071,964 04

103,821 84

163.116 53

392,152 14

22,736 29

5,460 28

14,582 79

47.297 22

38,073 40 42,528 24

8,790 00 6,998 05

20,888 22 24,613 b9

61,774 21 198,888 82

1,398,670 20

223,686 02

568,808 26

1,157,390 )6

s 7,909J93,75 s I 014 758 c;~ s_2!221 oss 52 s 3,142,41) 34

N3bJTa) (la,,;;s1tJcatmn
~bnes Faculty \taff
F.mployce Benefits Travel S1.holarsh1ps nnd
f c..lk>wship:, Ut1ht1t.~ Supplies ond Otht..-r
~==
Dcprcc1at1on
Total Operating Expenses

Plant Operabons and Mamtenancc

El.!lKl1~l Clm1fi!.:Bll!.!D

"icholan.h1ps
and 1-c:ncw.shms

rAux1hary
.ntm,n-.c-;

1/nallocaled
Dcm:cciatJon

lotal Operating [~pengs

$ 579,106 50 87,58 20 100 23

s 492,886 08
81,112 08
3,397 81

s 4,137 00

1,058,506 51

351,020 19

444,673 ll 56,325 42

5411j,Q49 39

8,1273)

1,687,306 20

, zgg S_l_.8:lZ ~ZI ~I S _UM>!>.6JJ,:I $ z~~ 2S1

s 656,924 9) s ~5b.2~~ 21

s 5,374,979 67
4,468,02 I 4!5 1,899,724 83
93,574 62
1,636,842 56 680,l74 41
5,589,937 85 6%/12491
S2Q~,~ lQ

- 25 -

SUPPLEMENTARY INFORMATION - 27 -

GEORGIA MILITARY COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

Totals per Annual Supplement
Accruals June 30, 2002 June 30, 2001
Compensated Absences June 30, 2002 June 30, 2001
Other College Work Study Unidentified Vanance

SALARIES $ 9,888,766 19 $

TRAVEL 93,483 69

440,037 33 -394,655 85

147,489 88 -175,425 02

-62,106 68 -1 104 73

90 93

$ 9 843 001 12 $==9=3=",5=7=4=6=2-

See accompanying notes and Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnfom1at1on
- 29 -

GEORGIA MILITARY COLLEGE RECONCILIATION OF PER DIEM AND FEES
YEAR ENDED JUNE 30. 2002
Totals per Annual Supplement Other Urndenbfied Vanance

SCHEDULE "2"

FEE AMOUNT

$

90,371 45

35902

=~--==-~ $

9073047

See accompanying notes and Independent Accountant"s Combined Report on Review of Basic Financial Statements and Supplementary Information
- 30 -

SECTION II AUDI fEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COS IS

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-590-98-08 FS-590-00-02 FS-590-01-01

Partially Resolved - See Correchve Acllon/Responses Further Act10n Not Warranted Prev10usly Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

GENERAL LEDGER Inadequate Endowment Agreements/No Separate Accountab1hty Finding Control Number FS-590-98-08

A resolut10n was presented to the Georgia M1htary College Board of Trustees at the Apnl 9, 2001, meeting to impose restnct1ons on the investments of pnnc1pal, use of income, or terminat10n of the endowments where no formal agreements exist The resolution would 1mt1ate a Georgia M1htary College Trustees Scholarship Fund usmg funds from the Edgar B Jackson Scholarship Fund and the Charles Whitfield Scholarslup Fund

The Board ofTrustees tabled the resolution until a determinahon 1s made that there are no descendants of either the Jackson farmly or the Whitfield fanuly

In November 2001, a representatJve of the Edgar Bell Jackson family signed a statement releasmg the Georgia M1htary College Trustees from any hab1hty concerning the ongmal scholarship agreement As of June 30, 2002, the Trustee's endowment account for the scholarship contamcd $5.073.83 A resolutJon to add these funds to the General Scholarship Endowment was presented at the January 2002 Georgia M1htary College Board of Trustees meetmg and passed

The Development Office of Georgia M1 htary College has continued their research to locate any descendants of the Charles Whitfield family A descendent has been located and efforts will be made to formahze an agreement

The Development Office of Georgia M1htary College has also continued their research to locate any descendants of the John Bulow Campbell family A descendent has been located and efforts will be made to formahze an agreement

There was no endowment agreement for the Al and Charlotte Gandy Scholarship However there was documcntahon expressing the donor intent of the d1stnbutton of the
earned mcome A letter serving as the agreement was forwarded to the Gandy's until such
agreement could be formally prepared.