Management report, Georgia Military College, Milledgeville, Georgia, an organizational unit of the state of Georgia year ended June 30, 2007

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
MANAGEMENT REPORT GEORGIA MILITARY COLLEGE
MILLEDGEVILLE, GEORGIA
AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2007
Russell W. Hinton State Auditor

GEORGIA MILITARY COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMITTAL

SELECTED FINANCIAL INFORMATION

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENT OF CASH FLOWS

5

D SELECTED FINANCIAL NOTES

6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 RECONCILIATION OF SALARIES AND TRAVEL

16

2 RECONCILIATION OF PER DIEM AND FEES

17

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 858-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 10, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly of Georgia Members ofthe Board of Trustees of Georgia Military College
and Major General Peter J. Boylan, President
Ladies and Gentlemen:
As part ofour audit ofthe basic financial statements ofthe State ofGeorgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2007, we have performed certain audit procedures at Georgia Military College. Accordingly, the financial statements and compliance activities of Georgia Military College were examined to the extent considered necessary in order to express an opinion as to the fair presentation ofthe financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Georgia Military College as ofand for the year ended June 30, 2007. Information contained in this report is a by-product ofour audit ofthe basic financial statements ofthe State ofGeorgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Georgia Military College, members of the Board of Trustees of Georgia Military College and the appropriate accrediting regulatory agency and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~-~OD~;~~ State Auditor
RWH:gp

SELECTED FINANCIAL INFORMATION - 1-

GEORGIA MILITARY COLLEGE STATEMENT OF NET ASSETS
JUNE 30, 2007
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Capital Assets, Net (Note 4)
Total Assets
LIABILITIES
Current Liabilities Salaries Payable Accounts Payable Deferred Revenue (Note 5) Funds Held for Others Capital Leases Compensated Absences Notes Payable
Total Current Liabilities
Noncurrent Liabilities Capital Leases Notes Payable
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Expendable Nonexpendable Unrestricted
Total Net Assets
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EXHIBIT"A"

$

2,643,558

1,075,022

233,388 1,732,128
3,406 733,503

$

6,421,005

41,839,752

$

48,260,757

$

539,296

1,270,926

1,353,401

65,895

58,677

278,091

174 219

$

3,740,505

$

162,938

6,723,218

$

6,886,156

$

10,626,661

$

34,720,700

96,626 1,004,620 1,812,150

$ ===3=7,=6=34=,0=9=6

GEORGIA MILITARY COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2007

EXHIBIT"B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State
Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Intercollegiate Athletics Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
Grants and Contracts State
Gifts Interest and Other Investment Income Interest Expense (Capital Assets) Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts Gain (Loss) on Disposal of Capital Assets
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
-3-

$

22,826,918

-7,845,146

7,428,095 4,239,315
190,194

536,747 2,611,746
775,293 34,915
411 748

$

31,209,825

$

8,051,186

7,071,140

2,894,647

234,132

4,838,626

946,951

7,999,178

1,905,340

$

33,941,200

$

-2,731,375

$

2,660,060

309,830

326,172

-208,205

597,498

$

3,685,355

$

953,980

-196 087

$

757,893

36,876,203

$ ====3=7=,6=34=,0=9=6

{This page left intentionally blank)

GEORGIA MILITARY COLLEGE STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2007
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Intercollegiate Athletics Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Capital Debt Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Lease Interest Paid on Capital Debt and Lease
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents- Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivables, Net Inventories Prepaid Items Accounts Payable Salaries Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations
-5-

EXHIBIT"C"

$

14,981,772

11,974,287

536,747 2,410,722
775,293 34,915 -12,873,366 -15, 122,437 -4,838,626 388 373

$

-1,732,320

$

-12,120

2,955,865

597 498

$

3 541 243

$

7,000,000

-10,163

-8,416,553

-211,990

-208,205

$

-1846911

$

1,470,948

326172

$

1797120

$

1,759,132

884,426

$

2,643,558

$

-2,731,375

1,905,340
-303,295 -138,083
-117 -660,258
7,655 195,578
-7765

$

-1,732,320

$======14,..5""4=0=1

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia Military College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge and by disseminating knowledge to the people of Georgia and throughout the country.
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 of Milledgeville. 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 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 (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
NET ASSETS The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, grants and contracts, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the governing board to meet current expenses for those purposes. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.
NOTE 2: DEPOSITS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) 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 depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
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 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 and 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.

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT "D"

NOTE 2: DEPOSITS

DEPOSITS The Georgia Military College Board of Trustees is responsible for all details relative to furnishing the required depository protection for Georgia Military College.

At June 30, 2007, $3,887,252 of the College's deposits was uninsured. All of these uninsured deposits were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2007.

Student Tuition and Fees Federal, State and Private Funds

$ 1,791,020 233,388

Less Allowance for Doubtful Accounts

$ 2,024,408 58.892

Net Accounts Receivable

$ 1,965.516

NOTE 4: CAPITAL ASSETS

Following are the changes in the College's capital assets for the year ended June 30, 2007:

-8-

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS

Beginning Balance Jul)'. 1, 2006

Additions

Reductions

Ending Balance June 30, 2007

Capital Assets, Not Being Depreciated:

Land

$

Capitalized Collections

Construction Work-In-Progress

514,485 63,187 2,658,746 $

61,723 $

$ 2,577,343

514,485 63,187 143,126

Total Capital Assets Not Being Depreciated

$ 3,236,418 $

61,723 $ 2,577,343 $

720,798

Capital Assets, Being Depreciated:

Infrastructure

$

Building and Building Improvements

Facilities and Other Improvements

Equipment

Library Collections

278,690 36,683,929 $
1,236,448 1,692,820 2,029,979

9,966,567 $ 530,862 351,550 228,595

$ 250,728
227,952 37 803

278,690 46,399,768
1,767,310 1,816,418 2,220,771

Total Assets Being Depreciated

$ 41,921,866 $ 11,077,574 $

516,483 $ 52,482,957

Less: Accumulated Depreciation:

Infrastructure

$

Building and Building Improvements

Facilities and Other Improvements

Equipment

Library Collections

218,532 $ 6,730,813
486,610 976,105 1,377,162

18,812 1,518,291 $
85,411 189,551 93 275

$ 86,514
206,242 37 803

237,344 8,162,590
572,021 959,414 1,432,634

Total Accumulated Depreciation

$ 9,789,222 $ 1,905,340 $

330,559 $ 11,364,003

Total Capital Assets, Being Depreciated,

Net

$ 32,132,644 $

9,172,234 $

185,924 $ 41,118,954

Capital Assets, Net

$ 35.369.062 $ 9.233.957 $ 2.763.267 $ 41.839.752

NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2007.

Prepaid Tuition and Fees Other Deferred Revenue

$

531,708

821,693

Totals NOTE 6: LONG-TERM LIABILITIES

$ 1,353.401

The College's Long-Term liability activity for the year ended June 30, 2007 was as follows:

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT"D"

NOTE 6: LONG-TERM LIABILITIES

Beginning Balance July 1, 2006

Additions

Reductions

Ending Balance June 30, 2007

Current Portion

Leases Lease Obligations

$

122,439 $

145,401 $

46,225 $

221,615 $

58 677

Other Liabilities

Compensated Absences

$

Notes Payable

285,857 $ 63,202

340,541 $ 7,000,000

348,307 $ 165,765

278,091 $ 6,897,437

278,091 174219

Total

$

349,059 $ 7,340,541 $

514,072 $ 7,175,528 $

452,310

Total Long-Term Obligations $

471.498 $ 7,485.942 $

560.297 $ 7.397.143 $

510.987

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2007 are as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets Total Net Assets
NOTE 8: LEASE OBLIGATIONS

Balance July 1, 2006

Additions

Reductions

Balance June 30, 2007

$ 35,183,421 $ 2,068,581 $ 2,531,302 $ 34,720,700

937,391

20,306,373

20,142,518

1,101,246

755,391

22,905,663

21,848,904

1,812,150

$ 36 876.203 $ 45.280.617 $ 44.522.724 $ 37.634.096

Georgia Military College is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2008 and 2012. Expenses for fiscal year 2007 were $58,528 of which $12,303 represented interest. Total principal paid on capital leases was $46,225 for the fiscal year ended June 30, 2007.

OPERATING LEASES Georgia Military College's cancellable operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and office facilities.

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT"D"

NOTE 8: LEASE OBLIGATIONS

OPERATING LEASES Noncancellable operating lease rental expenses in 2007 were $770,441 for real property.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2007, were as follows:

Capital Leases

Operating Leases

Year Ending June 30: 2008 2009 2010 2011 2012 2013 - 2016

$

71,087 $ 1,139,236

62,452

1,062,971

50,546

423,230

44,384

301,050

21,188

301,050

1,156.376

Total Minimum Lease Payments

$ 249,657 $ 4,383.913

Less: Interest

28,042

Principal Outstanding

221,615

NOTE9: NOTESPAYABLE

Notes payable consisted of the following at June 30, 2007:

College note payable secured by Baugh Barracks, dated July 2006, payable in monthly installments of$38,406, matures July 2008, interest rate 4.31 %.
College note payable secured by minivans, dated April 2004, payable in monthly installments of$1,315, matures April 2008, interest rate 2.81 %.
Total Notes Payable

$ 6,885,767
11,670 $ 6,897.437

MATURITY INFORMATION The scheduled maturities of Baugh Barracks and vehicle notes payable are as follows:

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT "D"

NOTE9: NOTESPAYABLE

MATURITY INFORMATION

Total Principal

Interest

Total Payments

2008 2009 2010 2011 2012 2013 2014 2015 2016

$ 174,219 $ 170,633 178,238 186,185 193,738 203,123 212,179 221,024
5,358,098

298,474 290,223 282,619 274,672 267,118 257,733 248,677 239,833

$ 472,693 460,856 460,857 460,857 460,856 460,856 460,856 460,857
5,358,098

$ 6,897.437 $ 2,159.349 $ 9,056.786

NOTE 10: RETIREMENT PLANS

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 TRS offices or the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Military College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Military 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 2007, the employer contribution rate was 9.28% 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

2007

100%

$ 1,026,236

2006

100%

$ 935,827

2005

100%

$ 873,121

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GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2007

EXHIBIT "D"

NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Military 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, 2007.
During fiscal year 2002, upon advice of the Attorney General's Office, Georgia Military College required that full-time employees participate in the Teachers Retirement System of Georgia. Previously, participation was elective by full-time employees. As a result of that change, a number of former full-time employees and "constructively qualified" faculty members were eligible to "purchase" prior service credit (based on employment at Georgia Military College) in Teachers Retirement System of Georgia, and Georgia Military College became responsible for its share of the purchase. For fiscal year 2007, Georgia Military College's potential liability for its share of the purchase has been estimated at $807,349.
NOTE 12: AFFILIATED ORGANIZATIONS
The Georgia Military College Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Georgia Military College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia Military College.

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SUPPLEMENTARY INFORMATION - 15 -

GEORGIA MILITARY COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

Totals per Annual Supplement
Accruals June 30, 2007 June 30, 2006
Compensated Absences June 30, 2007 June 30, 2006
Other College Work Study Unidentified Variance

SALARIES

$

15,222,079 $

TRAVEL 233,588

539,296 -531,641

278,091 -285,857

-94,575

-5 067

544

$

15,122,326 $ ===2=3.4.,.=13=2=

-16 -

GEORGIA MILITARY COLLEGE RECONCILIATION OF PER DIEM AND FEES
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

Totals per Annual Supplement Unidentified Variance

FEE AMOUNT

EXPENSE AMOUNT

$

429,002 $

10,342 $

-2,200

TOTAL 439,344 -2,200

$

426,802 $

10342 $===4=37=,1=4=4

- 17 -

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

GEORGIA MILITARY COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2007

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Unsupported Financial Statements Significant Deficiency Finding Control Number: FS-590-07-01

Condition:

The College's Cash Flow Statement prepared for inclusion in the State of Georgia Comprehensive Annual Financial Report (CAFR) included numerous errors.

Criteria:

Georgia Military College, an organizational unit of the State of Georgia, is required to submit to the State Accounting Office, financial statements prepared in accordance with generally accepted accounting principles (GAAP) for inclusion in the State's CAFR and Single Audit Report.

Questioned Cost: NIA

Information:

The Statement of Cash Flows was not reconcilable to the Statement of Net Assets, Statement of Revenues, Expenses and Changes in Net Assets and Selected Note Disclosures. Additionally, the Cash Flow Statement was not reconciled to the general ledger.

Cause:

The College failed to ensure that the Statement of Cash Flows was accurate and properly reflected the cash operations of the College.

Effect:

Failure to implement satisfactory accounting controls and procedures could place the College in a position where potential misstatements of financial activities could occur and mislead readers of the financial statements.

Recommendation:

The College should establish procedures to ensure that the financial statements are accurately prepared in all respects and properly reconciled to the College's formal accounting records.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No findings were reported.

- 1-

GEORGIA MILITARY COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2007 OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Georgia Military College did not include all of its Federal expenditure activity within its reporting of the Schedule of Expenditures of Federal Awards (SEFA). Other Federal Assistance (CFDA 12.OFA) made up of Tuition Assistance and R.O.T.C. of $1,464,006.18 and Federal Family Education Loans (CFDA 84.032) of$8,316,855.45 were omitted from the schedule. In addition, total contract overhead claimed on some of the Federal programs of $19,681.00 was also omitted. The SEFA was corrected to properly reflect this activity. Management should ensure that all submitted information for the SEFA is complete and accurate to reflect all Federal assistance administered.
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