GEORGIA SOUTHERN UNIVERSITY
STATESBORO, GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

GEORGIA SOUTHERN UNIVERSITY - TABLE OF CONTENTS -
SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS C STATEMENT OF CASH FLOWS D NOTES TO THE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND 4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND 5 BUDGET TO GAAP RECONCILIATION 6 RECONCILIATION OF SALARIES AND TRAVEL
SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Page
i
2 3 4 6
28 29 30 32 34 35

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 19, 2012

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Brooks A. Keel, President Georgia Southern University
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of Georgia Southern University, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2012. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Georgia Southern University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In accordance with section 50-6-1(c) of the Official Code of Georgia Annotated, Greg S. Griffin was appointed State Auditor on July 1, 2012. During the year under review, Mr. Griffin served as the State Accounting Officer. As the State Accounting Officer, Mr. Griffin was responsible for the State's accounting and financial reporting practices.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of Georgia Southern University as of June 30, 2012, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
12ARL-62

As discussed in Note 1, the financial statements of Georgia Southern University are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of Georgia Southern University. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2012, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages i through vi be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consists of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of Georgia Southern University taken as a whole. The accompanying supplementary information (Schedules 1 through 6) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting or other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,

GSG:as 12ARL-62

Greg S. Griffin State Auditor

REQUIRED SUPPLEMENTARY INFORMATION

GEORGIA SOUTHERN UNIVERSITY
Management's Discussion and Analysis

Introduction

Georgia Southern University, a Carnegie Doctoral/Research University founded in 1906, offers more

than 120 degree programs serving more than 20,000 students. Through eight colleges, the

University offers bachelor's, master's and doctoral degree programs built on more than a century of

academic achievement. The University, which is a unit of the University System of Georgia, is one of

the Top 10 most popular universities in the nation according to U.S. News & World Report, and is a

top choice of Georgia's HOPE scholars. Georgia Southern is recognized for its student-centered

approach to education.

Students

Students

Faculty

(Headcount)

(FTE)

Fiscal Year 2012 Fiscal Year 2011 Fiscal Year 2010

823

20,212

783

19,691

772

19,086

Overview of the Financial Statements and Financial Analysis

18,429 17,994 17,448

Georgia Southern University is proud to present its financial statements for fiscal year 2012. The emphasis of discussions 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 in Net Assets; and the Statement of Cash Flows. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2012 and fiscal year 2011.
Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Southern University. The Statement of Net Assets presents end-of-year data concerning Assets (current and noncurrent), Liabilities (current and noncurrent), and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will be discussed in the Notes to the Financial Statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

i

Statement of Net Assets, Condensed

June 30, 2012

June 30, 2011

Assets Current Assets Capital Assets, Net Other Assets

$ 59,500,468 435,291,595 10,084,837

$ 66,274,832 436,207,463 5,280,940

Total Assets

$ 504,876,900

$ 507,763,235

Liabilities Current Liabilities Noncurrent Liabilities

$ 26,927,862 167,271,743

$ 25,578,898 172,432,419

Total Liabilities

$ 194,199,605

$ 198,011,317

Net Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted

$ 264,256,740 2,465,814 3,204,780
40,749,961

$ 260,189,190 2,465,814 3,253,853
43,843,061

Total Net Assets

$ 310,677,295

$ 309,751,918

The total assets decreased by $2,886,335. A review of the Statement of Net Assets will reveal that the decrease was primarily due to a decrease in the categories of Federal Financial Assistance and Other Receivables, partially offset by increases in Cash, Investments, and Noncurrent Receivables from Affiliate Organizations. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution.

The total liabilities decreased for the year by $3,811,712. The combination of the decrease in total assets of $2,886,335 and the decrease in total liabilities of $3,811,712 yields an increase in total net assets of $925,377. The increase in total net assets is primarily in the category of Invested in Capital Assets, Net of Debt, in the amount of $4,067,550, partially offset by a reduction of unrestricted net assets.
Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

ii

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2012

June 30, 2011

Operating Revenues Operating Expenses

$ 185,636,157 283,298,124

$ 177,780,531 275,627,022

Operating Loss

$ -97,661,967

$ -97,846,491

Nonoperating Revenues and Expenses

98,576,015

104,865,251

Income (Loss) Before Other Revenues, Expenses, Gains or Losses

$

914,048

$

7,018,760

Other Revenues, Expenses, Gains or Losses

11,329

3,312,542

Increase (Decrease) in Net Assets

$

925,377

$ 10,331,302

Net Assets at Beginning of Year, as Originally Reported

$ 309,751,918

$ 297,062,797

Prior Year Adjustments

2,357,819

Net Assets at Beginning of Year, Restated

$ 309,751,918

$ 299,420,616

Net Assets at End of Year

$ 310,677,295

$ 309,751,918

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

iii

Revenue by Source For the Years Ended June 30, 2012 and June 30, 2011

June 30, 2012

June 30, 2011

Operating Revenue

Tuition and Fees

$

Grants and Contracts

Sales and Services of Educational Departments

Auxiliary

Other

102,164,506 6,913,433 3,496,425
71,188,917 1,872,876

$ 97,033,479 7,506,675 3,248,585
68,072,654 1,919,138

Total Operating Revenue

$ 185,636,157

$ 177,780,531

Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other

$ 72,809,060 30,658,197 3,835,465 262,137 -264,223

$ 76,625,510 34,128,251 2,420,415 696,516 -42,475

Total Nonoperating Revenue

$ 107,300,636

$ 113,828,217

Capital Grants and Gifts State Other

$

9,329

$

1,658,916

2,000

1,653,626

Total Capital Grants and Gifts

$

11,329

$

3,312,542

Total Revenues

$ 292,948,122

$ 294,921,290

Expenses (By Functional Classification) For the Years Ended June 30, 2012 and June 30, 2011

June 30, 2012

June 30, 2011

Operating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises

$ 95,494,374 4,356,108 1,815,378
20,176,967 25,741,202 23,944,819 35,825,492 11,152,208 64,791,576

$ 94,652,404 2,603,883 2,094,493
19,695,162 22,999,932 25,355,795 33,302,996 13,961,381 60,960,976

Total Operating Expenses

$ 283,298,124

$ 275,627,022

Nonoperating Expenses Interest Expense (Capital Assets)

8,724,621

8,962,966

Total Expenses

$ 292,022,745

$ 284,589,988

iv

Operating revenues increased by $7,855,626 in fiscal year 2012. Tuition and Fee revenues increased due to increases in enrollment and average increases in tuition and fee rates of 3%. These increases were offset by decreases in Grants and Contracts, and Other revenue categories.
The Auxiliary revenue increase of $3,116,263 is a result of increases in enrollment and increases in fees such as Health, Transportation and Athletic.
Nonoperating revenues decreased by $6,527,581 for the year primarily due to a decrease in State Appropriations and Federal Grants.
The compensation and employee benefits category increased by $5,748,176. Benefit cost increases are typical of the ever increasing cost of providing health benefits to faculty and staff. Compensation costs increases primarily in the area of instruction, research and academic support were made possible due to increases in funding for 2012 for faculty and staff positions due to enrollment growth through the funding formula and increases in tuition and fees.
Utilities increased by $1,271,680 during the past year. The increase was primarily due to increases in utility rates as well as above normal heat in the summers of 2011 and 2012 in addition to an unusually mild winter requiring cooling of classroom and offices spaces not typical in past years.
Statement of Cash Flows
The final statement presented by the Georgia Southern University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.
Cash Flows for the Years Ended June 30, 2012 and 2011, Condensed

June 30, 2012

June 30, 2011

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -64,787,686 107,468,103 -32,867,523 4,782,791

$ -93,502,485 113,315,962 -27,512,792 675,223

Net Change in Cash Cash, Beginning of Year

$ 14,595,685 30,387,695

$ -7,024,092 37,411,787

Cash, End of Year

$ 44,983,380

$ 30,387,695

v

Capital Assets The University had two significant capital asset additions for buildings in fiscal year 2012. Buildings 447, Landscape Services, and Building 450, Physical Plant Administration, were completed and placed into service during fiscal year 2012 for $1.7 million and $3.4 million, respectively. Georgia Southern University also completed major renovations to the Williams Student Center Building in fiscal year 2012 for $3.3 million. For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements. Long-Term Liabilities Georgia Southern University had Long-Term Liabilities of $176,432,172, which $9,160,429 was reflected as current liability at June 30, 2012. For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. Even with continued reductions in State funding, enrollment growth has allowed the institution to generate moderate increases in Net Assets. The University anticipates the current fiscal year will be much like the last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues.
Dr. Brooks A. Keel, President Georgia Southern University
vi

BASIC FINANCIAL STATEMENTS - 1 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF NET ASSETS JUNE 30, 2012
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Receivables - Federal Financial Assistance Receivables - Other Due from Affiliated Organizations Inventories (Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments (Externally Restricted) Due from Affiliated Organizations Investments Notes Receivable, Net Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Deferred Revenue (Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Due to Affiliated Organizations Notes and Loans Payable
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Notes and Loans Payable
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets
The notes to the financial statements are an integral part of this statement.
- 2 -

EXHIBIT "A"

$ 44,837,963
3,024,875 4,966,644 2,503,455 2,561,741 1,605,790
$ 59,500,468

$

145,417

2,365,412

4,909,400

10,330

2,654,278

435,291,595

$ 445,376,432

$ 504,876,900

$

6,451,934

668,106

641,800

924,646

7,510,996

5,335

1,555,813

5,293,007

3,761,785

8,803

105,637

$ 26,927,862

$ 163,903,379 1,635,532 1,732,832
$ 167,271,743
$ 194,199,605

$ 264,256,740
2,465,814 3,204,780 40,749,961

$ 310,677,295

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2012
OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Gifts Investment Income Interest Expense Other Nonoperating Expenses
Net Nonoperating Revenues (Expenses)
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
The notes to the financial statements are an integral part of this statement. - 3 -

EXHIBIT "B"

$ 128,626,042 -26,461,536
4,802,906 141,296
1,969,231 3,496,425
119,100
23,447,847 11,707,154 18,191,204
4,381,265 4,369,215 9,092,232 1,753,776
$ 185,636,157

$

56,528,946

73,287,007

38,078,143

532,600

2,468,279

15,993,294

10,592,017

66,293,218

19,524,620

$ 283,298,124

$

-97,661,967

$

72,809,060

30,658,197 3,835,465 262,137 -8,724,621 -264,223

$

98,576,015

$

914,048

$

9,329

2,000

$

11,329

$

925,377

309,751,918

$ 310,677,295

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations 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 Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
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
- 4 -

EXHIBIT "C"

$

102,319,339

10,863,313

3,496,425

-117,433,160

-129,738,699

-15,993,294

-618,589

625,323

23,656,190 11,144,961 17,021,158
4,355,475 4,328,053 8,943,378
-93,931 12,336,372

$

-64,787,686

$

72,809,060

34,357

34,516,942

107,744

$

107,468,103

$

9,329

-19,026,880

-5,125,351

-8,724,621

$

-32,867,523

$

4,501,937

280,854

$

4,782,791

$

14,595,685

30,387,695

$

44,983,380

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2012
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT "C"

$

-97,661,967

19,524,620
12,592,871 -288,303 -265,805 6,736 401,140 810,030 -31,810 124,802

$

-64,787,686

$

141,933

$

-32,868

$

-2,000

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

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Note 1: Summary of Significant Accounting Policies
Nature of Operations Georgia Southern University serves the region, 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 Southern University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Southern University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Southern University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Southern University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
Legally separate, tax exempt Affiliated Organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential Component Units of the State. See Note 17 for additional information.
Financial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets and cash flows.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intraUniversity transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.

- 6 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Short-Term Investments Short-Term Investments consist of investments of 90 days - 13 months. This would include certificates of deposits or other time restricted investments with original maturities of six months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
Investments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Assets. The Board of Regents Diversified Fund and the Board of Regents Short-Term Fund are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories for Food Services are valued at cost using the average-cost basis. Resale Inventories for Bookstore and other services are valued at cost using the first-in, first-out ("FIFO") basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Prepaid Items Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 2012, are recorded as prepaid items.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2012, GSFIC did not transfer any capital additions to Georgia Southern University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. Georgia Southern University had accrued liability for compensated absences in the amount of $5,272,514 as of July 1, 2011. For fiscal year 2012, $4,126,870 was earned in compensated absences and employees were paid $4,002,067, for a net increase of $124,803. The ending balance as of June 30, 2012, in accrued liability for compensated absences was $5,397,317.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section.
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

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

principal. The University 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 University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans

$

351,762

2,799,825

53,193

Total Restricted Expendable

$

3,204,780

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, 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 University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $185,952.50. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

$

6,927,574

22,500,947

93,000

11,228,440

Total Unrestricted Net Assets

$

40,749,961

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia Southern University, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.

Classification of Revenues and Expenses The Statement of Revenues, Expenses and Changes in Net Assets classify fiscal year activity as operating and nonoperating according to the following criteria:

Operating Revenues: Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3) sales and services.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Nonoperating Revenues: Nonoperating revenue includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
Operating Expenses: Operating expense includes activities that have the characteristics of exchange transactions.
Nonoperating Expenses: Nonoperating expense includes activities that have the characteristics of nonexchange transactions, such as capital financing costs and costs related to investment activity.
Scholarship Allowances Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the University, and the amount that is paid by students and/or third 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 operating or nonoperating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances. Auxiliary Intercollegiate Athletics revenue of $9,092,232 is reported net of discounts and allowances of $1,204,251.
Note 2: Deposits and Investments
Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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.
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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2012, the carrying value of deposits was $40,316,982 and the bank balance was $41,998,384. Of the University's deposits, $41,748,384 was uninsured. Of these uninsured deposits, $41,748,384 was collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
Investments Georgia Southern University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.
The University's investments as of June 30, 2012, are presented below. All investments are presented by investment type.

Other Investments Life Insurance Value Cash Surrender Value

$

10,330

Investment Pools Board of Regents Short-Term Fund Diversified Fund

4,500,000 2,365,412

Total Investments

$

6,875,742

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia - System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits - Education Audit Division or on their web site at http://www.audits.ga.gov.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.
The Effective Duration of the Diversified Fund is 4.01 years. Of the University's total investment of $2,365,412 in the Diversified Fund, $719,109 is invested in debt securities.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.
Note 3: Accounts Receivable
Accounts receivable consisted of the following at June 30, 2012:

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Due from Affiliated Organizations

Other

367,930 1,932,659 3,024,875 2,503,455 2,869,076

Less Allowance for Doubtful Accounts

$

10,697,995

203,021

Net Accounts Receivable

$

Note 4: Inventories

Inventories consisted of the following at June 30, 2012:

10,494,974

Bookstore Food Services Other

$

1,894,466

493,160

174,115

Total Inventories
Note 5: Notes/Loans Receivable

$

2,561,741

The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2012. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U. S. Department of Education.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Note 6: Capital Assets Following are the changes in capital assets for the year ended June 30, 2012:

Beginning Balance July 1, 2011

Additions

Reductions

Ending Balance June 30, 2012

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-In-Progress

$

10,690,601 $

490,880

8,888,530

4,180,054 7,680,899 $

$ 9,823,001

14,870,655 490,880
6,746,428

Total Capital Assets, Not Being Depreciated $

20,070,011 $

11,860,953 $

9,823,001 $

22,107,963

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

$

17,758,611

329,923,686 $

6,993,754

24,539,850

192,437,447

41,791,699

9,623,253 $ 33,500
5,132,165 141,933
2,077,454

$ 1,904,000
20,581 1,877,665
106,308 23,288

17,758,611 337,642,939
7,006,673 27,794,350 192,473,072 43,845,865

Total Assets Being Depreciated

$ 613,445,047 $

17,008,305 $

3,931,842 $ 626,521,510

Less: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

$

12,343,394 $

99,862,513

1,172,647

18,087,074

31,517,036

34,324,931

376,125 $ 7,530,722
50,538 2,407,309 7,800,558 1,359,368

28,470 $ 1,624,447
10,846 1,710,696
96,590 23,288

12,691,049 105,768,788
1,212,339 18,783,687 39,221,004 35,661,011

Total Accumulated Depreciation

$ 197,307,595 $

19,524,620 $

3,494,337 $ 213,337,878

Total Capital Assets, Being Depreciated, Net $ 416,137,452 $

-2,516,315 $

437,505 $ 413,183,632

Capital Assets, Net

$ 436,207,463 $

9,344,638 $

10,260,506 $ 435,291,595

Note 7: Deferred Revenue

Deferred revenue consisted of the following at June 30, 2012:

Prepaid Tuition and Fees Other Deferred Revenue

$

6,879,497

631,499

Total Deferred Revenue

$

7,510,996

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Note 8: Long-Term Liabilities Long-Term liability activity for the year ended June 30, 2012, was as follows:

Beginning Balance July 1, 2011

Additions

Reductions

Ending Balance June 30, 2012

Current Portion

Leases Lease Obligations

$ 174,079,746 $

141,933 $ 5,025,293 $ 169,196,386 $ 5,293,007

Other Liabilities Compensated Absences Notes and Loans Payable

$ 5,272,514 $ 4,126,870 $ 4,002,067 $ 5,397,317 $ 3,761,785

1,938,527

100,058

1,838,469

105,637

Total

$ 7,211,041 $ 4,126,870 $ 4,102,125 $ 7,235,786 $ 3,867,422

Total Long-Term Obligations

$ 181,290,787 $ 4,268,803 $ 9,127,418 $ 176,432,172 $ 9,160,429

Notes And Loans Payable

Included in total Long-Term liabilities is a $3,000,000 note payable that was originally payable to

Georgia Education Authority (University), (GEA(U)). In July 2007, GEA(U) met and resolved to no

longer conduct business as a state authority and dispose of all its assets and liabilities. As a result of

that decision, a Note Receivable that was payable from Georgia Southern University was transferred

by Resolution from GEA(U) to the University System Office (USO) of the University System of Georgia.

Georgia Southern University continues to render payments according to the original amortization

schedule to the USO. The note carries an interest rate of 5.50% and is due semi-annually through the

year 2025. The outstanding balance at June 30, 2012 is $1,838,469. Annual maturities are as

follows:

Total Principal

Interest

Total Payments

2013 2014 2015 2016 2017 2018 - 2022 2022 - 2025

$

105,637 $

99,683 $

205,320

111,527

93,793

205,320

117,745

87,575

205,320

124,310

81,010

205,320

131,241

74,079

205,320

774,480

252,121

1,026,601

473,529

39,771

513,300

$ Note 9: Significant Commitments

1,838,469 $

728,032 $ 2,566,501

The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $9,187,596 as of June 30, 2012, for renovations to Brannen Hall, Sanford Hall, University Bowl and the Hollis Building, and construction of the new Physical Plant complex, University Park, and Shooting Center. This amount is not reflected in the accompanying basic financial statements.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Note 10: Lease Obligations
Georgia Southern University 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.

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2013 and 2039. Expenditures for fiscal year 2012 were $13,644,652 of which $8,619,359 represented interest. Total principal paid on capital leases was $5,025,293 for the fiscal year ended June 30, 2012. Interest rates range from 3.77 percent to 29.88 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2012:

Outstanding

Net Assets Held

Balances

Under Capital

per Lease

Accumulated

Lease at

Schedules at

Description

Gross Amount

Depreciation

June 30, 2012

June 30, 2012

(+)

(-)

(=)

Land

$

12,024,271

$ 12,024,271 $

814,968

Infrastructure

3,409,806 $

-2,671,015

738,791

333,845

Equipment

805,880

-385,895

419,985

168,047,573

Buildings

176,233,115

-36,164,094

140,069,021

Total Assets Held Under Capital Lease

at June 30, 2012

$

192,473,072 $ -39,221,004 $ 153,252,068 $ 169,196,386

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Georgia Southern University had a capital lease with related entities in the current fiscal year. In October 2002, Georgia Southern University entered into a capital lease of $42,668,051 at 4.89 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases Buildings (Southern Courtyard and Southern Pines) for a twenty-eight year period that began September 2003 and expires October 2031. The outstanding liability at June 30, 2012, for this capital lease was $34,120,161.

Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $2,230,350 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases a Facility (Clements Baseball Stadium) for a twenty-four year period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2012, for this capital lease was $1,831,965.

Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $694,056 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases a facility (Athletic Training Center) for a twenty- four year period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2012, for this capital lease was $569,929.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $1,677,441 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases a facility (Soccer Stadium) for a twenty-four year period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2012, for this capital lease was $1,376,869.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $30,179,998 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases Buildings (Eagle Village) for a twenty-five year period that began August 2005 and expires July 2030. The outstanding liability at June 30, 2012, for this capital lease was $24,897,776.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In August 2006, Georgia Southern University entered into a capital lease of $40,264,057 at 4.73 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases Buildings (Recreational Activities Complex-RAC) for a twenty-five year period that began August 2006 and expires July 2031. The outstanding liability at June 30, 2012, for this capital lease was $36,224,928.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2008, Georgia Southern University entered into a capital lease of $13,360,301 at 5.256 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases Buildings and Land (University Villas) for a thirty year period that began August 2008 and expires June 2038. The outstanding liability at June 30, 2012, for this capital lease was $13,564,302.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2009, Georgia Southern University entered into a capital lease of $56,096,073 at 5.256 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization whereby the University leases Buildings and Land (Centennial Place) for a thirty year period that began August 2009 and expires June 2039. The outstanding liability at June 30, 2012, for this capital lease was $55,461,643.
Georgia Southern University had a capital lease with SunTrust Bank in the current fiscal year. In August 2008, Georgia Southern University entered into a capital equipment lease of $3,409,806 at 3.77 percent with SunTrust Bank, to purchase its voice over internet protocol (VOIP) campus fiber and telephone system for a 5 year period that began August 2008 and expires July 2013. The outstanding liability at June 30, 2012, for this capital lease was $814,968.
Georgia Southern University also has various capital leases for equipment with an outstanding balance at June 30, 2012, in the amount of $333,845.
OPERATING LEASES
Georgia Southern University's noncancellable operating leases having remaining terms of more than one year expire in fiscal year 2013. Certain operating leases provide for renewal options for periods from one to five 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 office space, copiers and other small business equipment.
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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for office space at Georgia Avenue Building #810, for monthly rental payments of $1,000. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $12,000 in the current year.
In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for office space in Building #7 at the Skidaway Institute of Oceanography for monthly rental payments of $875. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $10,500 in the current year.
In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for office space at College Plaza Unit #4 (GSU Building #814) for monthly rental payments of $9,232. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $110,784 in the current year.
In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for storage space at the Costume Shop, for monthly rental payments of $3,500. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $42,000 in the current year.
In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for office space in the Market District Center, for monthly rental payments of $1,323. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $15,876 in the current year.
In 2011, Georgia Southern University entered into a real property operating lease with an unrelated party for office space for the City Campus, for monthly rental payments of $3,000. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $36,000 in the current year.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

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, 2012, were as follows:

Real Property and Equipment

Capital

Operating

Leases

Leases

Year Ending June 30: 2013 2014 2015 2016 2017 2018 - 2022 2023 - 2027 2028 - 2032 2033 - 2037 2038 - 2039

$ 13,663,792 $ 12,947,338 12,890,891 12,883,887 12,968,459 64,870,898 64,830,988 52,198,805 24,688,139 8,943,175

227,160

Total Minimum Lease Payments $ 280,886,372 $

227,160

Less: Interest

111,689,986

Principal Outstanding

$ 169,196,386

Georgia Southern University's fiscal year 2012 expense for rental of real property and equipment under operating leases was $227,160.
Note 11: Retirement Plans
Georgia Southern University participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Georgia Southern University participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
Employees' Retirement System of Georgia
The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is

- 18 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). Members of the GSEPS plan may also participate in the GSEPS 401(k) defined contribution component described below. ERS members hired prior to January 1, 2009, also have the option to irrevocably change their membership to the GSEPS plan.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, Georgia Southern University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Georgia Southern University contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. Georgia Southern University is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Georgia Southern University contributions are not at any time refundable to the member or his/her beneficiary.

- 19 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Employer contributions required for fiscal year 2012 were based on the June 30, 2009 actuarial valuation as follows:

Old Plan* New Plan GSEPS

11.63% 11.63%
7.42%

* 6.88% exclusive of contributions paid by the employer on behalf of old plan members
Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits.
Teachers Retirement System of Georgia
The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.
On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2012, were 5.53% of annual salary. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009 actuarial valuation.

- 20 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

The following table summarizes the Georgia Southern University contributions by defined benefit plan for the years ending June 30, 2012, June 30, 2011, and June 30, 2010:

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

2012

$

2011

$

2010

$

Regents Retirement Plan

26,844 26,056 30,300

100% 100% 100%

$ 5,748,680 $ 5,470,825 $ 5,078,763

100% 100% 100%

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Georgia Southern University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2012, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Georgia Southern University and the covered employees made the required contributions of $5,126,042 (9.24%) and $2,773,835 (5%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

Georgia Defined Contribution Plan

Plan Description Georgia Southern University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2012 amounted to $325,327 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to three different selfinsured healthcare plan options. Effective January 1, 2012, The Blue Cross Blue Shield of Georgia PPO and HDHP plan names were changed to BCBS Open Access PPO and HSA/HDHP Open Access POS, respectively; both plans will use the Blue Cross Blue Shield Open Access POS network. Also effective January 1, 2012, the Consumer Choice Option was eliminated and the Blue Cross Blue Shield of Georgia HMO and the Kaiser Permanente HMO were frozen for new enrollment for active employees only; the Senior Advantage Plan 65+ remained open for new enrollment.
Georgia Southern University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the self-insured healthcare plan products. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The 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. Georgia Southern University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity,

- 22 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

and as such, 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. 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 expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Southern University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Southern University (an organizational unit of the Board of Regents of the University System of Georgia), 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, 2012.
Note 14: Subsequent Events
In the spring of 2011, the Georgia Southern University Foundation purchased the Campus Club apartment complex located on Lanier Drive in Statesboro, Georgia. The complex will be operated by the Foundation during fiscal year 2012. In fiscal year 2013, the University entered into a capital management lease to operate the facility as a student housing complex.
Note 15: Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established

- 23 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

annually by the Board of Regents for the upcoming plan year. For the 2012 plan year, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2012, there were 754 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2012, Georgia Southern University recognized as incurred $3,349,572 of expenditures, which was net of $1,648,796 of participant contributions.
Note 16: Natural Classifications with Functional Classifications
The University's operating expenses by functional classification for fiscal year 2012 are shown below:

Functional Classification

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

$ 53,204,820 $ 13,033,387 16,991,207 51,684 1,072,654 526,532 77,460 9,344,531 1,192,099

1,661,256 $ 902,491 360,620
171,784 34,324 4,187
1,054,834 166,612

70,792 $ 764,874 206,755
40,175 192,297
11,664 515,685
13,136

1,585,771 $ 9,333,610 2,837,918
18,444 282,985
84,600 49,848 4,482,651 1,501,140

12,305 12,433,217
3,058,702 22,062
211,165 526,112 848,370 8,407,431 221,838

Total Operating Expenses

$ 95,494,374 $

4,356,108 $ 1,815,378 $ 20,176,967 $ 25,741,202

Natural Classification

Institutional Support

Functional Classification

Plant Operations Scholarships

and

and

Auxiliary

Maintenance

Fellowships

Enterprises

Total Operating Expenses

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

$

4,341 $

10,832,216

7,552,134

452,170

178,937

-3,500

92,028

4,585,238

251,255

-10,380 9,761,812 3,345,578
-401,044 20,612 $
6,426,475 7,358,954 9,323,485

$
11,132,267 19,941

41 $ 16,225,400
3,725,229 389,284 489,967
3,500,662 3,081,985 30,523,953 6,855,055

56,528,946 73,287,007 38,078,143
532,600 2,468,279 15,993,294 10,592,017 66,293,218 19,524,620

Total Operating Expenses

$ 23,944,819 $

35,825,492 $ 11,152,208 $ 64,791,576 $ 283,298,124

- 24 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "D"

Note 17: Affiliated Organizations
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity which became effective for the year ended June 30, 2004, the Georgia Southern University Foundation, Inc., Georgia Southern University Housing Foundation, Inc., Georgia Southern University Athletics Foundation, Inc., and Georgia Southern University Research and Service Foundation, Inc. are legally separate tax exempt organizations whose activities primarily support Georgia Southern University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office determined Component Units of the State of Georgia, as required by GASB Statement No. 39 should not be assessed in relation to their significance to Georgia Southern University, but instead based on their significance to the State of Georgia. Copies of the financial statements for these affiliated organizations may be obtained from Georgia Southern University.
Georgia Southern University Housing Foundation, Inc., has been determined significant to the State of Georgia for the year ended June 30, 2012, and as such, is reported as a discretely presented component unit in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). The significant discretely presented affiliated organization issues separate audited financial statements that can be obtained from Georgia Southern University.

- 25 -

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SUPPLEMENTARY INFORMATION - 27 -

GEORGIA SOUTHERN UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30, 2012
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

30,439,329.46

24,318.37

1,553,496.61 1,678,251.03 1,584,243.75
157,301.20

$

35,436,940.42

$

463,758.28

19,607,625.65

261,355.74

5,810,032.80

$

26,142,772.47

$

4,535,083.84

1,731,788.67

51,776.20

320,735.78

83,386.17

2,292,444.79

93,000.00

185,952.50

$

9,294,167.95

$

35,436,940.42

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 28 -

GEORGIA SOUTHERN UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2011
Early Return of Surplus in Fiscal Year 2012 Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 72,870,222.00 $ 72,870,222.00 $

0.00

185,577,455.00

157,378,297.36

-28,199,157.64

$ 258,447,677.00 $ 230,248,519.36 $ -28,199,157.64

0.00

1,014,809.00

1,014,809.00

0.00

9,901,144.70

9,901,144.70

$ 258,447,677.00 $ 241,164,473.06 $ -17,283,203.94

$ 258,447,677.00 $ 232,293,758.41 $ 26,153,918.59

$

0.00 $

8,870,714.65 $ 8,870,714.65

10,082,312.56 61,126.77

258,125.30 -15,804.16

-61,126.77 -35.70
-9,901,144.70

$

9,294,167.95

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories
Total Reserved
Unreserved Surplus

$

4,535,083.84

1,731,788.67

51,776.20

320,735.78

83,386.17

2,292,444.79

93,000.00

$

9,108,215.45

185,952.50

Total Fund Balance
Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 29 -

$

9,294,167.95

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2012

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

74,357,369.00 $ 74,357,369.00 $ 72,870,222.00 $ 72,870,222.00

139,962,715.00

139,962,715.00

185,577,455.00

157,378,297.36

$ 214,320,084.00 $ 214,320,084.00 $ 258,447,677.00 $ 230,248,519.36

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 30 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Excess (Deficiency) of Funds Available
Over/(Under) Expenditures

$

0.00 $

9,901,144.70

31,068.26 $ 72,901,290.26 $

983,740.74

168,263,182.80

31,068.26 $ 72,901,254.56 $

-17,314,272.20

159,392,503.85

-31,032.56 $ 26,184,951.15

35.70 8,870,678.95

$ 9,901,144.70 $

1,014,809.00 $ 241,164,473.06 $ -17,283,203.94 $ 232,293,758.41 $

26,153,918.59 $

8,870,714.65

- 31 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2012

Teaching State Appropriation State General Funds Other Funds
Total Teaching
Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable

Beginning Fund Balance/(Deficit)
July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2011
Surplus

Prior Period Adjustments

$

3,520.00 $

9,958,751.47

$

9,962,271.47 $

0.00 $ -9,901,144.70
-9,901,144.70 $

106,000.00 75,167.86

0.00 0.00

-3,520.00 $ 16,281.21 -57,606.77 226,039.93
-61,126.77 $ 242,321.14

0.00 0.00

0.00 0.00

Budget Unit Totals

$

10,143,439.33 $

-9,901,144.70 $

-61,126.77 $ 242,321.14

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 32 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2012
Surplus

Excess (Deficiency) of Funds Available
Over/(Under) Expenditures

Ending Fund Balance/(Deficit)
June 30

Analysis of Ending Fund Balance

Reserved

Surplus/(Deficit)

Total

$ 13,000.00 $ -8,218.31
$ 4,781.69 $

-13,000.00 8,218.31

$

0.00 $

-35.70 $ 0.00
-35.70 $

35.70 $ 8,870,678.95
8,870,714.65 $

29,281.21 $

0.00 $

9,088,500.57 8,931,829.28

9,117,781.78 $ 8,931,829.28 $

29,281.21 $

29,281.21

156,671.29

9,088,500.57

185,952.50 $ 9,117,781.78

0.00 0.00

0.00 0.00

93,000.00 83,386.17

93,000.00 83,386.17

0.00 0.00

93,000.00 83,386.17

-35.70 $

8,870,714.65 $ 9,294,167.95 $ 9,108,215.45 $

185,952.50 $ 9,294,167.95

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Ending Fund Balance - June 30

$ 4,535,083.84 1,731,788.67 51,776.20 320,735.78 83,386.17 2,292,444.79 93,000.00
$
$ 9,108,215.45 $

$ 4,535,083.84 1,731,788.67 51,776.20 320,735.78 83,386.17 2,292,444.79 93,000.00

185,952.50

185,952.50

185,952.50 $ 9,294,167.95

- 33 -

GEORGIA SOUTHERN UNIVERSITY BUDGET TO GAAP RECONCILIATION
JUNE 30, 2012
Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")
Amounts reported for Business-Type Activities in the Statement of Net Assets are different because:
Capital Assets used in Business-Type Activities are not reported in the Budget Fund.
Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Assets.
Changes in the Fair Market Value of Investments are recognized on the Statement of Net Assets, but are not reported in the Budget Fund.
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity
Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity
Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity
The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Assets. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Reimbursement from grantors reported as revenues in the Budget Fund that are for expenditures based on encumbrances are deferred for GAAP reporting. Total Net Effect of Encumbrance Activity
Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Accounts Payable Capital Leases Payable Compensated Absences Payable Contracts Payable Due From Component Units Due To Component Units Total Liabilities
Net Assets of Business-Type Activities (Exhibit "A")
The supplementary information presented on Schedules 1, 2, 3 and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Assets of business-type activities, as reported on Exhibit A.
- 34 -

SCHEDULE "5"

$

9,294,167.95

435,291,595.00

$

5,699,857.28

-5,699,857.28

$ 13,034,172.58 -4,988,915.86

$

2,465,813.65

0.00

$

2,853,017.33

0.00

$

4,656,299.61

-355,639.92

-83,386.17 20,696.63
0.00 8,045,256.72 2,465,813.65 2,853,017.33 4,300,659.69

$

19,607,625.65

-814,390.71

18,793,234.94

$

-1,375,739.62

-169,196,386.76

-5,397,316.92

-641,799.79

6,316,285.57

-8,803.22

-170,303,760.74

$ 310,677,295.00

GEORGIA SOUTHERN UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2012

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2012 June 30, 2011
Compensated Absences June 30, 2012 June 30, 2011
Adjustments Shared Services on Jointly Staffed Personnel Armstrong Atlantic State University Hanzalik, Katherine Leverett, Christopher Saye, Donna Stumpf, Don Darton State College Bretti, Anthony East Georgia College Song, Francois Georgia College and State University Gnam, Adrian Greenstein, Robyn Georgia State University Kennedy, Ale Plew, Melissa Szymanski, Robert Kennesaw State University Roberts, Gary Middle Georgia College Brown, Terri North Georgia College and State University Dick, Geoffrey Skidaway Institute of Oceanography Alexander, Clark University of West Georgia Chibbaro, Julia

SALARIES

$

130,394,034 $

TRAVEL 2,464,293

668,106 -1,425,196

22,565 -18,579

5,013,764 -4,897,831

-1,700 -4,000 -2,500 3,230
-10,500
-12,480
-1,211 -750
-800 -1,000 -7,000
10,765
-5,000
30,000
64,522
1,500

$

129,815,953 $

2,468,279

- 35 -

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA SOUTHERN UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2012
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.