Management report Gordon College, Barnesville, an organizational unit of the state of Georgia year ended June 30, 2006

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
MANAGEMENT REPORT GORDON COLLEGE
BARNESVILLE, GEORGIA
AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2006
Russell W. Hinton State Auditor

GORDON COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMITTAL

SELECTED FINANCIAL INFORMATION

EXHIBITS

A STATEMENT OF NET ASSETS- (GAAP BASIS)

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS -

(GAAP BASIS)

3

C STATEMENT OF CASH FLOWS - (GAAP BASIS)

4

D SELECTED FINANCIAL NOTES

5

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET- (STATUTORY BASIS) BUDGET FUND

16

2 BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

17

3 RECONCILIATION OF SALARIES AND TRAVEL

19

SECTION II FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 7, 2006

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members ofthe State Board of Regents ofthe University System of Georgia
and Honorable Lawrence V. Weill, President Gordon College
Ladies and Gentlemen:
As part ofour agreed upon procedures engagement on the statutory basis financial statements ofthe State of Georgia and our audit ofthe basic financial statements ofthe State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report, and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2006, we have performed certain audit procedures at Gordon College. Accordingly, the financial statements and compliance activities of Gordon College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Gordon College as ofand for the year ended June 30, 2006. Information contained in this report is a by-product ofour engagement that is the representation ofmanagement, and accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Gordon College, members of the Board of Regents of the University System of Georgia and the appropriate accrediting regulatory agency and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~~~ Russell W. Hinton State Auditor
RWH:gp

SELECTED FINANCIAL INFORMATION - 1-

GORDON COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30, 2006
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Notes Receivable, Net Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue (Note 5) Other Liabilities Funds Held for Others Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Expendable Unrestricted
Total Net Assets

EXHIBIT"A"

$ 5,868,773.63
174.00 642,562.02 259,948.83
6,836.19
$ 6,778,294.67

$

10,632.54

29,561,575.74

$ 29,572,208.28

$ 36,350,502.95

$

573,743.93

100,451.11

217,000.00

603,737.89

83,163.16

207,616.43

298,371.77

$ 2,084,084.29

60,011.78 $ 2,144,096.07

$ 29,561,575.74
13,052.91 4,631,778.23

$ 34,206,406.88

-2-

GORDON COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2006

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal
Sales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Parking/Transportation Intercollegiate Athletics Other Organizations 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 Gifts Interest and Other Investment Income
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
-3-

$

5,459,430.35

-1,909,042.36

3,594,461.09 76,983.79 19,181.64

2,871,716.29 1,671,928.04 1,466,128.23
65,600.52 301,747.95
38,662.28 1,071,935.24

$ 14,728,733.06

$

6,016,175.89

4,523,898.36

2,785,209.57

589.00

144,482.10

1,812,876.33

1,597,799.56

7,174,313.80

1,272,959.49

$ 25,328,304.10

$ -10,599,571.04

$ 11,007,927.67 194,237.00 243,496.79

$ 11,445,661.46

$

846,090.42

$

1,364,071.11

$

2,210,161.53

$ 31,996,245.35

$ 34,206,406.88

GORDON COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation 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
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts
-4-

EXHIBIT"C"

$ 3,559,520.01 3,594,742.70 68,290.34
-11,528,993.72 -10,439,980.21
-1,812,876.33
2,897,757.93 517,901.81
1,462,453.23 65,600.52 303,344.27 38,662.28
2,001,882.58
$ -9,271,694.59

$ 11,007,927.67 -772,771.12 194,237.00
$ 10.429,393.55

$ -1,310.414.45

$

243,496.79

$

90,781.29

5.777,992.34

$ ==5,=86=8il=7' =7=3.=63=

$ -10,599,571.04
1,272,959.49 -193,953.49
35,552.91 -481.59
250,053.45 -64,806.10 -40,717.43 69,269.21
$ -9,271,694.59
$ -1364071.11

GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Gordon College 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 Gordon College 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. Gordon College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Gordon College 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.
NET ASSETS The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. 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 - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
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 College 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 $30,381.79. 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 Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the college) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
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, 2006, $1,071,556.84 of the College's deposits were uninsured. Of these uninsured deposits, $1,071,556.84 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
INVESTMENTS At June 30, 2006, the carrying value of the College's investment was $4,829,987.99, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS

Investment Pool

Board of Regents Short-Term Fund

$ 4,829.987 .99

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 Short-Term Fund is reported as Cash and Cash Equivalents on Exhibit "A" of this report.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2006.

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State and Private Funds Other

$ 22,033.02 25,982.72 174.00 606,113.28

Less Allowance for Doubtful Accounts

$ 654,303.02 11,567.00

Net Accounts Receivable

$ 642,736.02

NOTE 4: CAPITAL ASSETS

Following are the changes in the College's capital assets for the year ended June 30, 2006:

-7-

GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS

Beginning Balance July 1, 2005

Additions

Reductions

Ending Balance June 30, 2006

Capital Assets, Not Being Depreciated:

Land

$

Capitalized Collections

Construction Work-In-Progress

348,207.04 $ 1,083.33
19,158.75

60,667.00 $ 297,968.61

0.00 $

408,874.04 1,083.33
317,127.36

Total Capital Assets Not Being Depreciated

$ 368,449.12 $ 358,635.61 $

0.00 $ 727,084.73

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

$ 2,699,055.85 32,993,424.62 $ 1,362,167.35 3,706,487.64 2,498,975.99

2,0 I0,420.46 $
206,444.66 98,984.84

$ 2,699,055.85 0.00 35,003,845.08
1,362,167.35 3,912,932.30 2,597,960.83

Total Assets Being Depreciated

$ 43,260,111.45 $ 2,315,849.96 $

0.00 $ 45,575,961.41

Less: Accumulated Depreciation:

Infrastructure

$ 1,378,212.81 $

Building and Building Improvements

8,907,332.40

Facilities and Other Improvements

853,088.25

Equipment

2,253,960.99

Library Collections

2,075,916.46

96,098.52 $ 750,164.77 41,885.51 304,689.61
80,121.08

0.00 $

1,474,311.33 9,657,497.17
894,973.76 2,558,650.60 2,156,037.54

Total Accumulated Depreciation

$ 15,468,510.91 $ 1,272,959.49 $

0.00 $ 16,741,470.40

Total Capital Assets, Being Depreciated,

Net

$ 27,791,600.54 $ 1,042,890.47 $

0.00 $ 28,834,491.01

Capital Assets, Net

$ 28.160.049.66 $ 1.401 526 08 $

0.00 $ 29.561,575.74

NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2006.

Prepaid Tuition and Fees Other Deferred Revenue

$ 601,007.23 2,730.66

Totals

$ 603,737.89

NOTE 6: LONG-TERM LIABILITIES

The College's Long-Term liability activity for the year ended June 30, 2006 was as follows:

Other Liabilities Compensated Absences

Beginning Balance July 1, 2005

Additions

Reductions

Ending Balance June 30, 2006

Current Portion

$ 2891 H.34 $ 352,737.09 $ 283.467 88 $ 358,383.55 $ 298,371.77

-8-

GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2006 are as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets Total Net Assets
NOTE 8: RETIREMENT PLANS

Balance July 1, 2005

Additions

Reductions

Balance June 30, 2006

$ 28,160,049.66 $ 1,401,526.08

$ 29,561,575.74

13,052.91

13,052.91

3,823,142.78 26,136,939.55 $25,328,304.10

4,631,778.23

$ 31 226,245,35 $21,538,465 63 $25 328 3Q4, IQ $ 34,2Q6,4Q6,88

TEACHERS RETIREMENT SYSTEM OF GEORGIA

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

Funding Policy Employees of Gordon College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Gordon College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2006, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2006

100%

$ 543,410.66

2005

100%

$ 472,048.55

2004

100%

$ 466,188.64

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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 8: RETIREMENT PLANS
EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
Plan Description Gordon College participates in the Employees' Retirement System of Georgia (ERS), a singleemployer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees in the State of Georgia.
The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected 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. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twentyfour consecutive months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. 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.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion ofERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.
The ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2006, for employees covered by ERS was $109,088.50. The College's total payroll for all employees was $10,540,074.25.

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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 8: RETIREMENT PLANS
EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
Funding Policy Under the old plan, member contributions consist of 7.41 % of annual compensation. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 2006, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 2006 amounted to $13,056.35, of which $8,549.44 was made by the College and $4,506.91 was made by employees. These contributions met the requirements of the plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2006, financial report, which may be obtained through ERS.
REGENTS RETIREMENT PLAN
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. 4721-1 et. seq. and is 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 Gordon College 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. The employer contributes 9.65% of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 8: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Policy Gordon College and the covered employees made the required contributions of $333,701.13 (9.65%) and $172,903.11 (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 Gordon College participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer 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.
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 $3,500.00 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 and Vesting 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 2006 amounted to $26,067.53 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.

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GORDON COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2006

EXHIBIT "D"

NOTE 9: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Gordon College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Gordon College (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, 2006.
NOTE 10: AFFILIATED ORGANIZATIONS
The Gordon College Foundation is a legally separate, tax exempt organization whose activities primarily support students attending Gordon College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization is not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Gordon College.

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SUPPLEMENTARY INFORMATION - 15 -

GORDON COLLEGE BALANCE SHEET- (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories Unreserved Undesignated Surplus Regular
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$ 2,162,414.37 -2,556.66
432,703.64 6,836.19
19,330.86
$ ==2='=61=8=7,=2=8.=40=

$

91,268.97

1,897,009.73

540,123.71

$ 2,528,402.41

$

7,847.03

14,846.37

11,567.00

25,683.80

30,381.79

$

90,325.99

$ 2,618,728.40

Statutory Basis financial information 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.
- 16 -

GORDON COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
EXPENDITURES
Public Service/Special Funding Initiatives Teaching
Total Expenditures
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 - Administrative Central Office Year Ended June 30, 2005
Non-Mandatory Transfers
FUND BALANCE JUNE 30
RESERVED
Department Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories
Total Reserved
Unreserved (Surplus)
Total Fund Balance

FINAL BUDGET

ACTUAL

VARIANCE

$ 11,008,074.00 $ 11,008,074.00 $

3,161,523.00

3,594,461.09

6,145 327.00

6,555,261.14

$ 20,314,924.00 $ 21,157,796.23 $

0.00 -432,938.09 -409 934.14
-842 872.23

$

173,172.00 $

173,170.97 $

20,141,752.00

21,201,753.53

$ 20,314,924.00 $ 21,374,924.50 $

$

0.00 $ -217, 128.27 $

1.03 -1 060 001.53
-1 060 000.50
217 128.27

98,272.98 146.33

12,597.28 7,517.00

-146.33 189 067.00

$

90 325.99

$

7,847.03

14,846.37

11,567.00

25 683.80

$

59,944.20

30 381.79

$ ===90=!=32=5=.9=9=

Statutory Basis financial information 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.
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GORDON COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

Totals per Annual Supplement

Accruals June 30, 2006 June 30, 2005

Compensated Absences June 30, 2006 June 30, 2005

Adjustments

Shared Services on Jointly Staffed Personnel

Darton College

Powell,

Shirley

Georgia Perimeter College

Meadows, Danny

University of Georgia

Milewicz, Mark

Unidentified Variance

SALARIES $ 10,477,485.82 $

TRAVEL 144,482.10

100,451.11 -55,456.72

332,915.51 -268,568.82

-18,638.43 -4,521.30 -5,917.92
-17,675.00
$ 10,540,074.25 $===14=4=,4=8=2.=10=

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SECTION II FINDINGS AND QUESTIONED COSTS

GORDON COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No findings or matters related to management were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No findings or matters related to management were reported.