STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS GORDON COLLEGE BARNESVILLE, GEORGIA INDEPENDENT ACCOUNTANTS REPORT ON APPLYING AGREED-UPON PROCEDURES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Russell W. Hinton State Auditor GORDON COLLEGE - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXHIBITS A SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT 1 B STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCECOMPAREDTOBUDGET 2 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 December 8, 2008 Members ofthe State Board of Regents of the University System of Georgia Honorable Lawrence Weill, President Gordon College Independent Accountant's Report on Applying Agreed-Upon Procedures Ladies and Gentlemen: We have performed the procedures enumerated below, which were agreed to by the College and the University System Office (Oversight Unit) of the Board of Regents of the University System of Georgia, solely to assist you in assessing the accuracy of the financial information reported to the University System Office in the College's 2008 Annual Financial Report for inclusion in the State of Georgia's Comprehensive Annual Financial Report (CAFR) and Single Audit Report; and to assist you in assessing the accuracy of the budget basis information provided in the Summary Budget Comparison and Surplus Analysis Report and Statement ofProgram Revenues andExpenditures by Funding Source Compared to Budget which are attached as Exhibits A and B, respectively. Gordon College's management is responsible for the financial information reported to the University System Office in the College's Annual Financial Report. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute ofCertified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency ofthe procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures and the associated findings are as follows: 1. Review selected balance sheet items reported on the Annual Financial Report (cash, accounts receivable, accounts payable, deferred revenues, net assets). Confirm that these items have adequate supporting documentation and are properly reconciled to the College's general ledger. We did not note any exceptions as a result of our procedures. 2. Obtain the College's GAAP basis Statement ofNet Assets and Statement ofRevenues, Expenses and Changes in Net Assets (SRECNA) submitted for inclusion in the State's CAFR and Single Audit. Utilizing test scripts, confirm that financial information presented in these statements properly supports activity reported in the College's accounting records. The College incorrectly classified a grant in the amount of$18,752.91 as Federal revenue instead of Other revenue on the SRECNA. 3. Obtain the College's Statement of Cash Flows submitted for inclusion in the State's CAFR and Single Audit. Utilizing cash flow worksheets, confirm information reported on Statement of Cash Flows. We did not note any exceptions as a result of our procedures. 4. Obtain the College's Notes to the Financial Statements submitted for inclusion in the State's CAFR and Single Audit. Utilizing notes worksheets and other supporting documentation confirm that note disclosures related to Cash, Investments, Accounts Receivable, Capital Assets, Long-Term Debt, Lease Obligations and Retirement Plans have been properly reported. We did not note any exceptions as a result of our procedures. 5. Review the College's year end GAAP basis journal entries. Obtain documentation for GAAP journal entries and confirm that the entries were posted to the College's Annual Financial Report. We did not note any exceptions as a result of our procedures. 6. Confirm that State Appropriation revenues, receivables and remittances of prior year surplus balances have been properly recorded in the College's financial records. Prior year surplus balances should be netted against State Appropriation revenues in the GAAP basis financial statements; however, prior year surplus balances should be reflected as fund balance adjustments on the Budget basis financial statements. We did not note any exceptions as a result of our procedures. 7. Obtain listing of write-off requests for accounts receivable less than $3,000.00 for fiscal year 2008. Confirm that these write-offrequests have been approved by the State Accounting Officer and have been posted to the College's financial statements. We did not note any exceptions as a result of our procedures. 8. Verify that the listing of salaries, travel, and professional services reported to the Department of Audits is in accordance with O.C.G.A. 50-6-27 and reconciles to amounts recorded in the College's financial statements. We did not note any exceptions as a result of our procedures. 9. Review year end Budgetary Statements including the Summary Budget Comparison andSurplus Analysis Report (Exhibit A) and Statement ofProgram Revenues and Expenditures by Funding Source Compared to Budget (Exhibit B). Confirm that budget information presented in these statements supports activity reported in the College's accounting records and determine if any budget overexpenditures exist. The College's budget comparison reflected an overexpenditure of$4,551,196.38 in Teaching. This was due to the College's failure to budget Georgia State Financing and Investment Commission (GSFIC) activity. See Exhibits A and B. I0. Obtain documentation for Budget basis reserves reported by the College on the Summary Budget Comparison and Surplus Analysis Report (Exhibit A). Confirm that the reserves are properly documented, valid and appropriate. We did not note any exceptions as a result of our procedures. II. Review the H.0 .P.E. Scholarship Program reconciliation between the College and the Georgia Student Finance Commission. Confirm that information reported to the Georgia Student Finance Commission has been reconciled with H.O.P.E. Scholarship activity reported on the College's financial records. We did not note any exceptions as a result of our procedures. I2. Review the Schedule ofExpenditures of Federal Awards information submitted by the College for inclusion in the Statewide Single Audit. Confirm that the information is properly presented and supported by the College's accounting records. The College's Schedule ofExpenditures ofFederal Awards (SEFA) submitted to the State Accounting Office for inclusion in the Statewide Single Audit did not agree with the Federal expenditure activity reflected on the College's accounting records. The College failed to include $9,000.00 in Federal Work Study program expenditures on the SEFA. This omission was corrected by our department. I3. Review capital asset records to ensure that (I) subsidiary ledgers are appropriately reconciled to the ledgers, (2) capitalization thresholds are being properly followed, and (3) a complete annual physical equipment inventory is being conducted and that issues noted during the physical inventory are being properly addressed by management. We did not note any exceptions as a result of our procedures. I4. Review bank reconciliations during the year under review to ensure that management is preparing them timely and that reconciling items are being addressed by management timely and in an appropriate manner. We did not note any exceptions as a result of our procedures. These agreed-upon procedures do not constitute an audit of the financial statements or any part thereof, the objective ofwhich is to express an opinion on the financial statements or a part thereof. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~--- mv\)4~ R~nton, CPA, CGFM State Auditor RWH:gp EXHIBITS GORDON COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT YEAR ENDED JUNE 30, 2008 EXHIBIT"A" REVENUES State Appropriation State General Funds $ Other Funds Total Revenues $ CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Total Funds Available $ EXPENDITURES 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 - University System Office Year Ended June 30, 2007 Prior Year Reserved Fund Balance Included in Funds Available Non-Mandatory Transfers FUND BALANCE JUNE 30 BUDGET 13,089,350.00 $ 10,343,266.00 23,432,616.00 $ 0.00 23,432,616.00 $ 16,263.00 $ 23,416,353.00 23,432,616.00 $ 0.00 $ $ ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) 13,089,350.00 $ 14,804,195.15 27,893,545.15 $ 0.00 4,460,929.15 4,460,929.15 56,237.90 27,949,783.05 $ 56,237.90 4,517,167.05 16,263.00 $ 27,967,549.38 27,983,812.38 $ -34,029.33 $ 0.00 -4,551,196.38 -41551 I196.38 -34,029.33 97,430.90 9,900.11 1,961.71 2,104.00 -9,900.11 -56,237.90 189 067.00 200,296.38 SUMMARY OF FUND BALANCE Reserved Departmental Sales and Services Technology Fees Uncollectible Accounts Receivable Tuition Carry-Over Total Reserved Unreserved Surplus $ 11,920.08 41,118.88 27,594.02 115,520.34 $ 196,153.32 4 143.06 Total Fund Balance $ ===20=0&,2=96=.3=8= - 1- GORDON COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET YEAR ENDED JUNE 30, 2008 Special Funding Initiative State Appropriation State General Funds Original Appropriation Final Budget Funds Available Comeared to Budget Current Year Revenues Prior Year Carry-Over Total Funds Available Variance Positive (Negative) $ 16,263.00 $ 16,263.00 $ 16,263.00 $ 0.00 $ 16,263.00 $ 0.00 Teaching State Appropriation State General Funds Other Funds Total Teaching $ 12,786,143.00 $ 13,073,087.00 $ 13,073,087.00 $ 0.00 9,814,580.00 10,343,266.00 14 804 195.15 56,237.90 $ 22,600:123.00 23,416,353.00 $ 27,877 282.15 $ 56,237.90 $ 13,073,087.00 $ 0.00 14,860,433.05 4 517167.05 27,933,520.05 $ 4 517 167.05 Grand Totals All Programs $ 22,616,986.00 $ 23,432,616.00 $ 27,893,545.15 $ 56,237.90 $ 27,949,783.05 $ 4,517,167.05 2 EXHIBIT"B" Expenditures Compared to Budget Variance Positive Actual (Negative) Actual Funds Available Over/(Under) Expenditures Prior Period Adjustments Other Adjustments Program Fund Balances Transfers Program Fund Balances Reserve ~ Total Fund Balance 16,263.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ ~$ 0.00 13,288,112.29 $ 14 679 437.09 $ 27,967,549.38 -215,025.29 $ -4 336 171.09 -4 551196.38 -215,025.29 $ 180 995.96 -34 029.33 $ 0.00 $ 189,067.00 $ -25,958.29 $ 25,958.29 $ 4 065.71 13 598.98 198,660.65 -25,958.29 4 065.71 $ 202,665.98 172,702.36 $ 0.00 $ 0.00 $ 0.00 $ 0.00 168,559.30 4 143.06 172 702.36 168,559.30 $ 4 143.06 $ 172,702.36 $ 27,983,812.38 $ -4,551,196.38 $ -34,029.33 $ 4,065.71 $ 202,665.98 $ 172,702.36 $ 0.00 $ 168,559.30 $ ~$ 172,702.36 Unexpendable Reserves Uncollectible Accounts Receivable 27 594.02 200,296.38 -3-