GEORGIA GWINNETT COLLEGE LAWRENCEVILLE, GEORGIA INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED- UPON PROCEDURES FOR FISCAL YEAR ENDED JUNE 30,2010 -. -- Georgia ~e&wtmeatof Audits an6 Tccounts State Pliditclr GEORGIA GWINNETT COLLEGE - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXHIBITS A SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT B STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMEONFTAUDITASND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 November 30,2010 Members of the State Board of Regents of the University System of Georgia Honorable Daniel J. Kaufman, President Georgia Gwinnett College Indeaendent Accountant's R e ~ o rotn Applving Agreed-U~onProcedures 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 UniversitySystem of Georgia, solely to assist you in assessing the accuracy of the financial information reported t o the University System Office in the College's 2010 Annual Financial Report for inclusion in the University System of Georgia's Annual Financial Report, the State of Georgia's ComprehensiveAnnual Financial Report (C4FR) and Single Audit Repo/t;and to assist you in assessing the accuracy of the budget basis information provided in the Summary Budget Cbmparison and Surplus Analysis Report and Statement of Program Revenues and Expenditures by Funding Source Compared to Budget which are attached as Exhibits A and B, respectively. Georgia Gwinnett 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 of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regardingthe sufficiency of the 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. Funds Held For Others and Accounts Receivable were incorrectly reported. The net amount of positive and negative cash balances for Funds Held For Others was - incorrectly classified as Accounts Receivable Other resulting in an understatement of Funds Held For Others of $33,115.63 and an understatement of Accounts Receivable- Other of $33,115.63. 2. Obtain the College's GAAP basis Statement of Net Assets and Statement of Revenues, 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. Lease Purchase Obligations (current and noncurrent) were understated in total by $107,690.00. This occurred because lease executory costs were included in the current year lease payments as principal reductions. Other accounts affected included Invested in Capital Assets, net of related debt overstated by $107,690.00 and Supplies and Other Services understated by $107,690.00. An adjustment was proposed and the College resubmitted a correct Annual Financial Reportto the Board of Regents. 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. Cash flows from Operating Activities and Cash flows from Capital and Related Financing Activities were not properly reflected on the Statement of Cash Flows. Payments t o Suppliers were overstated by the omission of executory costs of $107,690.00. Principal Paid on Capital Debt and Leases were understated by the inclusion of executory costs. See explanation in ltem 2. 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, LongTerm Debt, Lease Obligations and Retirement Plans have been properly reported. The information presented in the Long-Term Liabilities and Lease Obligations note disclosures were not properly reported. Lease obligation reductions were overstated and ending lease obligations at June 30, 2010 were understated by $107,690.00, respectively. Additionally, the schedule of future commitments for capital leases was incorrect. See explanation in ltem 2. 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 2010. Confirm that these write-off requests 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. Salaries and travel reported to the Department of Audits and Accounts were not reconciled with amounts recorded in the financial statements. Unidentified variances of $66,231.14 and $692.55, respectively, were noted. 9. Review year end Budgetary Statements including the Summary Budget Compariwn and Surplus Analysis Report (Exhibit A) and Statement of Program 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. We did not note any exceptions as a result of our procedures. 10. Obtain documentation for Budget basis reserves reported by 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. 11.Review the H.O.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. 12. Review the Schedule of Expenditures 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 of Expenditures of Federal Awards (SEFA) information did not agree with the Federal expenditure activity reflected on the College's accounting records. The SEFA was originally calculated using Federal revenues instead of expenditures. This resulted in the Biological Science Grant being reported as $19,076.67 instead of $19,930.17 and the Federal Pell Grant Program as $5,131,259.10 instead of $5,128,236.10. The SEFA was corrected for these variances. 13. Review capital asset records to ensure that (1)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. 14. 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. 15. Review documentation to ensure that all subsidiary modules including BANNER are reconciled to the general ledger at least quarterly in accordance with the Business Procedures Manual Section 10.6.2.and ensure that reconciling items are adequately explained and resolved in a timely 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 of which 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, 1 Russell W. Hinton, CPA, CGFM State Auditor EXHIBITS GEORGIA GWlNNEn COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT YMR ENDED JUNE 30.2010 REVENUES State Appropriation State General Funds Federal Funds Other Funds Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Total Funds Available EXPENDITURES Teaching Excess of Funds Available over Expenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Pr~oYr ear Payables/Expenditures Unreserved Fund Balance (Surplus) Returned to Board of Regents - University System Office Year Ended June 30,2009 Early Remittance of Surplus in Current Fiscal Year Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCEJUNE 3 0 SUMMARY OF FUND BALANCE Reserved Department Sales and Servlces Technology Fees Restricted/Sponsored Funds Total Reserved Unreserved Surplus Total Fund Balance BUDGET ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) GEORGIA G W l N N m COLLEGE STATEMENT OF PROGRAM RNENUES AND EXPENDITURESBY FUNDINGSOURCE COMPAREDTO BUDGm YEAR ENDEDJUNE 3 0 , 2 0 1 0 Swclal Funding lnltiatlvw State Approprlatlon Sate General Funds Ortanal Appropr~atlon Flnal Budget Current Year Revenues Funas AVsllable Comparedt o Budget Prior Year Carw-Over Toal Funds Avatlable var~ance POSL~IW (Negauvel Tsachlng state Approprlamn state General Funas Federal ~ u n d s Amerltan Recovely and Relnvestrneol A n of 2009 Federal Sablllzatlon Funds Mher Funds Total Teachlng - Grand Totals All Programs ExpendlmresCompared m Budget Variance PDSI~~YB Actual (Negatrue) Actual Funds Available Ovar/(Under) Expend~tures Early Prior Perlad Other Rernmnce - Adjustments - Adjustments - of Surplus Program Fund Balances Transfen Program Fund Balances Reserve Surplus Total Fund Balance