Kennesaw State University, Kennesaw, Georgia, report on review of the financial statements for the fiscal year ended June 30, 2000

KENNESAW STATE UNNERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

22

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

24

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

26

2

LOTTERY FOR EDUCATION

29

3 CHANGES IN INVESTMENT IN PLANT

30

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

32

5 RECONCILIATION OF SALARIES AND TRAVEL

34

6 RECONCILIATION OF PER DIEM AND FEES

35

KENNESAW STATE UNIVERSITY - TABLE OF CONTENTS-
SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
December 5,2000

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members ofthe Board of Regents of the University System of Georgia
and Honorable Betty L. Siegel, President Kennesaw State University
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits Athrough D) ofKennesaw State University as of and for the year ended June 30, 2000, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Kennesaw State University.
A review consists principally ofinquiries ofUniversity personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, with the exception ofthe matters described in the fourth and fifth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
As disclosed in Note 1 to the financial statements, generally accepted accounting principles require encumbrances to be recorded as a reservation offund balance. However, in accordance with Georgia Law and State budgetary policy, management recorded encumbrances as expenditures and liabilities. The effects of this departure from generally accepted accounting principles on the financial statements were not reasonably determinable.

00ARL-67

As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $2,782,043.81 as of June 30, 2000, and the net change in fund balance for the year ended June 30, 2000, would be increased by $19,033.79.
Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 6) are presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review ofthe financial statements, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, we are not aware of any material modifications which should be made thereto.
Respectfully submitted,

RWH:gp OOARL-67

Ru sell W. Hinton State Auditor

FINANCIAL STATEMENTS - 1-

KENNESAW STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 2000

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Salaries Payable Student Deposits Deferred Revenue Tuition and Fees Other Deposits Held in Custody for Others Due to Other Fund Groups
Total Liabilities
Fund Balances U. S. Government Grants Refundable Institutional Loans - Restricted Endowment Quasi"Endowment - Restricted Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS UNRESTRICTED RESTRICTED

LOAN FUNDS

$ 12,491,004.57

$

929.716.53 $ 951,935.21 224,650.93 879.828.20

1.765,418.27

63,814.41 440.742.46

$ 15,477,135.44 $ 1.765,418.27 $===50;0.4;&,5=5=6.=87=

$ 1.914,696.31 279,890.69 25.00
5.848,986.86 190.193.79
$ 879.828.20
$ 8,233,792.65 $ 879,828.20
$ 355.175.91 149.380.96

$ $ 7.243,342.79
$ 7,243.342.79 $

885,590.07 885.590.07 $

504.556.87

$ 15,477,135.44 $ 1,765,418.27 $ ..........5..0..4.;&.5=5=6.=87=

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -2-

EXHIBIT "A"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$ 1,528,080.70 $

2,029,475.21

$ 519,889.68 $ 16,632,264.57

$ 755,429.70

755,429.70

11,175.24

734,133.00

3,881,185.50

951,935.21

224,650.93

879,828.20

_ _ _ _ _ _ $ 128,553,865.58

128,553,865.58

$ 755,429.70 $ 1,539,255.94 $

2,029,475.21 $ 128,553,865.58 $ 1,254,022.68 $ 151,879,159.69

$ 1,276,373.74 $

136,572.35

$ 1,276,373.74 $

136,572.35

$ 587,417.20 $ 3,915,059.60 279,890.69 25.00

666,605.48

5,848,986.86 190,193.79 666,605.48 879,828.20

$ 1,254,022.68 $ 11 ,780,589.62

$ 403,326.75 352,102.95

$ $ 755,429.70 $

262,882.20 $ 262,882.20 $

$ 128,553,865.58 1,892,902.86 1,892,902.86 $ 128,553,865.58

$

355,175.91

149,380.96

403,326.75

352,102.95

128,553,865.58

885,590.07

9,399,127.85

$ 140,098,570.07

$ 755,429.70 $ 1,539,255.94 $

2,029,475.21 $ 128,553,865.58 $ 1,254,022.68 $ 151,879,159.69

-3-

KENNESAW STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30, 2000

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Regular Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
Endowment Other Net Increase/(Decrease) in the Fair Value of Investments Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Renewals and Replacements Georgia State Financing and Investment Commission
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Loan Cancellations and Write-Offs Administrative and Collection Costs Expended for Plant Facilities
Capitalized Noncapitalized Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Mandatory Investment Income for Principal
Nonmandatory Renewals and Replacements Capital Projects Student Loans
Total Transfers Between Funds
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1,1999

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$ 91.363,187.80
$ 5,872,892,16 8,908,595.27 674,406,57 417.370.92 $ 304,343.54
113.844,98 1,907.15

4,477.40 2,776.32

$ 91,478,939.93 $ 16,177,608.46 $

7,253.72

$ 86.338.037.78 $ 15.605,866.54 2.816.237.49 237,333.58
32,640.59
3,424.85 $

3,355.35 2,149.94

$ 89,190.340.71 $ 15,843,200.12 $

5.505.29

$

$

-350,078.58

-212.922.06

-30,000.00

$

-593.000.64 $

$ 1,695.598.58 $

5,547,744.21

-5.028.62
$ -5,028.62 $ 329,379.72 $ 556,210.35

30,000.00 30,000.00 31.748.43 472,808.44

FUND BALANCES JUNE 30, 2000

$ 7,243,342.79 $

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.

-4-

885,590.07 $

504.556.87

EXHIBIT"B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

1,613,988.00

$

-21,153.06

933,692.55 1,800.00 $

$

-21,153.06 $

2,549,480.55 $

$ 902.80 902.80 $

$ 91,363,187.80

48,066.60

1,613,988.00 5,872,892.16 8,908,595.27
674,406.57 469,914.92

304,343.54 936,468.87 -21,153.06

116,547.78 1,907.15

5,476,338.65

5,476,338.65

2,539,300.86 21,478.00
5,459,898.24

2,539,300.86 21,478.00
5,459,898.24

13,545,082.35 $ 123,738,114.75

$

0.00

$ 101,943,904.32 2,816,237.49 237,333.58

32,640.59

3,424.85 3,355.35 2,149.94

$

2,539,300.86 $

208,335.32

21,478.00 503,668.90
$

1,615,064.42

2,560,778.86 712,004.22
1,615,064.42

$

0.00 $

2,747,636.18 $

525,146.90 $ 1,615,064.42 $ 109,926,893.62

$

5,028.62

$

0.00

$

350,078.58

0.00

$

212,922.06

0.00

0.00

$

5,028.62 $

. 212,922.06 $

350,078.58

$

0.00

$

-16,124.44 $

14,766.43 $

-174,165.52 $ 11,930,017.93 $ 13,811,221.13

771,554.14

248,115.77

2,067 ,068.38

116,623,847.65

126,287,348.94

$

755,429.70 $

262,882.20 $

1,892,902.86 $ 128,553,865.58 $ 140,098,570.07

-5-

KENNESAW STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 2000

EXHIBIT "C

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement -6-

KENNESAW STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHffiIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Kennesaw State University is one ofthirty-four (34) State supported member institutions ofhigher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations ofKennesaw State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System ofGeorgia. 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. Kennesaw State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Kennesaw State University is considered an organizational unit ofthe Board ofRegents ofthe University System ofGeorgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, public service, etc.
RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.
-7-

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FUND ACCOUNTING

LOAN FUNDS

The fund used to account for resources which have been made available for financial loans to students.

ENDOWMENT AND SIMILAR FUNDS

The fund used to account for endowment funds and quasi-endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized. While quasi-endowment funds have been established by the University for the same purposes as endowment funds, any portion ofquasi-endowment funds may be expended. Restricted quasi-endowment funds may be expended only for the purposes established by the source of such funds.

PLANT FUNDS

UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes.

RENEWALS AND REPLACEMENTS - The fund used to account forresources set aside for the

renewal ~d replacement of institutional properties.

'

INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others.

AGENCY FUNDS

The fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations.

BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to [mance expenditures of the fiscal period.

-8-

KENNESAW STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations ofthe University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $2,782,043.81 and a related net reduction of current year expenditures of $19,033.79 have not been reported in the current funds as required by generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the' financial statements.
To the extent that CUrrent Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses.
BUDGET The Board ofRegents ofthe University System ofGeorgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended
- 9-

KENNESAW STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET Appropriations Act of 1999-2000. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

A comparison ofanticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below:

Resident Instruction Personal Services: Education, General and Departmental Services Capital Outlay

$ 666.371.77 $ 1.658,785.08

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the Board object class level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.

INVESTMENTS Investments are reported at fair value. Funds received by the University as endowments or for restricted purposes are invested according to conditions stipulated by the donor, grantor, or in accordance with the Board of Regents authorizing resolutions. Gains and losses on investment transactions are accounted for in the funds where such assets are recorded.

ACCOUNTS RECEIVABLE Accounts receivable consist ofreimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

INVENTORIES Inventories of goods for resale are valued at cost using the weighted average method.

PREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt ofgoods and services that will benefit periods subsequent to the balance sheet date.

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KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia 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 anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations ofthe United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, 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 ofdevelopment authorities created by the laws ofthe 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, or 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.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.
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KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIDIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES The treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units ofthe University System of Georgia.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2000, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

Category 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name.

Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name.

Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

$12,787466,04 $15789013.63 $

Risk Categories

2

3

o00 $====O:O~,O~O $15789013 63

CATEGORIZATION OF INVESTMENTS Investments are summarized and classified as to custodial credit risk within the three categories described below:

Category 1 - Insured or registered, or securities held by the University or its agent in the University's name.

Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the University's name.

Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the University's name.

The carrying amounts of investment balances as of June 30, 2000, are categorized below:

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KENNESAW STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHlBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS

Type of Investment

Risk Categories

1

2

3

Carrying Amount

u. S. Government Securities $==~O~.O~O $ 675,071.18 $==~O~.O~O $ 675,071.18

Investments Not Subject to Categorizations:

Board of Regents Legal Fund Short-Term Investment Fund
Investment Portfolio Accounts Mutual Funds

998,409.69 2,765,651.58
80,358.52

Total Investments

$ 4,519,490.97

Funds invested in an investment pool managed by another governmental entity are not required to be categorized since the University did not own any specific, identifiable investment securities ofthe pool.

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 2000:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 3,302,820.87 80,234,384.59 6,112,289.22 24,884,759.33 14,019,611.57

Total Investment in Plant

$128.553.865.58

NOTE 4: RISK MANAGEMENT

Kennesaw State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which isa self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements of the Board of Regents of the University System ofGeorgia - Administrative Central Office. All units ofthe University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a

- 13 -

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHffiIT"D"

NOTE 4: RISK MANAGEMENT
maximum lifetime benefit of $1,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects ofaccidental 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. The University, as an organizational unit ofthe Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, 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 ofthe performance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund.
NOTE 5: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Kennesaw State University participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing 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 ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their
- 14-

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT "D"

NOTE 5: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy independent actuary. For fiscal year 2000, the employer contribution rate was 11.29% for covered employees. In addition, the University contributed 2.35% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
2000 1999 1998

Percentage Contributed
100% 100% 100%

Required Contribution
$ 3,829,973.21 $ 3,926,991.18 $ 3,578,758.15

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. 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 Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia. The employer contributes 8.79% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

The University and the covered employees made the required contributions of $1,180,433.04 (8.79%) and $670,611.56 (5%), respectively.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description Kennesaw State 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 ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime 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.

- 15 -

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT "D"

NOTE 5: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. Ifa member has less than $ 3,500.00 credited to hislher account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death ofa member, a lump sum distribution equaling the amount credited to hislher 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-halfpercent (7.5%) ofgross 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 2000 amounted to $294,075.05 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 6: LEAVEPOUCrnS
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Certain employees who retire with a minimum ofthree months ofunused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.
NOTE 7: CONTINGENCrnS
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 ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position.
- 16-

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000

EXHIBIT"D"

NOTE 7: CONTINGENCrnS

Litigation, claims and assessments filed against Kennesaw State 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, 2000.

NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents ofthe University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and whohave at least ten years ofservice with the University System of Georgia are eligible for these postemployment 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.

As ofJune 30, 2000, there were 115 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2000, Kennesaw State University recognized as incurred $157,121.39 of expenditures, which was net of $54,730.06 of participant contributions.

NOTE 9: ENROLLMENT

The equivalent full-time student enrollment of Kennesaw State University was as follows:

Regular Term Fall Semester, 1999 Spring Semester, 2000

8,863 8,394

Average

Summer School, 1999

- 17 -

SUPPLEMENTARY INFORMATION -19 -

KENNESAW STATE UNIVERSITY COMBINING BALANCE SHEET
CURRENT FUNDS - UNRESTRICTED JUNE 30, 2000

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups

RESIDENT INSTRUCTION

LOTTERY FOR I EDUCATION

$ 5,617,084.09 $ 770,747.23
191,008.64 879,828.20

224,321.80

Total Assets

$ 7,458,668.16 $====2=:2::4,=32:=1=:.8:.:0,=

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Salaries Payable Student Deposits Deferred Revenue Tuition and Fees Other
Total Liabilities
Fund Balances Unrestricted

$ 1,678,610.75 $ 269,006.71

191,151.01

5,155,795.96

$ 7,103,413.42 $

191,151.01

355,254.74

33,170.79

Total Liabilities and Fund Balances

$ 7,458,668.16 $ ===22=4...,,3:=2=:1,=:80=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 20-

EXHIBIT"E"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 4,501,067.48 $ 2,148,531.20 $ 12,491,004.57

152,582.45

6,386.85

929,716.53

951,935.21

951,935.21

9,580.79

24,061.50

224,650.93

879,828.20

$ 5,615,165.93 $ 2,178,979.55 $ 15,477,135.44

$

30,861.16 $

14,073.39 $ 1,914,696.31

7,839.86

3,044.12

279,890.69

25.00

25.00

323,752.05 190,193.79

369,438.85

5,848,986.86 190,193.79

$

552,671.86 $ 386,556.36 $ 8,233,792.65

5,062,494.07

1,792,423.19

7,243,342.79

$ 5,615,165.93 $ 2,178,979.55 $ 15,477,135.44

- 21 -

KENNESAW STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30. 2000

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects Student Loans In Lieu of State Appropriations
Total Transfers Between Funds
Net Increase for the Year
FUND BALANCES JULY 1.1999

RESIDENT INSTRUCTION

LOTIERYFOR EDUCATION

$ 83,313,679.13 $
112,762.58 1,194.12
$ 83,427,635.83 $

700,586.00 700,586.00

$ 84,410,601.90 $

667,415.21

32,565.39 1,023.33

75.20

$ 84,444,190.62 $

667,490.41

$ 1,066,226.00

$ 1,066,226.00

$

49,671.21 $

305,583.53

33,095.59 75.20

FUND BALANCES JUNE 30. 2000

$

355,254.74 $===3=:3,=17:.;0=.7=9=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 22-

EXHIBIT "F"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 5,129,587.65 $ 2,219,335.02 $ 91,363,187.80

806.78 713.03

275.62

113,844.98 1,907.15

$ 5,131,107.46 $ 2,219,610.64 $ 91,478,939.93

$ 1,260,020.67 $ 86,338,037.78

$ 2,816,237.49

2,816,237.49

2,183.02

218.50

32,640.59 3,424.85

$ 2,818,420.51 $ 1,260,239.17 $ 89,190,340.71

$ -350,078.58

$ -350,078.58

-144,259.80 $ -68,662.26

-212,922.06

-30,000.00

-30,000.00

-412,934.00

-653,292.00

0.00

$ -907,272.38 $ -751,954.26 $ -593,000.64

$ 1,405,414.57 $ 207,417.21 $ 1,695,598.58

3,657,079.50

1,585,005.98

5,547,744.21

$ 5,062,494.07 $ 1,792,423.19 $ 7,243,342.79

- 23-

KENNESAW STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30, 2000

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources
Total Revenues
EXPENDITURES
Educational and General Instruction Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Food Services Stores and Shops Intercollegiate Athletics Other Service Units
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/(DEDUCTIONSl
Transfers for Renewals and Replacements Transfers for Capital Projects Transfers for Student Loans Transfers in Lieu of State Appropriations Prior Period Adjustments (Net) Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Total Other Transfers and Additions/(Deductions)

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 49,773,208.00 $
27,089,107.17 206,006.14 30,266.22 3,608.22 165,183.40 25,534.45
6,020,765.53
$ 83,313,679.13 $

700,586.00 700,586.00

$ 43,094,262.67 $
1,764,715.61 11,693,248.25 4,961,898.71 13,185,378.01
8,710,131.65 1,000,967.00

433,835.79 233,579.42

$ 84,410,601.90 $

667,415.21

$ 1,066,226.00
112,933.37
-32,565.39 $ $ 1,146,593.98 $

-75.20 -75.20

Net Increase in Fund Balances

$

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 24-

49,671.21 $ =====3=3:.!::,0=9;;;,;5.;;;,;59=

EXHIBIT"G"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 50,473,794.00

$ 2,017,441.57

29,106,548.74

206,006.14

30,266.22

3,608.22

165,183.40

25,534.45

$ 4,988,132.50

4,988,132.50

141,455.15

201,893.45

6,364,114.13

$ 5,129,587.65 $ 2,219,335.02 $ 91,363,187.80

$ 43,528,098.46

1,764,715.61

11,926,827.67

$ 1,259,420.67

6,221,319.38

13,185,378.01

8,710,131.65

600.00

1,001,567.00

$

101,871.72

912,763.18

1,708,451.10

93,151.49

101,871.72 912,763.18 1,708,451.10
93,151.49

$ 2,816,237.49 $ 1,260,020.67 $ 89,154,275.27

$ -350,078.58

$ -350,078.58

-144,259.80 $ -68,662.26

-212,922.06

-30,000.00

-30,000.00

-412,934.00

-653,292.00

0.00

-663.21

57.12

112,327.28

-32,640.59 $ -907,935.59 $ -751,897.14 $ _---::-5:..,:1..;:.31.=,3....:.;13:;..:..9::.:50-

$ 1,405,414.57 $ 207,417.21 $ 1,695,598.58

- 25-

KENNESAW STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 2000

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 49,773,208.00

$ 1,613,988.00

33,540,471.13 $ 15,605,866.54

933,692.55 $

O::..:.::..:OO~

$ 83,313,679.13 $ 15,605,866.54 $ 2,547,680.55 $

0.;;..;.;;..00'-

EXPENDITURES

Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Capital Outlay Special Funding Initiative Year 2000 Project

$ 60,871.868.77 $ 1,990,107.69

22,061.539.47
1,358.906.66 118,287.00

13.615,758.85 $ 2,747,636.18 $

525.146.90

$ 84,410.601.90 $ 15.605,866.54 $ 2.747.636.18 $_.--;5=2:.::5,!..;.1...:;46::.;,.9::..:0:....

Excess of Revenues over Expenditures

$ -1,096,922.77 $~=-=_ _O;;;;,'O~O;.; $ -199,955.63 $=_-5;,;;2;,;5J,C.1.4.6.;;,.;.=90=

(1) To eliminate tuition waivers not budgeted and to redassify current year transfers and prior year fund balances budgeted as revenues.

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-26 -

SCHEDULE "1"

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 51,387,196.00 50,080,030.22 $

$ 51,387,196.00 $ 51,442,196.00 $

803,913.96

50,883,944.18

49,532,749.00

-55,000.00 1,351,195.18

$ 101,467,226.22 $

803,913.96 $ 102,271,140.18 $ 100,974,945.00 $ 1,296,195.18

$ 60,871,868.77 1,990,107.69

$ 60,871,868.77 $ 60,205,497.00 $

1,990,107.69

2,274,619.00

22,061,539.47 $ 13,615,758.85 3,272,783.08
1,358,906.66 118,287.00

-1,000,381.00

21,061,158.47 13,615,758.85 3.272,783.08
1,358,906.66 118,287.00

21,174,874.00 14,079,181.00
1.613,998.00 1,508,489.00
118,287.00

-666,371.77 284,511.31
113,715.53 463,422.15 -1,658,785.08 149,582.34
0.00

$ 103,289,251.52 $ -1,000,381.00 $ 102,288,870.52 $ 100,974,945.00 $ -1,313,925.52

$ -1,822,025.30 $ 1,804,294.96 $

-1.7.,1,,;,.7,;;;;30;;,;;.34_.

$

-1,;,;,7,;,;,7.3.._0._3.4 .

-27 -

KENNESAW STATE UNIVERSITY

SCHEDULE "2"

SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

LOTIERY FOR EDUCATION

YEAR ENDED JUNE 30, 2000

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$

700,586,00 $ 700,586,00 $

-:0:.:.,0.:..:0:.-

EXPENDITURES

Equipment, Technology and Construction

Trust Fund

$

Special Funding Initiatives

558,825.99 $ 590,586,00 $

108,589.22

110,000,00

31,760,01 1,410,78

$

667,415.21 $ 700,586.00 $ _ _-::3.::.3,:..;.1..:..;70:.;,.7;..;9~

Excess of Revenues over Expenditures

$ ====3=3.,1..=70=:,7=9=

$ ==~33~,1:..:.7~O';,;.,79~

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
- 29-

KENNESAW STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30. 2000

ADDITIONS

BALANCE JULY 1,1999

CURRENT FUNDS UNRESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

Land

$

3,302,820.87

Buildings

74,173,665.70

$ 1,606,369.80

Improvements Other Than Buildings

5,402,308.34

709,980.88

Equipment

21,194,403.40 $

4,008,273.02

222,950.18 $

21,478.00

Library Books and Collections

12,550,649.34

1,468,065.63

$ 116,623,847.65 $

5,476,338.65 $ 2,539,300.86 $===2=1==,4=78=:.0=0,=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 30-

SCHEDULE "3"

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 2000

$

3,302,820.87

$ 4,454,349.09

80,234,384.59

6,112,289.22

1,005,549.15 $

41,050.00 $ 1,608,944.42

24,884,759.33

7,016.60

6,120.00

14,019,611.57

$ 5.459,898.24 $

48,066.60 $ 1,615,064.42 $ 128,553,865.58

- 31 -

KENNESAW STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30. 2000

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTIERY FOR

AUXILIARY

EDUCATION

ENTERPRISES

STUDENT ACTIVITIES

NET INVESTMENT IN PLANT

Investment in Plant Facilities

RESTRICTED

Designated for Subsequent Years' Expenditures

UNRESTRICTED

Designated

For Bus Replacement Reserve

For Concert Hall

For Intercollegiate Athletics

$

735,922.67

For Inventory Reserve

951,393.21

For Renewals and Replacements Reserve

For Subsequent Years' Expenditures

3,356,625.03 $ 1,789,290.59

For Uncollectible Accounts

$ 243,496.76

18,553.16

3,132.60

Surplus

Regular

111,757.98

Lottery for Education

_ _ _ _ _ $ _----'3::,:3"",1..:..70::.:,.7:..:9:...

$ 355,254.74 $

33,170.79 $ 5,062,494.07 $ 1,792,423.19

$ 355,254.74 $

33,170.79 $ 5,062,494.07 $ 1,792,423.19

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-32-

SCHEDULE "4"

RESTRICTED

UNEXPENDED REGULAR

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 128,553,865.58 $ 128,553,865.58

$ 885,590.07

$ _ _8=.:8::,::5;,::,5:.::,90=..:.::.;07,-

$ $ 261,082.16

51,739.54

1,841,163.32

$

51,739.54

261,082.16

735,922.67

951,393.21

1,841,163.32

5,145,915.62

265,182.52

1,800.04

$

262,882.20 $ _~1.:::,8~92:L:,9~0.::.:2.~86::...

113,558.02 33,170.79 $ 9,399,127.85

$ 885,590.07 $ 262,882.20 $

1,892,902.86 $ 128,553,865.58 $ 138,838,583.50

- 33-

KENNESAW STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2000

SCHEDULE "5"

Totals per Annual Supplement

Accruals June 30, 2000

Adjustments

Shared Services on Jointly Staffed Personnel

Augusta State University

Fedelli,

Lynn

Board of Regents

Wallace,

William

Clayton College and State University

Pratte,

John M

Cobb County Board of Education

Frost,

Jami

Georgia College and State University

Blick,

Jeffrey

Georgia Institute of Technology

Hill,

Ted

Georgia Perimeter College

Shinholster, Sheila

Southern Polytechnic State University

Dennison,

Wayne

Li,

Huilin

University of Georgia

Braester,

Yomi

Lester,

Army

Panu,

AI M

Unidentified Variance

SALARIES $ 52,942,091.93 $

TRAVEL 1,034,667.34

279,890.69

-3,847.00 -33,373.84
6,394.00 1,800.00 2,200.00
250.00 -700.00 -15,412.28 600.00 4,000.00 -2,691.25 -2,691.25 10,952.72
$ 53,189,463.72 $ 1,034,667.34

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-34-

KENNESAW STATE UNIVERSITY RECONCILIATION OF PER DIEM AND FEES
YEAR ENDED JUNE 30. 2000

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 1999

FEE AMOUNT

EXPENSE AMOUNT

TOTAL

$ 2,629,289.46 $

84,357.63 $ 2,713,647.09

-1,235.52

-1,235.52

$ 2,628,053.94 $

84,357.63 $ 2,712,411.57

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 35-

SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

KENNESAW STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

543-96-01

Partially Resolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

REVENUES/RECENABLES/RECEIPTS Student Accounts Receivable not Supported by Financial Aid Finding Control Number: 543-96-01

The process for collecting Masters of Experienced Professional student fees has been restructured. These students' accounts are now processed in the Banner subsystem. The policies developed are designed to ensure that the University is in compliance with Regents policy. The number of outstanding Masters of Experienced Professional receivables has been greatly reduced.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

KENNESAW STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 2000
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS Inadequate Accounting Procedures Finding Control Number: FS-543-00-01
For the year under review, the University's accounting procedures were insufficient to provide for adequate internal control over the bank reconciliation process. The following deficiencies were noted:
1) Book and bank errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods oftime. These reconciling items were numerous in number and netted to a total of$32,197.76.
2) The monthly bank reconciliations for the operating and payroll accounts were not performed in a timely manner.
3) The monthly bank reconciliations, as presented for review, were unorganized and did not use a standardized format.
These deficiencies were a result of management's lack of adherence to proper internal control procedures over bank reconciliations that are necessary to adequately safeguard and report the cash operations ofthe University. The University should implement appropriate procedures and controls to ensure that reconciliations are performed in a timely manner and necessary adjustments are made on a timely basis.
GENERAL LEDGER Detailed Listing of Salaries Not Reconciled Finding Control Number: FS-543-00-02
The detailed listing of salary payments made to employees as submitted by the University to the Georgia Department of Audits was not reconciled with the general ledger as presented for review. The unlocated difference totaling $10,952.72 is reflected in the Reconciliation ofSalaries and Travel. This condition occurred because management did not ensure that amounts submitted to Georgia Department of Audits were reconciled to the University's general ledger. Procedures should be established by the University to ensure that the detailed listing of salaries is reconciled to the accounting records prior to submission to the Georgia Department of Audits.