Medical College of Georgia, Augusta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2001

MEDICAL COLLEGE OF GEORGIA



-TABLE OF CONTENTS-

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON 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

24

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

26

COMBINING STATEMENTS OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

G

UNRESTRICTED

28

H

RESTRICTED

31

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

32

2

LOTTERY FOR EDUCATION

35

3

OTHER ORGANIZED ACTIVITIES

36

4 CHANGES IN INVESTMENT IN PLANT

40

5 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

42

MEDICAL COLLEGE OF GEORGIA - TABLE OF CONTENTS -
SECTION II 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
November 15,2001

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 Daniel W. Rahn, President Medical College of Georgia
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) ofMedical College of Georgia as of and for the year ended June 30, 2001. These financial statements are the responsibility of the College's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the College to prepare its financial statements on a basis which is not consistent with accounting principles generally accepted in the United States of America with respect to the recording of encumbrances as expenditures and liabilities. To conform with accounting principles generally accepted in the United States ofAmerica, encumbrances should be recorded as a reservation offund balance. The effects on the financial statements of this departure from accounting principles generally accepted in the United States of America were not reasonably determinable, but are believed to be material.

01ARL-62

As disclosed in Note 1 to the financial statements, the College did not report the liability and related
expenditure for compensated absences in the current funds as required by accounting principles generally accepted in the United States of America. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $14,940,736.56 as ofJune 30, 2001, and the net change in fund balance for the year ended June 30, 2001, would be increased by $1,958,006.61.
In our opinion, except for the effects on the financial statements ofthe matters discussed in the third and fourth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position ofMedical College ofGeorgia as ofJune 30, 2001, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 5) are presented for purposes ofadditional analysis and are not a required part ofthe financial statements ofMedical College of Georgia. Such information has been subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, except for the effects of the matters discussed in the third and fourth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,

RWH:gp
01ARL-62

R sell W. Hinton State Auditor

,

FINANCIAL STATEMENTS

- 1-

MEDICAL COLLEGE OF GEORGIA COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 2001

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable Inventories Prepaid Items Investment in Plant
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees Deposits Held in Custody for Others Capital Lease Obligations
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

$ 15,100,767.94 $ 8,573,438.14 $ 1,416,370.09

2,732,776.10 550,200.46
8,603,714.44

9,802,658.24 1,232,960.00

6,945,513.48

$ 26,987,458.94 $ 19,609,056.38 $ 8,361,883.57

$ 11,504,786.22
2,582,751.27

$ 14,087,537.49

$ 7,205,993.25
1,155,890.32

$ 19,609,056.38 $ 12,899,921.45
$ 12,899,921.45 $ 19,609,056.38 $ 8,361,883.57

$ 26,987,458.94 $ 19,609,056.38 $ 8,361,883.57

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
Onl>::)~_

$ 6,698,344.02 $

459,299.58

$ 13,883,935.77 $ 46,132,155.54

$ 7,839,799.14

7,839,799.14

19,480,947.82

550,200.46

27,382,894.13

37,219,568.57

______ $ 462,341,823.38

462,341,823.38

$ 7,839?99.14 $ 34,081,238.15 $

459,299.58 $ 462,341,823.38 $ 13,883,935.77 $ 573,564,494.91

$ 6,652,182.19 $

27,210.25

$ 12,805,713.02 $ 30,989,891.68

_ _ _ _ _ _ $ _ _.:..11.:.::8:L;,1~14..:.:.=56::....

1,078,222.75

2,582,751.27 1,078,222.75
118,114.56

$ 6,652,182.19 $

27,210.25 $

118,114.56 $ 13,883,935.77 $ 34,768,980.26

$ 1,725,742.07
6,114,057.07

$ 462,223,708.82

_ _ _ _ _ $ 27A29,055.96 $ _ _....:.4::::32~,O~8:::.:9.:::.:33::...

$ 7,839,799.14 $ 27,429,055.96 $

432,089.33 $ 462,223,708.82

$ 7,205,993.25
1,155,890.32 1,725,742.07 6,114,057.07 462,223,708.82 19,609,056.38 40,761,066.74
$ 538,795,514.65

$ 7,839,799.14 $ 34,081,238.15 $

459,299.58 $ 462,341,823.38 $ 13,883,935.77 $ 573,564A94.91

- 3-

MEDICAL COLLEGE OF GEORGIA COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30, 2001

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
Endowment Other Rental Income Net Decrease in Fair Value of Investments Interest on Loans Receivable Adjustments Prior Years' Expenditures/Accounts Payable Expended for Plant Facilities Current Funds Plant Funds
Unexpended Georgia State Financing and Investment Commission Other Additions Recovery of Prior Years' Cancelled Loans
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Hospital Expenditures Indirect Costs Recovered Refunded to Grantors Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
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
Nonmandatory Renewals and Replacements
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1, 2000
Prepaid Early Retirement Program Pension Costs (Note 1) Transfer of Hospitals and Clinics Operations (Note 1)
FUND BALANCES JULY 1,2000 (RESTATED)

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$ 177,810,893.16
$ 28,721,669.61 $ 111,238,790.81 710,936.78 112,802,494.40
789,090.71

64,549.00 43,390.00 41,177.11

182,966.98

187,723.02

$ 177,993,860.14 $ 254,262,982.31 $

191,696.12 528,535.25

$ 135,138,629.93 $ 247,933,506.91
2,591,866.94 38,136,029.57
7,432,343.16 $

287,684.57

213,683.77

176,402.87 26,639.11

$ 176,080,210.21 $ 255,365,850.07 $ 490,726.55

$ _ _:.l-1.:f!:.94:!.!;,9~7~8:.:::.5~1

$

1,718,671.42 $

-1,102,867.76 $

37,808.70

$ 116,643,125.01 $ 20,711,924.14 $ 8,324,074.87

13,542,898.68 -119,004,773.66
$ 11,181,250.03 $

20,711,924.14 $ 8,324,074.87

FUND BALANCES JUNE 30, 2001

$ 12,899,921.45 $

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

-4-

19,609,056.38 $ 8,361,883.57

----------------------------------------
EXHIBIT "B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
OnIY,,-l_ _

$ 2.240,000.00 607,934.72

$ 177,810,893.16

2,240,000.00

28,786,218.61

111,238,790.81

710,936.78

$

162,888.07

113,616.707.19

$ -146.061.88

3,032,635.49 366,319.24

789,090.71 3,073,812.60
366,319.24 -146,061.88 187,723.02

46,161.55 $

2.934.17

232.062.70

10,457.507.09

10,457.507.09

4,696,359.82 4,429.507.55

4,696,359.82 4,429.507.55

191,696.12

$ -146.061.88 $ 6,293,051.00 $ _ _---:2::..:,9:::.::3:..:.4:..:..17~ $ 19,746,262.53 $ 458,681.563.52

$

0.00

$ 383.072.136.84
2,591.866.94 38.136.029.57 7,432,343.16
287.684.57

$

16.098.61

229,782.38 176,402.87 26,639.11

4,696,359.82

1,131.336.03 $

30,483.27

_ _ _ _ _ _ $ 103.824,087.23

4.696.359.82 1,161,819.30 103.824.087.23

$

--:::.:O.~OO~ $ 5,843,794.46 $

30,483.27 $ 103.824.087.23 $ 541.635,151.79

$ _ _....:1..:.94.:.l;.9:.:,7..:.8.:.::,51.;...

$

...::;0.:,.:;.0"'-0

$ -146,061.88 $

449.256.54 $

167,429.41 $ -84,077.824.70 $ -82.953,588.27

$ 7,985,861.02 $ 26,979,799.42 $

264,659.92 $ 546,301.533.52 $ 727.210.977.90

13,542,898.68 -119,004,773.66

$ 7,985,861.02 $ 26,979,799.42 $

264,659.92 $ 546,301,533.52 $ 621,749,102.92

$ 7,839,799.14 $ 27,429,055.96 $

432,089.33 $ 462,223,708.82 $ 538,795,514.65

-5-

------------

MEDICAL COLLEGE OF GEORGIA STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 2001

EXHIBIT "CO

UNRESTRICTED

RESTRICTED

TOTAL (Memorandum
Onl}1~ _ _

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Endowment Income Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Sales and Services of Hospital Other Sources
Total Revenues

$ 143,949,388.00

$ 143,949,388.00

11,836,270.64

11,836,270.64

6,531,174.60 $ 21,222,403.11

27,753,577.71

90,105.80

115,886,641.01

115,976,746.81

601,826.99

601,826.99

834,183.76

109,594,049.92

110,428,233.68

628,585.88

628,585.88

5,386,092.52

5,386,092.52

2,779,886.56

2,779,886.56

1,912,925.04

1,912,925.04

4,490,866.24

4,490,866.24

$ 177,810,893.16 $ 247,933,506.91 $ 425,744,400.07

EXPENDITURES

Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Food Services Stores and Shops Other Service Units
Hospital Medical College of Georgia Hospital Georgia War Veteran Nursing Home Georgia Correctional Health Care
Total Expenditures

$ 79,338,350.15 $ 110,793,977.26 $ 190,132,327.41

3,311,137.98

21,416,071.37

24,727,209.35

31,550.48

31,550.48

12,470,620.40

507,701.08

12,978,321.48

1,787,033.15

448.90

1,787,482.05

27,115,141.77

2,631 ,545.31

29,746,687.08

9,868,053.00

9,868,053.00

1,216,743.00

1,152,026.00

2,368,769.00

628,966.89 26,832.38
268,939.68 1,667,127.99

628,966.89 26,832.38
268,939.68 1,667,127.99

38,136,029.57

7,820,022.19 103,611,714.80

38,136,029.57 7,820,022.19
103,611,714.80

$ 175,866,526.44 $ 247,933,506.91 $ 423,800,033.35

OTHER TRANSFERS AND ADDITIONS//DEDUCTIONS)

Excess of Restricted Receipts over

Transfers to Revenues

Transfers for Renewals and Replacements

$

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 Additionsl(Deductions)

$

$
-194,978.51 182,966.98

-1,102,867.76 $

-1,102,867.76 -194,978.51 182,966.98

-213,683.77 -225,695.30 $

-1,102,867.76 $

-213,683.77 -1,328,563.06

Net Increase/(Decrease) in Fund Balances

$

1,718,671.42 $

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

-6-

-1 ,1 02,867.76 $ ==_,;;;,61.:.;;5~,8~0,::,;3.~66;:..

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Medical College of Georgia is one ofthirty-four (34) State supported member institutions ofhigher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State ofGeorgia. The accompanying financial statements reflect the operations ofMedical College of Georgia 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. Medical College ofGeorgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Medical College of Georgia 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 ofthe 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 College, the accounts ofthe College are maintained in accordance with the principles offund 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 College'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 College retains full control to use for purposes of performing the primary functions of the College, e.g., instruction, research, 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-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

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 College for the same purposes as endowment funds, any portion of quasi-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 for resources set aside for the renewal and 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 College. Net Investment in Plant is an equity account showing the total book value of physical properties belonging to the College less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the College 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 of accounting is defined as that method of accounting 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 finance expenditures of the fiscal period.
-8-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

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 accounting principles generally accepted in the United States ofAmerica, which provide for the recording ofencumbrances as a reservation offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with accounting principles generally accepted in the United States of America.
Compensated absences represent obligations ofthe College 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 $14,940,736.56 and a related net reduction of current year expenditures of$l ,958,006.61 have not been reported in the current funds as required by accounting principles generally accepted in the United States of America.
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 accounting principles generally accepted in the United States ofAmerica in that immaterial adjustments should be reported as current period revenues and expenditures. The effect ofthis departure is deemed to be immaterial to the fair presentation ofthe 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 behalf of the College. 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.
It is the policy of Medical College of Georgia to record assets acquired through capital leases as additions to Investment in Plant when received at the total acquisition cost including interest. The liability for such leases at fiscal year-end is recorded in Investment in Plant including interest. This presentation differs from accounting principles generally accepted in the United States ofAmerica in that the assets and the related liability resulting from capital leases should be recorded in Investment in Plant at the inception of the agreement at the net present value of the future minimum lease payments, not to exceed the fair value ofthe leased property. The effect ofthis departure is deemed to be immaterial to the fair presentation of the financial statements.
- 9-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING 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.
RESTATEMENT OF PRIOR YEAR FUND BALANCE On July 1, 2000, the Board ofRegents ofthe University System ofGeorgia transferred the operations of the Medical College of Georgia Hospitals and Clinics to MCG Health, Incorporated, a 501 (c) 3 not-for-profit corporation. As part of this transaction, MCG Health, Incorporated acquired certain

assets and liabilities from the University System of Georgia Board of Regents. An adjustment of $119,004,773.66 was made bythe College to restate the fund balance ofUnrestricted Current Funds at July 1, 2000, for the assets and liabilities transferred to MCG Health, Incorporated.
During FY 2000, Medical College of Georgia recorded $17,292,695.93 on the College's financial statements as pension expense for the Early Retirement Program, which was greater than the required pension cost of $3,749,797.25 for FY 2000. An adjustment of $13,542,898.68 was made by the College to restate the fund balance of Unrestricted Current Funds at July 1,2000.
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 Appropriations Act of2000-2001. 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 College by the Administrative Central Office. In addition, the College 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:

- 10-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET
Resident Instruction Personal Services: Sponsored Operations Operating Expenses: Sponsored Operations Capital Outlay Special Funding Initiative
Lottery for Education Equipment, Technology and Construction Trust Fund
Other Organized Activities Medical College of Georgia Hospital and Clinics Operating Expenses: Education, General and Departmental Services Sponsored Operations

$13.626,956.58

$ 2,358,876.34

$ 268,657.72

$

339.40

$ 3..208.69

$ L9l2..925.0~ $ 3,009,993.98

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 College 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 ofallotments due from the Board ofRegents ofthe University System of Georgia - Administrative Central Office, reimbursements 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 ofconsumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the first-in, first-out; last-in, last-out or weighted average methods.

- 11 -

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
Departments within the College use several costing methods for determining valuations for inventories for resale. Inventories of goods for resale are valued at cost using the first-in, first-out; last-in, last-out or weighted average methods.
PREPAID ITEMS
Prepaid items consist ofpayments made to vendors in advance ofthe receipt of goods and services that will benefit periods subsequent to the balance sheet date and Early Retirement Program pension costs paid in advance.
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:
(l) 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 ofthe 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,
- 12-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"


NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES
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.

The treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the 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 oOune 30, 2001, 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 College or by its agent in the College's name.

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

Cash Deposits Investment Portfolio
Accounts
Total Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

1

2

3

$13,845,772.50 $25,584,581.58 $ 246,282.42 $

0.00 $25,338,299.16

24,842.64

24,842.64

24,842.64

$J3,870,6l2..H $25,6.09.424.22 $ 2.11.125.06 $===O~.OOQ!,O $25,338,299.I..6.

- 13 -

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as of June 30, 2001, are as follows:

me ofInvestment

Investments Not Subject to Categorizations:

Board of Regents Total Return Fund
Investment Portfolio Accounts Mutual Funds
State Investment Pool

$ 7,345,874.75
469,081.75 32,264,075.04

Total Investments

$ 40,079.031.54

Funds invested in an investment pool managed by another governmental entity are not required to be categorized since the College 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, 2001:

Land Buildings Improvements Other Than Buildings
Equipment Library Books and Collections Construction in Progress

$ 8,998,281.93 361,406,274.43 7,545,910.30 70,768,552.39 13,324,033.13 298,771.20

Total Investment in Plant

$462.341.823 138

NOTE 4: CAPITAL LEASES
Medical College of Georgia acquires certain equipment through multi-year capital leases with varying terms and options. These agreements contain fiscal funding clauses in accordance with Official Code of Georgia Annotated Section 50-5-64 which prohibits the creation of a debt to the

State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

- 14-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 4: CAPITAL LEASES

As of June 30, 2001, future minimum lease payments under capital leases are as follows:

Fiscal Year Ending June 30

2002 2003

$ 89,102.88 29,011.68

Total Future Minimum Lease Payments

$ 118,114.56

NOTE 5: RISK MANAGEMENT

Medical College of Georgia is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The College 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 maximum lifetime benefit of $2,000,000.00 per person and dental coverage up to an annual maximum of$l,OOO.OO per person. Blue Cross Blue Shield ofGeorgia processes medical and dental claims in accordance with the Health Benefits Plan as established by the Board of Regents. As of January 1, 2001, Express Scripts, Incorporated was contracted with to process phannacy drug claims in accordance with the Pharmacy Benefit Program portion of the Health Benefits Plan.

The Department ofAdministrative Services (DOAS) has the responsibility for the State ofGeorgia 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 College, as an organizational unit of the 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.

- 15 -

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 5: RISK MANAGEMENT
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund.
The College has obtained commercial insurance for risk ofloss associated with Professional Liability (Malpractice) in excess ofthe DOAS "Georgia Tort Claims Act" $1,000,000.00 cap and the "Georgia Broad Form" $1,000,000.00 cap. The shared excess aggregate limit is $10,000,000.00 and the shared excess each loss limit is $5,000,000.00.
The College's commercial insurance for Professional Liability excludes coverage for sexual misconduct, default judgments, violation oflaw and knowing transmission ofor exposure to certain infectious diseases.
NOTE 6: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description
Medical College of Georgia 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 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 College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The 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 2001, the employer contribution rate was 11.29% for covered employees. In addition, the College contributed 2.33% to the TRS on behalfof 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:

- 16-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$15,431,614.25 $23,757,686.10 $24,795,568.92

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 8.81 % 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 College and the covered employees made the required contributions of$4,296,809.21 (8.81 %) and $2,436,802.74 (5%), respectively.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description
Medical College ofGeorgia participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly ofGeorgia 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.

- 17 -

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 6: RETffiEMENTPLANS
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. If a member has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking 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-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 2001 amounted to $176,542.00 which represents 7.50% of covered payroll. These contributions met the requirements of the plan.
EARLY RETIREMENT PENSION PLAN
Plan Description
The Medical College ofGeorgia (MCG) Early Retirement Pension Plan (ERP) is a single-employer defined benefit pension plan administered by William M. Mercer, Incorporated. The plan was devised by MCG as a means of manpower reduction and was approved by the Board ofRegents of the University System of Georgia (BOR) effective January 1, 2000.
The manpower reduction plan was designed to allow vested employees aged 55 or employees ofany age with 25 years of creditable service to retire without penalties as applied by the Teachers Retirement System ofGeorgia (TRS) for early retirement. The plan would allow for all participants to retire as if they were vested and aged 60 or had attained 30 years of creditable service. No other benefits will be paid by this plan.
A financial statement is maintained by the Medical College ofGeorgia, Comptroller's Division, and is available for review during normal business hours.
Funding Policy
The plan is to be funded by the purchase of an annuity utilizing salary savings of departed employees. For fiscal year ended June 30, 2001, the funding period for the annuity is 15 years. The fund sources that provided for an employees salary, as ofDecember 31, 1999, would be responsible for funding the annuity to provide the retiree benefits. There is no additional funding cost to the employee/retiree, BOR, or the State of Georgia for this plan.
- 18 -

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 6: RETmEMENTPLANS

EARLY RETIREMENT PENSION PLAN

Funding Policy
Since this plan was not pre-funded, MCG is taking an aggressive approach to collect and deposit as much into the annuity fund in the earlier years as is possible, thereby realizing a greater return on
investment.

Annual Pension Cost and Net Pension Obligation
The ERP's annual pension cost and net pension obligation for fiscal year 2001 were as follows:

Total

MCG

Other Associated
Units

Annual Required Contribution Interest on Net Pension Obligation Adjustments on Annual Required
Contributions Annual Pension Cost Contributions Made

$ 15,960,000 $ 8,613,230 $ 7,346,770

-336,171

-181,426

-154,745

29,033

15,668

13,365

$ 15,652,862 $ 8,447,472 $ 7,205,390

-13,098,679 -11,280,065

-1,818,614

Increase (Decrease) in Net Pension

Obligation

$ 2,554,183 $ -2,832,593 $ 5,386,776

Net Pension Obligation Beginning of Year -13,638,335

-7,158,998

-6,479,337

Net Pension Obligation End of Year

$ -lJ.O4.152 $ -9,991.59t $ -1.022561

The annual required contribution for the current year was determined as part of the December 18, 2000, actuarial valuation using the Unit Credit actuarial cost method. The amortization period is 15 years utilizing the Level Dollar, Closed method. The asset valuation method is 5 year smoothed market value. The actuarial assumptions included (a) 7.5% rate of return on investment, (b) projected salary increases of 1.12% (3% per year increase, compounded annually), (c) cost of living increases of 1 1/2% each January 1 and July 1, (d) recognize the liability ofan excess benefit plan to pay for benefits that exceed the Federal maximums as stated in Sec 415(b) of the Internal
Revenue Code.

- 19 -


MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS

EARLY RETIREMENT PENSION PLAN

Annual Pension Cost and Net Pension Obligation

Trend Information

Annual Pension Cost (APe) Percentage of APC Contributed Net Pension Obligation End of Year
Annual Pension Cost (APe) Percentage of APC Contributed Net Pension Obligation End ofYear

FY 2000 Total

MCG

Other Associated
Units

$ 4,136,820 $ 2,231,008 $ 1,905,812

429.68%

420.88%

439.97%

$ -13,638,335 $ -7,158,998 $ -6,479,337

FY 2001 Total

MCG

Other Associated
Units

$ 15,652,862 $ 83.68%
$ -11,084,152 $

8,447,472 $ 133.53%
-9,991.591 $

7,205,390 25.24%
-1,092,561

NOTE?: LEAVEPOUCffiS
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 of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.

NOTE 8: CONTINGENCffiS
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 College expects such amounts, if any, to be immaterial to its overall financial position.
- 20-

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2001

EXHIBIT "D"

NOTE 8: CONTINGENCIES

Litigation, claims and assessments filed against Medical College ofGeorgia (an organizational unit ofthe Board ofRegents ofthe 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, 2001.

NOTE 9: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board ofRegents 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 forretirernent or that become permanently and totally disabled to continue as members of the 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 who have 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 of June 30, 2001, there were 3,014 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2001, Medical College of Georgia recognized as incurred $3,383,396.30 ofexpenditures, which was net of$I,109,854.15 ofparticipant contributions.

NOTE 10: ENROLLMENT

The equivalent full-time student enrollment ofMedical College of Georgia was as follows:

Regular Term Fall Semester, 2000 Spring Semester, 2001

3,026 3,192

Average

3.109

Summer School, 2000

- 21 -

SUPPLEMENTARY INFORMATION
- 23-



MEDICAL COLLEGE OF GEORGIA

COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

JUNE 30, 2001

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items
Total Assets
LIABILITIES AND FUND BALANCES Liabilities
Accounts Payable Deferred Revenue
Tuition and Fees Total Liabilities
Fund Balances Unrestricted
Total Liabilities and Fund Balances

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 11,550,665.15 $ 2,709,286.26 160,241.90 7,245,634.80

999,169.43


$ 21,665,828.11 $ -=~99~9d..:'1~69;;;.;..4~3~

$ 10,050,931.35 $
2,212,696.50
$ 12,263,627.85 $

994,910.10 994,910.10

9,402,200.26

4,259.33

$ 21,665,828.11 $ ......~99_90!:,1~69;,;.4_3~

See notes to the financial statements.

- 24-

EXHIBIT "E"

OTHER ORGANIZED ACTIVITIES

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 699.147.29 $ 1.563.168.25 $ 288.617.82 $ 15,100.767.94

23,489.84

2,732,776.10

389,958.56

550,200.46

427,333.75

930,745.89

8,603.714.44

$ 1,126,481.04 $ 2.907.362.54 $ 288,617.82 $ 26,987,458.94

$ 431,764.18 $
$ 431.764.18 $

27.180.59

$ 11,504,786.22

257.380.77 $ 112.674.00

2,582,751.27

284,561.36 $ 112,674.00 $ 14,087.537.49

694,716.86

2,622,801.18

175,943.82

12,899.921.45

$ 1,126,481.04 $ 2,907.362.54 $ 288,617.82 $ 26.987,458.94

- 25-

MEDICAL COLLEGE OF GEORGIA COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 2001

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Hospital Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1, 2000
Prepaid Early Retirement Program Pension Costs (Note 1) Transfer of Hospital and Clinics Operations (Note 1)
FUND BALANCES JULY 1, 2000 (RESTATED}
FUND BALANCES JUNE 30, 2001

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 135,523,482.75 $

983,694.00

163,441.78

4,259.33

$ 135,686,924.53 $ _~98::..:.7~,9~53~.3:::.::3~

$ 133,855,915.98 $

886,902.69 100,000.00

212,841.07 $ 134,068,757.05 $_~98~6~,9~02:.:..6:::.::9~

$

1,618,167.48 $ _ _....:.1~,0~50~.64~

$

2,041,933.10 $

3,208,69

5,742,099.68

$

7,784,032.78 $ _ _...::3:.&::,2~08:::..:..6:::.::9~

$

9,402,200.26 $ ===4*=,2-.59=.3;;;,;3;;...

See notes to the financial statements.

- 26-

EXHIBIT "F"

OTHER ORGANIZED ACTIVITIES

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 38,067,580.04 $ 2,779,886.56 $ 456,249.81 $ 177,810,893.16

11,529.26

3,736.61

182,966.98

$ 38,079,109.30 $ 2,783,623.17 $ 456,249.81 $ 177,993,860.14

$

31,550.48

$ 364,260.78 $ 135,138,629.93

$ 2,591,866.94

2,591,866.94

38,036,029.57

38,136,029.57

842.70

213,683.77

$ 38,068,422.75 $ 2,591,866.94 $ 364,260.78 $ 176,080,210.21

$ _ _-1:.:::9~4 9.:..:78::.:;.5::..1:.... &.::::'

$

-1.:.:9~4.c:,9~78::.:..::..51:....

$

10,686.55 $

-3,222.28 $ 91,989.03 $

1,718,671.42

$ 112,919,818.97 $ 1,594,209.46 $ 83,954.79 $ 116,643,125.01

6,768,985.00 -119,004,773.66

$

684,030.31 $

1,031,814.00
2,626,023.46 $

13,542,898.68 -119,004,773.66
83,954.79 $ 11,181,250.03

$

694,716.86 $ 2,622,801.18 $ 175,943.82 $ 12,899,921.45

- 27-


MEDICAL COLLEGE OF GEORGIA COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30, 2001

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Sales and Services of Hospital Other Sources
Total Revenues
EXPENDITURES
Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Food Services Stores and Shops Other Service Units
Hospital Medical College of Georgia Hospital
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/(DEDUCTIONS}
Transfers for Renewals and Replacements 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)

Net Increase/(Decrease) in Fund Balances
See notes to the financial statements.

- 28-

RESIDENT INSTRUCTION

LOTIERYFOR EDUCATION

$

107,004,539.00 $

983,694.00

11,408,219.83

6,531,174.60

90,105.80

834,183.76

5,386,092.52

4,269,167.24

$

135,523,482.75 $ _--::::9~83~,6~9:::.4.:.:::.00~

$

78,451,447.46 $

886,902.69

3,311,137.98

12,470,620.40 1,422,772.37
27,115,141.77 9,868,053.00 1,216,743.00

100,000.00

$

133,855,915.98 $ _---::.9~86~,9~0:=2.:.::!:69:::....

$

163,441.78 $

4,259.33

-212,841.07

$

-49,399.29 $ _ _....:4~,2::::5~9.~33:::....

$

1,618,167.48 $ _ _..1.0:.0;;';;;5;.;0.,;;;;64~

EXHIBIT "G"

OTHER ORGANIZED ACTIVITIES

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 35,961,155.00
$ 1,912,925.04
193,500.00 $ 38,067,580.04 $

$ $ 428,050.81

2,779,886.56

28,199.00

143,949,388.00 11,836,270.64 6,531,174.60 90,105.80 834,183.76 5,386,092.52 2,779,886.56 1,912,925.04 4,490,866.24

2,779,886.56 $ 456,249.81 $ 177,810,893.16

$

31,550.48

$
$ 364,260.78

79,338,350.15 3,311,137.98 31,550.48 12,470,620.40 1,787,033.15
27,115,141.77 9,868,053.00 1,216,743.00

$

628,966.89

26,832.38

268,939.68

1,667;127.99

628,966.89 26,832.38
268,939.68 1,667,127.99

38,036,029.57 $ 38,067,580.05 $

38,136,029.57 2,591,866.94 $ 364,260.78 $ 175,866,526.44

$ -194,978.51

$

11,529.26

3,736.61

$

-194,978.51

182,966.98

-842.70

$

10,686.56 $

-191 ,241.90

-213,683.77 $ _ _.:::-2=:25::a,6~9~5.:.:::.3~0

$

10,686.55 $

. -3,222.28 $ . 91,989.03 $_....:.1.:.:.,7.:.;18;:.:,;,6~7..:o1.;,;:42:o..

- 29-

MEDICAL COLLEGE OF GEORGIA COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES RESTRICTED
YEAR ENDED JUNE 30, 2001

EXHIBIT "H"

RESIDENT INSTRUCTION

OTHER ORGANIZED ACTIVITIES

TOTAL

REVENUES
Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Endowment Income

$ 21,222,403.11

$ 21,222,403.11

4,454,904.02 $ 111,431,736.99

115,886,641.01

601,826.99

601,826.99

109,594,049.92

109,594,049.92

628,585.88

628,585.88

Total Revenues

$ 136,501,769.92 $ 111,431,736.99 $ 247,933,506.91

EXPENDITURES

Educational and General Instruction Research Academic Support Student Services Institutional Support Scholarships and Fellowships
Hospital Georgia War Veterans Nursing Home Georgia Correctional Health Care

$ 110,793,977.26
21,416,071.37 507,701.08 448.90
2,631,545.31 1,152,026.00

$ 110,793,977.26
21,416,071.37 507,701.08 448.90
2,631,545.31 1,152,026.00

$ 7,820,022.19
103,611,714.80

7,820,022.19 103,611,714.80

Total Expenditures

$ 136,501,769.92 $ 111,431,736.99 $ 247,933,506.91

OTHER TRANSFERS AND ADDITIONS/(DEDUCTIONS)

Excess of Restricted Receipts over (under) Transfers to Revenues

$ -1,102,867.76

$ -1,102,867.76

Net Increasel(Decrease) in Fund Balances

$ -1,102,867.76 $

0.00 $ __-..:.1,102,867.76

See notes to the financial statements.


- 31 -

MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 2001

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 107,004,539.00

$ 2,240,000.00 $

0.00

28,518,943.75 $ 136,501,769.92

4,006,889.45

$ 135,523,482.75 $ 136,501,769.92 $ 6,246,889.45 $

0;:,.;.::.;00:;...

EXPENDITURES

Personal services:

Education, General and Departmental Services $ 101,463,106.91

Sponsored Operations

$ 118,748,642.58

Operating Expenses: Education, General and Departmental services Sponsored Operations
Capital Outlay Research Consortium Special Funding Initiative Student Education Enrichment Program

29,093,243.35
1,003,330.00 1,928,012.40
368,223.32

17,753,127.34
$

5,827,695.85 $

30,483.27

$ 133,855,915.98 $ 136,501,769.92 $ 5,827,695.85 $ _ _--=-30::.!.,4.;;:8~3=.27~

Excess of Revenues over Expenditures

$ _....:.1,667,566.77 $

0.00 $ _ _.4.1;,;;,9,193.60 $

..3..0.,483.27

(1) To eliminate tuition waivers and MCG Research Institute contract overhead not budgeted, to reclassify prior year fund balances and current year transfers budgeted as revenues, and to reclassify early retirement program prepaid items budgeted as expenditures.

See notes to the financial statements.

- 32

SCHEDULE "1"

TOTAL

ADJUSTMENTS

TOTAL

_ _(!}L..._ _ .-JBudget BasisL

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$ 109,244,539.00 169,027,603.12 $

$ 109,244,539.00 $ 109,994,539.00 $

-2,744,046.91

166,283,556.21

152,674,031.00

-750,000.00 13,609,525.21

$ 278,272,142.12 $ -2,744,046.91 $ 275,528,095.21 $ 262,668,570.00 $ 12,859,525.21

$ 101,463,106.91 $ 118,748,642.58
29,093,243.35 17,753,127.34 5,858,179.12 1,003,330.00 1,928,012.40
368,223.32

1,503,535.12 $ 102,966,642.03 $ 104,960,985.00 $ 1,994,342.97

1,318,911.00

120,067,553.58

106,440,597.00

-13,626,956.58

-2,774,530.18 -188,741.40

26,318,713.17 17,753,127.34 5,669,437.72 1,003,330.00 1,928,012.40
368,223.32

26,420,112.00 15,394,251.00 5,400,780.00 1,753,330.00 1,927,673.00
370,842.00

101,398.83 -2,358,876.34
-268,657.72 750,000.00
-339.40 2,618.68

$ 276,215,865.02 $

-140,825.46 $ 276,075,039.56 $ 262,668,570.00 $ -13,406,469.56

$ _ _2,056,277.10 $ -2,603,221.45 $ _.....;-~54~6~,944:;;:;:;..:::35~

$ _-.;;;-54~6,,;;:;944=.3;;:.,5

- 33-

MEDICAL COLLEGE OF GEORGIA

SCHEDULE "2"

SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

LOTIERY FOR EDUCATION

YEAR ENDED JUNE 30, 2001

REVENUES
State Appropriations
EXPENDITURES
Equipment, Technology and Construction Trust Fund
Special Funding Initiatives
Excess of Revenues over Expenditures

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCE FAVORABLE JUNFAVORABLEL

$

983,694.00 $ 983,694.00 $

.::.;0..::.;00:....

$

821,902.69 $ 818,694.00 $

165,000.00

165,000.00

-3,208.69 0.00

$

986,902.69 $ 983,694.00 $

-3~,=20:.:8;;.;.6;.::9_

$ ===..,;;-3.,2~0~8.~69:;;..

$ ========-~3,208.69

See notes to the financial statements.

- 35-

MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 30, 2001

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

TOTAL

MEDICAL COLLEGE OF GEORGIA HOSPITAL AND CLINICS

REVENUES
State Appropriations Other Revenues Retained

$ 35,961,155.00

$ 35,961,155.00

2,106,425.04 $ 111,431,736.99

113,538,162.03

$ 38,067,580.04 $ 111,431,736.99 $ 149,499,317.03

EXPENDITURES

Personal Services:

Sponsored Operations

Operating Expenses:

.

Education, General and Departmental Services $

Sponsored Operations

$
38,067,580.05

50,983,310.82 $
60,448,426.17

50,983,310.82
38,067,580.05 60,448,426.17

$ 38,067,580.05 $ 111,431,736.99 $ 149,499,317.04

Excess of Revenues over Expenditures

$

-0.01 $

0.00 $ ===_......,;-~0.;;;.01~

(1) To reclassify personal services expenditures budgeted as operating expenses and reclassify early retirement program prepaid items budgeted as expenditures.

See notes to the financial statements.

- 36-

SCHEDULE "3"

ADJUSTMENTS

TOTAL

_ _""';(1.1-:-):....-_- _(Budget BasisL

BLJDGET

VARIANCE FAVORABLE JUNFAVORABLEL

$

0.00 $ 35,961,155.00 $ 35,961,155.00 $

0.00

113,538,162.03

108,529,292.00

5,008,870.03

$

....:0:.:.;.0:.,:0;... $ 149,499,317.03 $ 144,490,447.00 $ _--=5;.:.:,0:,::0..::;8,:.::8.:..;70:.:..0:.,:3;...

$ -50,983,310.82 $

0.00

$

50,897,359.81

38,067,580.05 $ 36,154,655.00

111,345,785.98

108,335,792.00

0.00
-1,912,925.05 -3,009,993.98

$

-85,951.01 $ 149,413,366.03 $ 144,490,447.00 $ -4,922,919.03

$

85,951.01 $ ==~8~5*,9~5;.:.1.;;;;,0,;;..0

$ ==~85*,9~5~1.;,;;;;00~

- 37-

MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 3D, 2001

GEORGIA RADIATION THERAPY CENTER REVENUES
Other Revenues Retained
EXPENDITURES Personal Services:
Education, General and Departmental Services Operating Expenses:
Education, General and Departmental Services
Excess of Revenues over Expenditures

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

0.00 $

..::.;0..::.;00::.....

$

0.00 $

0.00

$

0.00 $

.::.,:0..: .,:00: . . .

$

0.00 $ = =_ _0.=00....



See notes to the financial statements.

- 38-

SCHEDULE "3"

TOTAL
_(Budget Basis)

BUDGET

VARIANCE FAVORABLE _(UNFAVORABLE)

$

o::.:..o::.:o~ $ 3,625,810.00 $ _~-3::.:.,6:.:;2:.;;,5.:..;;;,8...;,.10::.:..0::.:0~

$

0.00 $ 2,224,653.00 $

2,224,653.00

1,401,157.00

1,401! 157.00

$

0::.:.O::.:O~ $ 3,625,81 0.00 $ _~3::.:.,6:.:;2:.;,5.:.;;.8..;,.10::.:.,O::.:O~

$ ====0-..0;,;0=


- 39-

MEDICAL COLLEGE OF GEORGIA CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 3D, 2001

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections Construction in Progress
SUMMARY OF INVESTMENT College Capital Leases

BALANCE JULY 1, 2000

CURRENT FUNDS UNRESTRICTED RESTRICTED

$. 8,998,281.93

352,692,885.29 $.

844,613.89

6,597,138.87 166,988,825.93
12,309,273.27

5,799,911.89 $. 2,798,221.45

913,489.97

101,269.89

175,171.80

$. 547,761,577.09 $.

7,558,015.75 $. 2,899,491.34

$. 546,301,533.52 $.
1,460,043.57

7,558,015.75 $. 2,899,491.34

. $. 547,761,577.09 $.

7,558,015.75 $. 2,899,491.34

See notes to the financial statements.

-40 -

SCHEDULE "4"

ADDITIONS
PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 2001

$ 8,998,281.93

$ 3,562,867.10 $
948,771.43

0.00 $ 4,305,908.15

361,406,274.43 7,545,910.30

184,721.29

$ 162,888.07 $ 105,166,016.24

70,768,552.39

13,324,033.13

123,599.40

298,771.20

$ 4,696,359.82 $

0.00 $ 4,429,507.55 $ 162,888.07 $ 105,166,016.24 $ 462,341,823.38

$ 4,696,359.82 $ $ 4,696,359.82 $

0.00 $

4,429,507.55 $ 162,888.07 $ 103,824,087.23 $ 462,223,708.82

1,341 ,929.01

118,114.56

0.00 $ 4,429,507.55 $ 162,888.07 $ 105,166,016.24 $ 462,341,823.38

- 41

MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30. 2001

NET INVESTMENT IN PLANT Investment in Plant Facilities
RESTRICT~D
Designated for Subsequent Years' Expenditures UNRESTRICTED
Designated For Capital Projects (GSFIC) For Early Retirement Program For Insurance Recovery/Restitution Reserve For Inventory Reserve For Renewals and Replacements Reserve For Revenue Stabilization Reserve for Medical College of Georgia Hospital and Clinics For Subsequent Years' Expenditures Surplus Regular Lottery for Education

RESIDENT INSTRUCTION


LOTTERY FOR EDUCATION

CURRENT FUNDS

UNRESTRICTED

OTHER ORGANIZED

AUXILIARY

ACTIVITIES

ENTERPRISES

$

7,245,634.80

1,822,737.26

183,199.07

$

427,333.75 $

930,745.89

389,958.56

150,629.13

_ _ _ _ _ _ $ _ _...;;4~,2~5::::9.~33~

$

9,402,200.26 $

4,259.33 $

267,383.11

1,302,096.73

694,716.86 $ 2,622,801.18

$

9A02,200.26 $

4,259.33 $

694,716.86 $ 2,622,801.18

See notes to the financial statements.

-42

SCHEDULE "5"

STUDENT ACTIVITIES

RESTRICTED

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 462,223,708.82 $ 462,223,708.82

$ 18,376,096.38

$ 18,376,096.38

$ 27,382,894.13 $ 1,232,960.00

$

432,089.33

$ 27,382,894.13
9,836,674.44 1,822,737.26
573,157.63 432,089.33

$ 175,943.82

267,383.11 1,478,040.55

46,161.83
$ 175,943.82 $ 1,232,960.00 $ 27,429,055.96 $ _ _-=4:::3~2,~08~9~.3::::3:..

196,790.96 4,259.33
$ 41,994,026.74

$ 175,943.82 $ 19,609,056.38 $ 27,429,055.96 $

432,089.33 $ 462,223,708.82 $ 522,593,831.94

-43


SECTIONll CURRENT YEAR FINDINGS AND QUESTIONED COSTS

MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUESIRECEIVABLESIRECEIPTS Inadequate Documentation Finding Control Number: FS-05l2-0l-0l

A review of the source documentation supporting RevenueslReceivableslReceipts for Restricted Funds disclosed the following deficiencies:

1. At June 30, 2001, the College had sixteen restricted funds with deficit balances totaling $1,807,218.37 for which documentation of funds available to cover the deficits was not provided. Restricted funds should not be expended in projects that do not have funds available.

2. AtJune 30, 2001, the College had balances in eight new projects which were not supported by source documentation. Accordingly, we were unable to determine if these restricted funds were properly classified by source.

The deficit balances are a result ofmanagement's failure to establish controls to ensure that grants are

available and that reimbursement requests are made in a timely manner. The College should

implement procedures to ensure that all grants are current, that funds are available to cover

expenditures and that reimbursement requests are made in a timely manner. The College should



review individual Restricted Funds to determine ifall available funding was requested, ifthe receipts

were correctly posted to the funds, and ifany other source offunding can be used to fund the deficits.

The lack of documentation supporting new projects is a result of management's failure to establish controls to ensure that grants and contracts are properly identified and classified in restricted funds. The College should implement procedures to ensure that documentation for all grants and contracts is maintained and available on file for each restricted fund.