, ..... " .' ( l, v " ! ,STATE OF GEORGIA- ,- - .' \ , ,' DEPARTMENT OF AUDITS A,ND ACCOUNTS \ .' I' ( ,( " ,, I . ,I, I I' , (, .' , . .' r ,, , ,. ,- -, ,, , r - ,, \J ,! MEDICAL COLLEGE OF GEORGIA _ , ' " - AUGUST~. GEORGIA " - I' _ ,, , 'REPORT ON AUDIT . ,- " , OF THE FINA,'N, CIAL STA, TEMENTS'_ " FOR THE FISCAL J YEAR ENDED l .... JUNE 30. 200/2 " '... - ., I" ' , , ,- l '. " " ,, ,, ./ ~ Russell W. Hinton State Auditor " " , ,' . . .~ \ -,\ MEDICAL COLLEGE OF GEORGIA - TABLE OF CONTENTS SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS II B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 12 C STATEMENT OF CASH FLOWS 13 D NOTES TO THE FINANCIAL STATEMENTS 14 SUPPLEMENTARY INFORMATION SCHEDULES SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS) 1 RESIDENT INSTRUCTION 35 2 LOTTERY FOR EDUCATION 36 3 OTHER ORGANIZED ACTIVn IES 37 4 RECONCILIATION OF SALARIES AND TRAVEL 39 5 RECONCILIATION or PER DIEM AND FEES 41 SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS MEDICAL COLLEGE OF GEORGIA - TABLE OF CONTENTS- SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RllC;;'iEII \\1. HIf'l.TO'l STATE AUDITOR \4~J 656 217.01 DEPARTMENT OF AUDITS AND ACCOUNTS ~"i4 \V..l... hmglon ~lrCCI S \V SUHC 214 All,mla, GeorglJ 30334-H400 February 3. 2003 Honorable Sonny Pcrdue, Governor Members of the Gencral Assembly of GeorgIa Members of the Board of Regcnts ofthc UmvcrsIty System of Georgia and Honorable Damel W Rahn, President Medlc.!l College of Georgia INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladlcs and Gcntlemen We have audited the accompanY1Og basIc financial statements (Exhibits A through D) of Medical Collegc of Georgia, an organlLalional umt of the State of GeorgIa, as of and for the year ended Junc 30. 2002 Thcse financial statements are the responsibIlIty of the College's management Our rcsponslbility IS to exprcss an op1Olon on these financial statements based on our audit Wc conducted our audit 10 accordance with audlling standards generally accepted 10 the Umted States of Amenca Those standards reqUIre that we plan and perform the audit to obtam reasonablc assurance about whether the financial statements are free of matenal misstatement An audit 10cludcs cxam101Og, on a test basiS, eVidence support1Og the amounts and disclosures 10 the financial statements An audit also 10cludes assess10g the account1Og pnnclples used and significant eslimates made by management. as well as evaluating the overall financial statement presentalion We believe that our audit provides a reasonable baSIS for our op1OlOn As discussed 10 Note I. the financial statements of Medical College of Georgia are 10tended to prcsent the financial pOSitIOn and changcs 10 financial poslllon (1Oclud1Og cash flows) of only that portIOn ofthe busmess-type actlvllies ofthe State of GeorgIa that IS attnbutable to the transaclions of Medical College ofGeorgJa They do not purport to, and do not, prescnt fairly the financial posllion and changes 10 finanCIal posItIOn (1Oclud1Og cash flows) of the State of GeorgIa, 10 conformity With accountmg pnnclples gencrally accepted 10 the Umted States of Amenca 02ARL-62 As descnbed In Note I to the financial statements, the Medical College of Georgia did not recognize Junc 30, 2001, encumbrances as expenses In the June 30. 2002, basic financial statements To conform to gcncrally accepted accounting pnnclples, encumbrances should be recognized as expenses and liabilities In the penod that goods and SCrvlCCS are received The effects on the basiC financial statements of thiS departure from generally accepted accounting pnnclples were not reasonably dctcrmInable In our OpinIOn, except for the effects on the basiC financial statements ofthe matter discussed In the fourth paragraph, the basIC finanCial statcmcnts referrcd to above present faIrly, m all matenal rcspects, the finanCial pOSItIon of Medical College ofGeorgia as ofJune 30,2002, and Its changes In financial posItion (including cash flows) for the ycar then ended In conforrmty With accounting pnnclples generally accepted In the Umted States of Amcnca As descnbed In Note I. Medical College of Georgia adopted the provIsions of Governmental Accounting Standards Board (GASB) Statements No 35, BaSIC Financial Statements - and Management'~ DISCUSSIOn and Anail'sis - for Puhllc Colleges and Ullll'erSltles, as amended by GASB Statement No 37. BasIC Financial Statements - and Management's DISCUSSIOn and Analyslsfor State and Local Governments, and GASB Statement No 38, Certam FlIIanclal Statements Note DIsclosures, as of July 1,2001, to Implement a new financial reportmg model Management's DISCUSSion and AnalysIS IS not a reqUired part ofthe basIC finanCial statements but IS supplementary informatIon reqUired by the GASB We have applied certam limited procedures, which consIsted pnnclpally of Inqumes of management regardmg the methods ofmeasurement and prcscntatlOn of thiS supplementary informatIOn Howcvcr, we did not audit thiS informatIon and express no opmlon on It Our audit was conducted for the purpose of forming an 0plmon on the basiC finanCial statements taken as a whole The accompanYing supplementary information (Schedulcs I through 5) IS prcsented for purposes of addl\lonal analySIS and IS not a reqUired part of the basiC finanCial statements of Medical College of Georgia Such information has been subjected to the audltmg proccdures applied by us m the audit ofthe basiC finanCial statements and, In our 0plmon, based on our audit, IS fairly stated In all matenal respects In relatIOn to the basiC finanCIal statcments taken as a whole Respectfully submitted, ~~,~~ State Auditor RWHgp 02ARL-62 REQUIRED SUPPLEMENTARY INFORMATION .I- MEDICAL COLLEGE OF GEORGIA Management's Discussion and Analysis Introduction Mcdlcal College of Geoflpa (MCG), the oldest school of mediCIne In GcorgIa, was Incorporated In 1828 as the MedIcal Academy of Georgia and IS onc of the 34 instItutIons of the Umvcrslty Systcm of Gcorgla The Collegc, located In Augusta, Georgia, has becomc known for ItS stateof-the-art technology and technology-related programs Currently, the Collcge offers morc than 40 academIc programs In allIed health SCiences, dentIstry, graduatc studIes, mediCine, and nursing at the certificate, baccalaureate, masters, doctoral and first profesSIOnal levcIs AddllJonally, MCG offers reSidency traInIng In medical and dental specialty areas The InstitutIon contInUCS to be cost effective as shown by the companson numbcrs that follow Faculty Students Fall 2002 Fall 2001 Fall 2000 590 2,377 617 2,380 658 2,409 Overview ofthe Financial Statements and Financial Analysis MedIcal College of Georgia IS proud to present ItS financIal statements for fiscal year 2002 The emphaSIS of diSCUSSions about thesc statements Will be on current ycar data There are three financial statements presentcd the Statcmcnt of Net Assets, the Statcment of Revenues, Expenses and Changes In Net Assets, and the Statement of Cash Flows ThIS diSCUSSion and analYSiS of the College's finanCial statcments proVides an overview of Its finanCial actlvltIcs for the year Medical College of GeorgIa has elected to not restate pnor penods for purposes of proVidIng the comparatIve data for thIS Management's DISCUSSion and AnalySIS However, In future years, whcn pnor penod InformatIOn IS available, a comparatIve analySIS Will bc prcscnted Statement ofNet Assets The Statement of Net Assets presents the assets, lIabilItIes, and nct assets of the College as of the end of the fiscal year The Statement of Net Assets IS a poInt of tImc finanCial statemcnt The purpose of the Statement of Net Assets IS to present to the readers of thc finanCial statemcnts a fiscal snapshot of Medical College of Georgia The Statement of Net Assets presents end-ofyear data concernIng Assets (current and non-current), LiabilItIes (current and non-current), and Net Assets (asscts mInUS lIabilItIes) Thc difference between current and non-current assets Will bc discussed In the notes to the finanCial statements From the data presented, readers of the Statement of Net Assets are able to determine the assets available to contInue the operatIOns of the InstitutIOn They are also able to determIne how much the Institution owcs vcndors, Invcstors and lendmg mstItutlOns -3- Finally. the Statement of Net Assets provides a picture of the net assets (assets minUS hablhtles) and their availability for expenditure by the institutIOn. Net asscts are divided mto three major categoncs The first category, Invested In capital assets, net of debt, provides the institution's eqUIty In property, plant and eqUIpment owned by the instItutIOn The next asset category IS restncted net assets, which IS divided mto two catcgones, nonexpendable and expendable The corpus of nonexpendable restnctcd resources IS only aVailable for Investment purposes Expendable restncted net assets are avaIlable for expendIture by the institution but must be spent for purposes as determined by donors and/or cxternal entities that have placed tIme or purpose rcstnctlons on the use of the assets The final category IS umestncted net asscts Unrestncted assets are avaIlable to the institution for any lawful purpose of the institutIOn Statement of Net Assets, Condcnsed (thousands of dollars) Assets Current Assets CapItal Assets, Net Other Assets $104.088 159,929 7.859 Total Assets $271,876 Liabilities Current LiabilIties Non-Current Llablhtles $ 43,196 10,598 Total Liabilities $ 53,794 Net Assets Investcd In CapItal Assets, Net of Debt Restncted - Nonexpcndable Restncted - Expendablc Unrestncted $159,916 1,598 62,449 -5,881 Total Net Assets $218,082 Statement ofRevenues, Expenses and Changes in Net Assets Changes In total net assets as presented on the Statement of Net Assets are based on the activIty presented In the Statement of Revenues, Expenses, and Changes m Net Assets The purpose of the statement IS to present the revenues receIved by the mstltutlon, both operatmg and nonoperating, and the expenses paId by the mslltullon, operatmg and nonoperating. and any other revenues, expenses, gains and losses received or spent by the Institution Generally speakmg operatmg revenues are recel ved for provldmg goods and servIces to the vanous customers and constituencies of the institutIOn Operating expenses are those expenses paid to acqUire or produce the goods and servIces proVIded m return for the operating revenues, and to earry out the mIssIon of the mstltutlon Nonoperating revenues are revenues receIVed for which goods and servIces are not prOVided For example state appropnatlons are nonoperatmg because they are proVIded by the Leglsldture to the mstltutlOn WIthout the legislature dIrectly receiving commensurate goods and servIces for those revenues -4- Statcment of Revenues, Expenses and Changes In Nct Assets, Condensed (thousands ofdollars) OperatIng Rcvenues OperatIng Expenses $ 277,870 402,647 Opcratmg Loss $-124,777 NonoperatIng Revcnues 115,878 Income (Loss) Before Other Revenues $ -8,899 Other Revenues II Increase (Decrease) In Net Assets $ -8,888 Nct Assets at BeginnIng of Year, as OngInally Rcportcd $ 538,795 CumulatIve Effect of Changes In AccountIng Pnnclple -31 \,825 Net Assets at BegInnIng of Year Restated $ 226,970 Net Assets at End of Year The Statement of Revenues, Expenses, and Changes In Net Assets reflects a shghtly negative year WIth a decrease In the net asscts at the end of the year Some hlghhghts of the Information presented on the Statement of Revenues, Expenses, and Changes In Net Assets are as follows -5- Revenue By Source !o.\QOll,' 52705293693 - 20- MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANClAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE2 CASH AND CASH EOUIVALENTS, OTHER DEPOSITS, AND INVESTMENTS CATEGORIZATION OF INVESTMENTS At June 30, 2002, the College's Investments consIsted of the follOWing Investments Not Subject to CategorIzations Board of Regents Total Return Fund Investment Portfoho Accounts Mutual Funds State Investment Pool S 6,801,802 06 414,68638 20,999,00692 Total Investments $28,215,495,36 Funds Invcsted In an Investment pool managed by another governmcntal entity are not reqUired to be catcgorIzed SInce the College dId not own any specIfic, Identifiable Invcstment secuntles ofthe pool NOTE 3 ACCOUNTS RECEIVABLE Accounts receivable conSIsted of the follOWIng at June 30, 2002 Auxlhary Enterpnscs and Other OperatIng ActiVIties Federal, State, and Pnvate Funds Other $ 12,14203 4,838,31427 15,963,690 97 Total Accounts ReceIvable $2Q.814,147,27 NOTE 4 INVENTORIES Inventones consisted of the follOWing at June 30, 2002 Bookstore PhYSical Plant Other $ 402,053 16 13,38061 30,40823 Total $ 44~~2,00 NOTE 5 NOTESILOANS RECEIVABLE Notes/Loans receIvable at Junc 30, 2002, pnmanly consIst of student loans made through the Federal PerkinS Loan Program (the Program) The Program proVIdes for cancellatIon of a loan at ratcs of 10% to 30% pcr year up to a maxImum of 100% Ifthc particIpant comphes WIth certaIn proVISIOns The Federal govcrnment reImburses the College for amounts cancelled under these proVISIOns As - 21 - MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE 5 NOTES/LOANS RECEIVABLE the College detenmnes that loans are uncollectIble and not eligIble for TClITlbursement by the Federal government. thc loans are wntten off and asSigned to the U. S. Department of EducatIon Management considers all loans to be colleclible and has not proVided an allowance for uncolleclible loans NOTE 6 CAPITAL ASSETS The balance at July 1,2001 was adjusted for accountmg changes reqUired m Implementmg GASB Statements 34 and 35 as disclosed m Notc I Followmg are the changes m capital assets for the year ended June 30. 2002 Adjusted Balance July I 2001 Additions Reductions Balance June 10 2002 Capital Assets, Not Bemg Depreciated Land Jnd Land Irnprovcmcnts 5 8.998.281 93 5 8,998.281 93 ('Jpltdl A.sset". Bemg Depreciated Buildmg and BUlldmg Improvements raclhues and Other Improvement'i Equipment CapItOl! Leases llhrary CollectIOns 5215.267,70200 5 2,339,67900 43,816,886 64 264,10373 1. . 1 1 4 0 7 6 0 0 1,524,455 00 4,184,98444 S 12,78000 98,82800 5216,792,15700 2,339,67900 1,088,01664 46,913,85444 228,96864 47,91509 209,55800 13,203.346 00 527'.002.44737 $ 582104744 S 1,526.543 28 5279 296 951 53 Less Accumulated Depreciation BUIldmgs .md BUIlding Improvements $ 83,608.86209 S Facilltlcc; and Other Improvements 1,162,513 57 Equipment 25,686,985 91 Capital Leases 139,66960 Library Collec[lons 8 218 4~7 00 6,150,732 36 114,36335 4,505,24301 5 78,011 70 712,24Q QQ 5 89,759.59445 1,276,876 92 1,615,48104 28,576,74788 185,47408 32,20722 209.558 QII 872111900 SI18.816.488 17 5 II 560,59Q,42 5 2.01051112 5)28,366,56547 Total CapltJI Assct~, Being Deprecl.llcd, ~et 5156.185,95920 S -5 739 ~42 98 S -481 969 84 S15Q.93Q,386 06 Capital Assets, Net 5165,)84 ~1.u S -~ 139,542 9.8 S -4~\2g? 84 5159,928.667,22 NOTE 7 DEFERRED REVENUE Deferred revenue conSisted of the followmg at June 30, 2002 Prepaid Tuition and Fees Research Other Deferred Revenue $ 2,860,253 42 13,347,43521 101,734,28 Totals $16.30942291 - 22- MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 8 LONG-TERM LIABILITIES Long-tenu lIabilIty aetl\"lty for the year ended June 30, 2002, was as follows Lca.c;;cs I ease Obhg,.UIon~ Other LiabilitIes Compensated Ah<;cncc<; Total Long-Term Obl1g~llons B . .i1Jncc July 1 2001 S 118,11456 14940711> 56 Sl-.5,.Q:;:M~I."t~ Addlllonc;; S 12,78000 7480.38653 S 149) I 61j..5.3 ReductIOns S 118 11456 6,IS4,790J2 S 6,302.9J!:!.&J! B.lI.rncc June ll) 200:! S 12,7800\1 16,236,33277 S 16 249,II2,U Current Portion S 12,780 ()(I 5,63833258 S 56'\ I J 12 '\8 NOTE 9 LEASE OBLIGATIONS C O\PIT<\L LEASES hpenses It>r fiscal ycar 2002 \\ere S79,080 00 of which SIO,625 53 represented lIlterest Total prinCipal pdlJ on cdpltdlleases was 568,454 47 for the fiscal year ended June 30, 2002 The lIlterest rate IS 12 10 percent I'wo edpltalleases were cancelled dunng the fiscal year ended June 30, 2002 totalmg $19,03456 Cenam edplldl leases provide lor renewal dnd/or purchase options Generally purchase options at hargam prll-CS of one dollar arc e,erelsahle at the e"plrallon of the lease tenus Medical Collcge of Georgia has a capital lease for equipment with an outstandmg balance at Junc 30, 2002 mthe amount of$12,780 (JO SUMMARY OF LEASE OBLIGATION Future commitments for capItal leases as of June 30, 20()2, were as follows Capital Leases Year Endlllg June 30 2003 S )2,78000 NOTE II) RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Medical College of Georgld partIcIpates m the Teaeher~ Retirement System of GeorgIa (TRSj, a eost-shanng multIple-employer defined benefit pension plan establIshed by the Geneml Assembly of Georgia for the purpose of provldmg retirement allowances and other benefits for teachers of the State of GeorgIa TRS provides service retirement, dlsabl IIty rellrement, and SUrviVOr'S benefits for - 23 - MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "0" NOTE 10 RETIREMENT PLA.L\lS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Its members 10 accordance wIth State statutc The Teachers RelIremcnt System of Georgia ISSUCS a separate stand alone financIal audIt report and a copy can bc obtamed from the GeorgIa Departmcnt of AudIts and Accounts. Funding Policy Employees of Medical Collcge of Georgia who arc covered by TRS are reqUired by State statute to contnbute 5% ofthelf 1,'I'OSS earmngs to TRS Medical College of Georgia makes monthly employer contnbulIons to TRS at ratcs adopted by the TRS Board ofTrustees 10 accordancc WIth State statute and as advIsed by theIr 10dependent actuary For fiscal year 2002, the employer contnbulIon rate was 9 24% for covered employees Employer contnbutIOns for thc currcnt fiscal year and the preced10g two fiscal years are as follows Fiscal Ycar Percentage Contnbuted ReqUired C o n t n bulIon 2002 2001 2000 100% 100% 100% $11,359,99841 $15,431,61425 S23,757,68610 REGENTS RETIREMENT PLAN Plan Description The Regents RelIremcnt Plan, a s1Ogle-employer dcfined contnbulIon plan, IS an oplIonal relIrement plan established and adnurustered by the Board of Regents of the Umvcrslty System of GeorgIa, under which It may purchase annuIty contracts for the purpose of provld1Og retIrement and death benefits for eligIble faculty and pnnclpal admlrustrators Benefits depend solely on amounts contnbuted to the plan plus 10vestrnent eam10gs Benefits are payable to partlclpat10g employees or their beneficlanes 10 accordance With the tenns of the annUity contracts Funding Policy Member contnbutIOn reqUirements are established by thc Board of Trustees of the Teachers RelIrement System Employer contnbulIons are established by statute and may bc amended only by the General Assembly of the State ofGeorgIa The employer contnbutes 9 62% ofthe partlclpat10g employee's earnable compensatIOn Employees contnbute 5% of their camable compensatIOn Amounts attnbutable to all plan contnbutIOns are fully vested and non-forfeItable at all lImes MedIcal College of GeorgIa and thc covered employees made the reqUired contnbulIons of $5,213,692 09 (9 62%) and $2,714,966.54 (5%), respeclIvely - 24- MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHffiIT "D" NOTE I 0 RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Medical Collcgc ofGcorgIa participates m the Georgia Defined ContnbutlOn Plan (GDCP) which IS a smgle-employer defined contnbulIon plan establIshed by the General Assembly of Georgia for the purpose ofprovldmg relIrement coverage for State employees who are temporary, seasonal, and partIImc and arc not members of a publIc rctIrement or pensIOn system GDCP IS admmlstered by the Board of Trustees of the Employees' RetIrement System of GcorgIa Benefits A member may rellre and elect to receive penodIe payments after attamment ofage 65 The payment Will be based upon mortalIty tables and mterest assumplIons to be adopted by the Board of Trustees If a member has less than $ 3,500 00 credited to hlslher account, the Board ofTrustccs has the oplIon of requmng a lump sum dlstnbullon to the member m lIeu ofmakmg penodle payments Upon the death of a member, a lump sum dlstnbutlOn equalIng the amount credIted to hlslher account WIll be paid to the member's dcslgnated beneficIary Benefit provIsIOns arc establIshed by State statute Contributions and Vesting Member contnbulIons are seven and one-halfpercent (7 5%) of gross salary There are no employer contnbutlOns ContnbutlOn rates are cstablIshed by State statute Earnmgs are credIted to each member's account m a manner establIshed by the Board of Trustees Upon termmatlOn of employment, the amount of the member's account IS refundable upon request by the member. Total contnbulIons made by employees dunng fiscal year 2002 amounted to $226,32401 which represents 7 5% of covered payroll These contnbullons met the requirements of the plan EARLY RETIREMENT PENSION PLAN Plan Description The Medical Collegc of Georgia (MCG) Early Retuement Pension Plan (ERP) IS a smgle-employer defined benefit pensIOn plan admmIstered by WillIam M Mereer, Incorporated The plan was deVised by MCG as a means of manpower reduclIon and was approved by the Board of Regents of thc Umvcrslty System of Georgia (BOR) effectIve January 1,2000 The manpower reductton plan was deSIgned to allow vested employees aged 55 or employees ofany age With 25 years of credItable SCfV1ce to retue WIthout penaltIes as applIed by the Teachers Rellrement System of Georgia (TRS) for early retIrement The plan would allow for all partIcIpants to relIre as If they were vested and aged 60 or had attamed 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 dunng normal busmess hours - 25 - \1EDlCAL COLLEGE OF GEORGIA NOTES TO THE FIl\ANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 10 RETIREMENT PLAl\S EARLY RETIREMENT PENSIOI' PLAN Funding Policy The plan IS to be funded by the purchase of an annUIty utilizing salary savings of departed employees The fundmg penod lor the annuity IS 15 years The fund sources that provIded for an employees salary, as of December 31, 1999, would be responsible for fundmg the annUIty to proVIde the retlTee benefits There IS no addItional fundmg cost to the employee/rellree, BOR, or the State of GeorgIa for this plan SInce this plan was not pre-funded, \'ICG IS takIng an aggressive approach to collect and depOSit as much Into the annuIty fund m the earlier years as IS pOSSIble, thereby realizmg a greater return on mvestmenl Annual Pension Cost and ~et Pension Obligation The ERP's annual pension cost and net pensIOn obligallon for the fiscal years 2001 and 2002 were as follo\\s FISCAL YEAR 2001 Totdl MCG Other AsepreclatJon Total Opernlmg Upc:rlSC'S S 60,393,510 05 $ 9,664,65658 S 52,090.32869 S 6.407,151 97 $ 1,118,372 33 $ 10,754,372 90 16,964,44951 2.002,60141 9,795,75969 4 792,574 78 299,60824 9,645,746 77 542,780 79 522,699 98 226,096 78 63,08262 30,33690 223,866 28 518.996 67 I ,064.829 07 81,05934 36,41992 45,771 38 311,44518 25.2U124 1<8,43754 -7,51923 36,62533 293.55610 264,632 13 8,765,073 54 8,088.704 77 7,203,682 25 1,814,063 82 291,19779 3.941.14954 S 56 249,639.63 S 20..19.:6,14200 S 69671 081 27 $ !32WS::8n Sa ! 76M2! 36 5..25 If} 32W NillUrnl ClasufiCjll!OD SalanLs raculty Staff Employee Benefits rravel Schobrshlps aoo Fellowships Utilities \upphes and Other >emeos J)epret.lauon Toml Operating Expcn~ Plant OperationS and Mamtenance 'icholarshlps and Fellllwshms tunet100DI ( Ia.c;aficatlon Auxlhary m1LTIJIlSes Patlenl Cpre Unallocated DepreclallOn lotal Operatmg EXlXIlse> $ 3,560.88673 1,044.67472 7,22470 S 1,275.882 C>4 S 66,809,93643 602,82933 17,362,48813 10,43048 IX9,73184 $212,075,098 12 62,510,73258 1,816.250 37 12500 S 1,261.386 12 2,702,18291 75233 168,73933 347,17844 2,219,54595 5.090.48985 1,919,600 2J S 'l.2Y8~19 34' 82 S I 261 711 94 2168tJ1682 S 4.l2U5.Q.2J 73.181,65854 'a Sill890 29' S II ,0;;60,590 42 S II 0;;60 5QM;! 107,374,093 12 II 560 0;;90 42 SiD2 ~800 61 - 31 - SUPPLEMENTARY INFORMATION - 33 - MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENPITURES COMPARED TO BUDGET - (NON-GAAP BASIS) RESIDENT INSTRUCTION YEAR ENDED JUNE 30 2002 SCHEDULE "1" REVENUES State Appropnabons Other Revenues Retained BUDGET ACTUAL (1) VARIANCE FAVORABLE (UNFAVORABLE) $ 114,853,97600 $ 114,103,97600 $ 295,757,954 00 276,594,727 60 -750,()()() 00 -19,163,22640 $ 410611,93000 $ 39069870360 $ EXPENDITURES Personal ServiceS Education, General and Departmental ServiceS Sponsored Operabons Operating Expenses Educabon, General and Departmental Services Sponsored Operabons Cap,tal Outlay Speaal Funding Imbabve Student Educat,on Ennchment Program Research ConsortJum $ 110,492,193 00 $ 107,29072041 $ 177,125,70700 162,46780822 25,653,684 00 87,435,444 00 4,794,764 00 2,302754 00 358,97900 2,448,405 00 27,893,391 57 93,636,360 57 3,725,296 50 2,290,609 90 366 865 00 1,711,18810 3,201,472 59 14,657,898 78 -2,239,70757 -6,400,91657 1,069,46750 12,144 10 -2790600 737,21690 $ 410,611,93000 $ 399,602,26027 $ 11,009,66973 Excess of Revenues over EXpenditures S -8,903,558 67 $_...;;-8.:.,903=:..:.,558=::.67;. (1) Actual amounts were prepared on a prescnbed bas,s of accountHlg that demonstrates compliance WIth budgetary staMes and regUlations of the State of Georgia which IS a comprehensIVe baSIS of accounting other than generally accepted accounting pnncples See notes to the financal statements - 35- ------------- - --- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS) LOTIERY FOR EDUCATION YEAR ENDED JUNE 30. 2002 SCHEDULE "2" REVENUES State Appropnal1ons BUDGET ACTUAL (1) VARIANCEFAVORABLE (UNFAVORABLE) $ 870,37600 $ -=O-=OO:=_ EXPENDITURES EqUipment, Technology and Construction Trust Fund Special Funding 1",~al1ves $ 736,82600 $ 703,22600 $ 133,55000 133,34642 33,60000 20358 $ 870,37600 $ Excess of Revenues over Expenditures $ 33,80358 $====33=,8;,;;0;;,3;;,58;;, (1) Actual amounts were prepared on a prescnbed baSIS of accounting that demonstrates compliance WIth budgetary statutes and regulations of the State of Georgia, which IS a comprehenSive baSIS of accounting other than generally accepted accounting pnnClples See notes to the financial statements - 36- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET (NON-GAAP BASIS) OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 30, 2002 SCHEDULE "3" MEDICAL COLLEGE OF GEORGIA HOSPITAL AND CLINICS REVENUES Other Revenues Retained BUDGET ACTUAL (1) VARIANCE FAVORABLE (UNFAVORABLE) $ 193,500 00 $ 193,500 00 S --=O..:oo:.=.. EXPENDITURES Operating Expenses Education, General and Departmental Services Excess of Revenues over Expendrtures S 193,500 00 $ 193,500 00 $ --=.0..:;0.::..0 $ 00 S_===~O.;;O,;.O (1) Actual amounts were prepared on a prescnbed baSIS of accounbng that demonstrates compliance wrth budgetary statutes and regulations of the State of Georgia, which IS a comprehenSive baSIS of accounting other than generally accepted accounbng pnnClples See notes to the finanCIal statements - 37- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS) OTHER ORGANIZED ACTIVITIES YEAR ENDER JUNE 30, 2002 SCHEDULE "3" GEORGIA RADIATION THERAPY CENTER REVENUES Other Revenues Retained BUDGET ACTUAl(1) VARIANCEFAVORABLE (UNFAVORABLE) $ 3,625,81000 $ 000 $ _ _-3::..:,::..:62:..:5""8;,,,:1,;:.0,;:.00,,- EXPENDITURES Personal Services Education, General and Departmental SeNlces Operanng Expenses Education, General and Departmental Services $ 2,224,653 00 $ 1,401,15700 $ 3,625,81000 $ Excess of Revenues over Expenditures $ 000 $ 000 2,224,653 00 1,401,15700 00 $ _ _",3,,,,62,,,5,,,,8::..:1-,,0-,,00,,- 00 $ ~===.;;0.;;00;;;, (1) The Georgia Radlabon Therapy Center was transferred to MCG Health, Incorporated as part of the establishment of the MCG dln,cal system See notes to the finanCial statements -38- Totals per Amual Supplement Compensated Absences June 30, 2002 June 30, 2001 Adjustments Ash, John M A1bntton, Thomas Andnsl, Larry L Baural, sangeeta Bergeron. Michael Berry, Tammy BIles Lantz Black, Ernest Bowman, Latanya Bradford Robert Branam, Heather S Bray, Carlos M BreaseUe, Wilbam Breltmann Troy Alan Bndges, Frances C Brown Eula S Bums Chnstopher Bynes, Tracy Cartledge, Crystal A. Carvant-Tangel, Marti A Ctuu Fungchow A Chong Raymond Chnstmas. Elizabeth Click Rebecca Coleman Demse Cooper, unda S Coule Ptulhp Dancer. Jl1Tlmte 0 Dalllels, Suffeama DeVaughn, Linda Evans Beth T Finn, Danrel J Flynn PhyUlS H Fuchs Leslie C Gaines. Bndgel Gowan Jimmy l Haas Cheryl Haas, Richard E Hall lena Hallden, VICkIe L Hannah Lenora B Henson John S Holland Debbie F Howdoeshell, Laurhetla Howser Okal 0 Imig John D Jackson, Willynda Jester, DaVId M Johnson. Glenda l Johnson, Melissa Renee Jones, Denise K Jones, Me~nda B Kearney, ~enceC KerWIn, Rebecca L Kluger. MaUhew J Lee Tamers Liang, Yayun utile, Detra I a Long, Crystal McBnde, William MEDICAL COLLEGE OF GEORGIA RECONCILIATION OF SALARIES AND mAVEL YEAR ENDED JUNE 3Q 2QQ2 SCHEDULE "4" - 39- SALARIES TRAVEL $ 21Q 837,482 74 $ 1,692 337 74 15,Q82,51999 -13,878,99355 13Q 24 99261 3,34548 lQ24Q 1,429 87 39QQ5 17Q 72 1,Q36 54 7176 3,47606 1 50516 126 39 6180 89 67519 1,12541 1,QQ591 57143 31467 87676 12396 1,2478Q 334 63 -11 25 51384 5298 46685 5298 51Q 81 51Q 81 5298Q 68874 168 38 -306 00 7Q98 -1,35996 794 7Q 317 88 -1,220 4Q 40983 68550 lQ596 158 94 -868 80 -l,66Q 7Q 17694 -25778 45984 -4368 5298 26490 -649 Q5 -15528 -811 16 5298Q -3175Q -1829 QQ 5298 -155 Q7 600 81 Mcleod, Kyle Mellick, larry Miller, Mike MfShoe, Shelly Mo Xlanmlng MUSIC Penny A Newman. L 0 Newton Andrew Nussbaum Juhan J O'Conner Marsha OraClon, Amy R Owen. Mary Ann Owensby Knsty Parker, Maroe A Parks WlIrsha J Passmore Gregory Pearson, Thomas P Peavy Sherne N Peckham, Herbert Pelper, Stephen PeloqUin Cindy Perry. Stephanie Peler-Kala~n1c, Jasna Poduslo Shirley Poon AIysla Poorbaugh Susan Poteet, Mary Rachels, Teresa Rahn, Damel Roberts Mary V Rosenkoeuer. Marlen Scar1ett,Beverty Schrelhofer, Derek A Schwartz, Richart! SISCO, Jerry Smith lisa R Sneed Teresa F Slachura, Max E StacyI Phillip Steadman Clayton 0 Slurgln, Angela Tarver, Beverty Thompkuls, Lenora Thompson. KeVIn R Thompson, Mason P Thompson Penelope A Turner. David Vernon, Brenda L Walker, Michael WhIle RIChard White, Sheila Wiles, l-lenry Willcox Barbara W~hams, G~bert Wingard Chnstopher Woods, Vlf'Qlma Unldenhfied Vanances MEDICAL COLLEGE OF GEORGIA RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30 2002 SCHEDULE "4" SALARIES TRAVEL $ 794 70 1 334 70 21294 5298 $ 2,95998 2,48582 14196 101722 -24850 18049 1,05860 15894 144 55 111 96 -72430 158 94 653 Q4 89230 40385 90850 5298 5298 31850 -168599 48123 37086 -$64 00 158 94 68750 1,55514 47700 40560 -1 897 B6 799 50 254 90 11540 122 40 -91 28 51081 -1,21090 48123 264 90 2,017 69 2,261 58 -1 07682 1 33505 158 94 2,94915 376966 74376 -62824 68125 264 90 14196 4B800 42232 14,78888 124,18983 $ 212,D75[09832 $ 1[816[250 37 see notes to the finanCIal statements - 40- MEDICAL COlLEGE OF GEORGIA RECONCILIATION OF PER RIEM AND FEES YEAR ENDER JUNE 30 2002 SCHEDULE "5" Totals per Annual Supplement Adjustments BaITS, Joseph Bowman, Kimberly Boyd DaVIS, VIrginia Dixon, Clinton Gambrell, Robert C Gilleland Brad E Graham-Ga1"Cla Judy Gramling, Joshua A GUIon, Kent Jones, Theron Kaldas, Eman Kavll, Meena Lightsey, Anon L Linder, Charles W Lohse, Jennifer E McCord, Sheila MIddleton, Tamsis Mills, Thomas M Mozallan, Mahmood Penmston. TIm Poole, Charles R,ley Calhenne Rudow, Gabnel W Shull, Jess'ca G Strong, William B Totals Umdenbfied Vananee Totals per Report TYPE PAYMENT FEE AMOUNT EXPENSE AMOUNT TOTAL $ 13,658,890 94 $ 307,36919 $ 13,966,260 13 Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees Other Fees 27080 2744 5298 22792 2,19680 27080 2,039 B4 27080 12544 26400 54272 10000 1,87648 3,28762 1,00000 35490 4396 2,322 82 2,706 48 7330 20264 26490 8000 27080 17,806 87 27080 2744 5298 22792 2,196 80 27080 2,039 B4 27080 12544 26400 54272 10000 1,87648 3,28782 1,000 00 35490 4396 2,32282 2,70648 7330 20264 26490 6000 27080 17,806 87 $ 13,695,55125 $ 307,36919 $ 14002,92044 -43,629 38 $ 13,959,291 06 See notes to the finaneal statements - 41 - SECIION" AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUES nONED COSTS MEDICAL COLLEGE OF GEORGIA AUDITEE'S RESPONSE SUMMARY SCHEDULE or PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMEI\T FINDI\lGS AND QUESTIONED COSTS FINDING CONTROL NUMBER A;\/D STATUS FS-512-01-01 Partially Resolvcd - Scc Corrcctlve ActIOn/Responses CORRECTIVE ACTION/RESPONSES REVENUESIRECEIVABLES/RECEIPTS Inadcquate DocumentatIOn Fmdmg Control Number FS-512-lll-01 As noted, thc findmg has been partIally resolved The weakness that stili nceds additional efforts Involves thc InstItutIOn ha\ Ing adcquatc documentatIOn that supports defiCIt balances In restncted accounts To assIst In correcttng thiS ISSUC, the InstItution Will begm on February 3,2003, USIng the control feature ofthe PcopleSoft financIal reportIng system that Will not allow expendItures to he processed wIthout sufficient fundmg and/or project end date By June 30, 2003, the Institution Will review all restncted accounts to ensure that any defiCit balance IS supportcd with adequate documentatton of fundIng avaIlabIlity S!:'CTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 2002 FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Fmdmg Control Number FS-5 I2-02-0 I Dunng fiscal year 2002, the Board ofRegents ofthe UnIversIty System ofGcorgla converted uruts of the UnIversity System from the cXlstmg computer systems to the new PcopleSoft System In January of 2002, Medical College of Georgia placed thIS accountmg system mto productIOn The managemcnt of Medical Collegc of GeorgIa IS responsIble for Implementmg procedures to establish and mamtam adequate control over the operatIOn, uulizatlOn and mtegnty of their data processed With the PeopleSoft System We encountered problems WIth the financial data presented by the Collcgc The College's failure to establish and adhcre to a final closmg for the year ended June 30, 2002. created a sItuatIOn where data presented for audit was not complete. ExtenSive audit procedures were necessary to detenmne the validIty of the mformatlOn proVIded To reduce the nsk ofrcportmg mcomplete mformauon, the College should work WIth the Board of Regcnts Central Officc to develop proccdures that Will result ill complcte reportmg of all financial data m a more efficlcnt and umely manner REVE~1JES/RECEIVABLESIRECEIPTS Restncted Funds DefiCIt Balances Fmdmg Control Number FS-5l2-02-02 Our exammatlOn mcluded a revIew of source documentahon supportmg Revenues!Recelvables! ReceIpts for Rcstncted Funds Our review of twenty-one Restncted Funds WIth defiCit balances revealed that fundmg was not available for ten proJccts WIth dcfiCIt balances totaling $53,851 70 Restncted funds should not be expended m proJccts that do not have funds aVaIlable The defiCit balances are a result ofmanagement's failure to establish controls to ensure that grants are available and that relmbursemcnt requests are made m a tImely manner The College should Implement procedures to ensurc that all grants are current, that funds arc aVailable to cover cxpendltures and that relmburscment requests are made m a hmely maJJner The College should revlcw mdlvldual Restncted Funds to determme Ifall aVailable fundmg was requested, Ifthe receIpts were correctly posted to the funds, and Ifany other sourcc offundmg can be used to fund the defiCits -I- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR EI\1J)ED JUNE 30, 2002 FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS REVENUESiRECEIV ABLESiRECEfPTS EXPENDITURESiLLt\BILITIESiDISBlJRSEMENTS GEI\ERAL LEDGER Agency Funds - DefiCienCies m Accountmg Procedures Fmdmg Control Number rS-5l2-02-03 A review of accounting procedures utl1lLed by the College m mamtammg their Agency Funds dlscloscd the followmg dcficlencles At June 30, 2002, the College's SUbSidiary rccords rcflected twenty-eight Agency Funds with defiCit balances The College was unable to provide documentatIOn of funds aVailable to cover the defiCits Agency Funds should not be disbursed from proJccts that do not have funds aVailable 2 Rcccipts and disbursements for Agency Funds were not supported by adequate documentatIOn and were posted to mcorrect accounts All receipts and disbursements should be supported by adequate documentatIon to demonstrate proper receipt, disbursement and accountmg of funds The College should ensurc that receipts and disbursements are posted to the proper Agency Fund accounts 3 The College's subSidiary records for Agency Funds did not agree With the general ledger SubSidiary records should be supported by the General Ledger These defiCiencies are the result of management's fUilure to establIsh controls to momtor all Agency Funds actiVity, to ensurc that funds are available for disbursement and to ensure that correct acwunt codes are used by accountmg personnel The College should Implement proccdures to ensure that funds are available to cover disbursements and that the correct account codes are used when disbursements are made The College should review indiVidual agency funds to deterrmne Ifrccelpts and disbursements werc po;ted correctly to the funds SUbSidiary records should be revIewed to ensure that amounts agree With the general ledger EXPENDITURESiLiABILlTlESiDlSBURSEMENTS EMPLOYEE COMPENSATION Inadequate Aeeountmg Procedures Fmdmg Control 1\ umber FS-5l2-02-04 Thc aceountmg procedures of the College were msufficlent to provide adequate control over the Expendltureo;iLlabllItlesiDlsbursements and Employee CompensatIOn control catcgoTles as noted below -2- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURESfLIABILlTIESfDISBURSEMENTS EMPLOYEE COMPENSATION Inadequatc Accountmg Procedures Finding Control Number FS-512-02-04 Salary, travel and per diem and fees listmgs as submitted by the Medical College ofGeorgJa to the Georgia Department of Audits did not reconcile to the Collegc's general ledger Umdentlfied vanances of$14,788 88 for salanes, $124,189 93 for travel and $43,629 38 for pcr diem and fecs eXisted at June 30, 2002 2 The travcl listmg as submitted by the Medical College of Georgia mcluded thud party payments m the amount of$138,489 90, and payments to non-employees m the amount of $29,271 08 Extensive audn procedures were necessary to IdentIfy third party payments by cmployee and to reclasSIfy payments for non-employces Thesc deficlenclcs occurred as a result of management's faIlure to reconcile salary, travel and per dlcm and fees SUbSidIary reports on a quarterly basiS and the faIlure to establish procedures to ensure that travel paymcnts are properly reportcd by employec The College should establish controls to ensure that the salary, travcl and per diem and fees listmgs submlttcd to the Georgia Department of Audits arc properly clasSified and reconciled With thc general ledger GENERAL LEDGER Inadcquacles In Control Over SUbSidiary Ledgers Finding Control Number FS-512-02-05 Our exammatlOn mcluded a revIew of the procedures utIlized by Medical College of Georgia m recording transactIOns to the variOus modules compnsmg the PcopleSoft accountmg software. Our testing rcvealed that, at June 30, 2002, the College's general ledger module did not balancc wllh the SUbSIdiary modules ThIs condItIOn was pnmanly due to errors In postmg subSIdiary records dunng the conversIOn from thc old accountmg system to the new PeopleSoft accountmg system and due to transactions bemg posted to the general ledger module rather than the appropnate SUbSidiary modulcs The College dId not proVide a reconciliation of the general ledger balances to the subSidiary rccords which resulted In extenslvc work by the auditors to IdentIfy reconCIlIng Items at June 30, 2002 Management's failure to ensure that subSidIary records are reconcIled With the gcneralledger causes Intcrnal reports to management, generated from the SUbSidiary modules, to be Inaccurate and mlslcadmg This conditIOn can lead to erroneous deciSIOns by thc College's managcment and result In Inaccuratc reportmg of finanCial mformatlon -3- MEDICAL COLLEGE OF GEORGIA SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 2002 FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS GENERAL LEDGER InadequacIes In Control Over SubsIdIary Ledgers FIndmg Control Number FS-512-02-05 To ensure accurate and tImely reportIng offinancIaI mformatlOn from subsIdIary records, the College should post transactIOns corrcctly to the subsidiary ledgers rather than as Journal entnes In the general Icdger The Collegc should develop Internal accountIng controls and procedures to ensure that reconCIlIatIons of subSidiary lcdgcrs and the general ledger are performcd on a regular basIS CAPITAL ASSETS Inadequate CapItal Asset Records FIndIng Control Number FS-512-02-06 Our reVIeW of MedIcal College of Georgia's accountIng procedures for the CapItal Asset Management System determIned that procedures In place were Insufficlcnt to proVIde adequate control ovcr thc Collegc's capital assets Thc followmg dcficlencles were noted I EffectIVe July I, 2001, the capitalIzatIOn threshold for eqUipment was Increased from $1,000 00 to $5,000 00. The College failed to reconCile the equlpmcnt component of thc Asset Managcment module as of July 1,2001, With the equIpment mventorybalance as of June 30, 2001 2 Thc Collcge's Asset Managemcnt module dId not reconCIle to the CapItal Ledger 3 Thc Collegc failed to record penodlcals purchased for the Library on the CapItal Ledger These defiCienCies are a result of management's faIlure to Implement adequate polICies and procedures to ensure that thc College's capital assets are properly maIntaIned The College should establIsh appropnate proccdures to strengthen controls and ensure that asscts arc properly accounted for and safeguarded -4-