Audit report, state of Georgia, Savannah State University, Savannah, Georgia, year ended June 30, 1999

A~oc
. p"
Sl5""
i qq~ -')q

AUDIT REPORT STATE OF GEORGIA SAVANNAH STATE UNIVERSITY SAVANNAH, GEORGIA YEAR ENDED JUNE 30,1999

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400
I

SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS -

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

7

D NOTES TO THE FINANCIAL STATEMENTS

8

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

21

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

23

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

2

RESIDENT INSTRUCTION

26

3

LOTTERY FOR EDUCATION

29

4 CHANGES IN INVESTMENT IN PLANT

30

5 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

32

6 RECONCILIATION OF SALARIES AND TRAVEL

34

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
February 2,2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia Members ofthe Board ofRegents ofthe University System of Georgia
and Honorable Carlton E. Brown, President Savannah State University
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) ofSavannah State University as of and for the year ended June 30, 1999. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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 University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the financial statements ofthis departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.
As disclosed in Note I to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. Ifcompensated absences were reported, liabilities would be increased and fund balance would
99ARL-62

be decreased by $930,533.35 as of June 30, 1999, and the net change in fund balance for the year ended

June 30, 1999, would be decreased by $35,359.98.

.

In our opinion, except for the effects on the financial statements of the matters discussed in the third and fourth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 1999, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.

The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. fu addition, we do not provide assurance that Savannah State University is or will become year 2000 compliant, that the University's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Savannah State University does business are or will become year 2000 compliant.

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 G) and the financial schedules (Schedules 2 through 6) are presented for purposes of additional analysis and are not a required part of the financial statements of Savannah State University. Such information has been subjectedto the auditing procedures applied in the audit ofthe financial statements and, in our opinion, except for the effects ofthe 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,
~~..J~ Russell W. Hinton State Auditor

RWH:jb 99ARL-62

FINANCIAL STATEMENTS - 1-

SAVANNAH STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS . JUNE 30.1999

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

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

1.064.933.24

585,629.58 $

679.064.04

76.134.41

550.223.94

$ 731.537.74

41.918.03 848.707.82

$

2,955,985.21 $

731.537.74 $ ===8=:9=:0=,6:=25=.8=5=

$

1.208.684.21

5.637.71

93.075.00

682.597.42

$

$

1.989.994.34 $

550.223.94 550.223.94
$

815.499.79 75.126.06

$

181,313.80

$

965.990.87

$

965.990.87 $

181.313.80 $

890,625.85

.$

2,955.985.21 $

731.537.74 $ _ .........8;a9.0.!.ii.6.25 .8;;;;;5...

The notes to the financial statements are an integral part of this statement -2-

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

845,694.94 $

2,151,958.40 $

638,349.13

$

543,3n.46 $

5,286,231.20

7,875.00

2,173,750.14

679,064.04

76,134.41

- - - - - $ 67,975,984.30

550,223.94 67,975,984.30

$

845,694.94 $

2,159,833.40 $

638,349.13 $ 67,975,984.30 $

543,377.46 $

76,741,388.03

$

2,166,038.30

$

2,166,038.30

$

149,392.35 $

3,524,114.86

5,637.71

93,075.00

393,985.11

682,597.42 393,985.11 550,223.94

$

543,3n.46 $

5,249,634.04

$

632,563.52

213,131.42

$

$

845,694.94 $

-6,204.90 $ -6,204.90 $

$ 638,349.13 638,349.13 $

67,975,984.30 67,975,984.30

$

815,499.79

75,126.06

632,563.52

213,131.42

67,975,984.30

181,313.80

1,598,135.10

$

71,491,753.99

$

845,694.94 $

2,159,833.40 $

638,349.13 $ 67,975,984.30 $

543,3n.46 $ 76,741,388.03

-3-

SAVANNAH STATE UNIVERSITY
COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUNp GROUpS
YEAR ENDEp JUNE 30. 1999

EXHIBIT"B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

28,611,541.59

$

1,903,068.00

96,624.32

$

12,158.05

1,903,068.00 16,365,135.62
587,637.66 17,883.95
392,343.14

27.349.73

6,337.14 $

19,120.00

30,698.49 25,457.14 32,811.28 10,935.53

133.13

23,886.72

197,408.03 9,915.57

$

1,471,903.93

1,471,903.93

1,954,014.72 9,343.00
7,514,373.30

1,954,014.72 9,343.00
7,514,373.30

2,748.00

$

39,507.78 $

2,006,162.59 $

43,006.72 $

10,949,634.95 $

59,137,218.95

$

41,899,599.87

4,184,108.76

212,483.19

$

3,605.50

93,038.60

7,007.03

9,137.51 5,914.28 6,276.13

1,954,014.72 $ 51,345.74

9,343.00 8,453.48
$

455,028.02

1,963,357.72 59,799.22
455,028.02

$

2,015,972.99 $

17,796.48 $

455,028.02 $

48,888,743.30

$

1,903.98

$

1,903.98

$

41,411.76 $

804.283.18

$

845,694.94 $

$ $ -9,810.40 $ 3.605.50

213,804.44 213.804.44 239,014.68 $ 399,334.45

$
$ 10,494,606.93 $ 57,481,3n.37

0.00 0.00 0.00 10,248,475.65 61,243,278.34

-6,204.90 $

638,349.13 $

67,975,984.30 $

71,491,753.99

-5-

SAVANNAH STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES
YEAR ENDED JUNE 30. 1999

EXHIBIT"C"

Net InaeaseJ(Deaease) In Fund Balances

$

The notes to the finandal statements are an integral part of this statement -7-

179,628.40 $

-711,758,81 $ ===-5=3=:2=,1=30=:,4=1=

SAVANNAH STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY Savannah State University is one ofthirty-four (34) State supported member institutions ofhigher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity.

The Board ofRegents has constitutional authority to govern, control and manage the University System of Georgia. 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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit ofthe Board ofRegents ofthe 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 of the Governmental Accounting Standards Board Codification of Governmental Accountin~ and Financial ~ortin~ Standards.

FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use ofthe resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.

Within each fund group, the University's fund balance allocations and designations represent those portions ofthe fun4 balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.

Fund groups and funds presented in the accompanying financial statements are as follows:

CURRENT FUNDS

UNRESTRICTED - The fund used to account for those economic resources over which the University

retains full control to use for purposes of perfoIming the primary functions of the University, 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.

-8-

SAVANNAH STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1999

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 tenn endowment funds. Endowment funds are subject

to the restrictions ofgift instruments requiring that the principal be invested in perpetuity and income only

be utilized. Term endowment funds are similar to endowment funds except that upon the passage of a

stated period oftime or the occurrence ofa particular event, all or part of the principal may be expended.

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 ofinstitutional properties.

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

AGENCY FUNDS

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

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

Contractual obligations for goods and services which have not been received at the end of the 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 ofcontracts

-9-

SAVANNAH STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

NOTE 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING for goods and services. The recognition of encumbrances as expenditures and liabilities is in confonnity with accounting practices prescribed or pennitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures detennined in accordance with generally accepted accounting principles.
Compensated absences represent obligations of the University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $930,533.35 and a related net current year expenditure of$35,359.98 have not been reported in the current funds as required by generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or pennitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation 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 behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities ofcurrent 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 ofincome or a statement ofrevenues and expenses.
BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units ofthe University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of 1998-1999. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation of the appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget :filed with the Administrative Central Office.
-10-

SAVANNAH STATE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1999

EXHIBIT "D"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

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

Resident Instruction Operating Expenses: Sponsored Operations Special Funding Initiative Year 2000 Project

$ 434.353.43 $ 6,180.63 $ 12,673.00

Lottery for Education Equipment, Technology and Construction Trust Fund

$ 6,790.01

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations ofbudget 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.

ACCOUNTS RECEIVABLE Accounts receivable consist of allotments due from the Board of Regents of the University System of Georgia - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from infonnation available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method.

Inventories ofgoods for resale are valued at cost using the first-in, first-out method.

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

MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial infonnation and are presented only to facilitate financial analysis. The columns do not present infonnation that reflects financial position or changes in financial position in

-11-

SAVANNAH STATE UNNERSITY
NOTES TO THE FlNANCIAL STATEMENTS JUNE 30. 1999

EXIllBIT "D"

NOTE1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALlZATION STATUTES AND POLICmS Funds belonging to the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations ofthe United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of .Georgia. .
(5) Bonds, bills, certificates ofindebtedness, 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 Intennediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.
The treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

-12 -

SAvANNAH STATE UNNBRSITY
NOTES TO THE FINANCIAL STATEMENTS ruNE 30. 1999

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

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 ofJune 30, 1999, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

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

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

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

Total Cash Deposits

Carrying
Amount

Bank Balances

Risk Categories

2

3

$ 4,229,796,34 $ 5,684,378.87 $ 296,260.42 $ 370,903.62 $ 5,017,214,83

CATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as ofJune 30, 1999, are as :follows:

Board ofRegents Short-Term Fund Total Return Fund
Total Investments

$. 232,297.60 815.990.85
$ 1.048,288,45

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

NOTE 3: INVESTMENT IN PLANT .

The following is a summary ofInvestment in Plant fixed assets as of June 30, 1999:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections
Total Investment in Plant

$ 325,975.16 44,775,694.48 7,725,366,94 10,449,035,83 4.699,911.89
$67,975,984.30

-13 -

SAVANNAH STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
ruNE 30.1999

EXHIBIT "0"

NOTE 4: RISKMANAGEMENT
Savannah State University is a participant in the Board ofRegents ofthe University System ofGeorgia Health Benefits Plan, which is a self-insurance program ofhealth and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements ofthe Board ofRegents ofthe University System of Georgia - Administrative Central Office. All units ofthe University System of Georgia share the risk ofloss for claims ofthe 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 $1,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board ofRegents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordaIice with the Health Benefits Plan as established by the Board ofRegents.
The Department ofAdministrative Services (DOAS) has the re~onsibility for the State of Georgia ofmaking and carrying out decisions that will minimjze the adverse effects of accidenta110sses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board ofRegents ofthe University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program ofprofessional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out ofthe performance of their duties or in any way connected therewith.. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 5: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Savannah State University participates in the Teachers Retirement System of Georgia (IRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and either benefits for teachers of the State of Georgia. IRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

-14-

SAVANNAH STAIE UNNERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

NOTE 5: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1999, the employer contribution rate was 11.95% for covered employees. In addition, the University contributed 3.46% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1999 1998 1997

100% 100% 100%

$ 1,462,909.44 $ 1,474,701.16 $ 1,590,288.68

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 ofRegents of the University System of Georgia, under which it may purchase annuity contracts for the purpose ofproviding 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 ofthe 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 oIlly by the General Assembly ofthe State of Georgia. The employer contributes 8.34% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to.all plan contributions are fully vested and non-forfeitable at all times.

The University and the covered employees made the required contributions of $291,322.93 (8.34%) and $174,752.02 (5%), respectively.

-15 -

SAVANNAH STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "0"

NOTE 5: RETIREMENT PLANS

GEORGIA DEFINED .CONTRIBUTION PLAN

Plan Description Savannah State University participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time 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.

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. Ifa member has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option of requiring 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-half percent (7.5%) of gross 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 ofTrustees. Upon tennination of employment, the amount of

the member's account is refundable upon request by the member.

.

Total contributions made by employees during fiscal year 1999 amounted to $35,950.15 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan.
NOIE 6: LEAVE POLICIES

Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)

Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.

Certain employees who retire with a minimum ofthree months ofunused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.

-16 -

SAVANNAH STATE UNIVERSITY .
NOTES TO THE FINANCIAL STATEMENTS ruNE 30. 1999

EXHIBIT "D"

NOTE7: CONTWGENCmS

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 tenns. The amount ofexpenditures which may be disallowed by the grantor cannot be detemrined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position.

Litigation, claims and assessments filed against Savannah State University (an organizational unit of the Board ofRegents ofthe University System of Georgia), ifany, 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, 1999.

NOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31,the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System of Georgia. It is the policy ofthe Board ofRegents to pennit employees ofthe University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the University System ofGeorgia 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, 1999, there were 129 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1999, Savannah State University recognized as incurred $285,265.83 of expenditures, which was net of $86,622.07 ofparticipant contributions.

NOTE 9 : ENROLLMENT

The equivalent full-time student enrollment of Savannah State UniverSity was as follows:

Regular Term Fall Semester, 1998 Spring Semester, 1999

1,646
U12

Average

Summer School, 1998

-17 -

SUPPLEMENTARY INFORMATION -19 -

SAVANNAH STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30.1999

EXHIBIT -E"

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

RESIDENT INSTRUCTION

LOITERYFOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$

811,244.29 $

122,261.24

$

131,427.71 $ 1,064,933.24

308,245.02

$

270,758.78

6,625.78

585,629.58

134,959.70

544,104.34

679,064.04

72,674.41

3,460.00

76,134.41

642,697.93

642,697.93

Total Assets

$ 1,969,821.35 $

122,261.24 $

818,323.12 $

138,053.49 $ 3,048,459.20

LIABILITIES AND FUND BALANCES

Liabilities

Accounts Payable

$

Salaries Payable

Student Deposits

Deferred Revenue

Tuition and Fees

Due to Other Fund Groups

Total Liabilities

$

Fund Balances

Unrestricted

1,074,741.34 $ 5,637.71
450,294.90
1,530,673.95 $ 439,147.40

121,385.04 $
121,385.04 $ 876.20

5,576.98 $ 93,075.00 199,208.20 92,473.99 390,334.17 $ 427,988.95

6,980.85 $
33,094.32 40,075.17 $ 97,978.32

1,208,684.21 5,637.71
93,075.00
682,597.42 92,473.99
2,082,468.33
965,990.87

Total Liabilities and Fund Balances $ 1,969,821.35 $

122,261.24 $

818,323.12 $

138,053.49 $ 3,048,459.20

see notes to the financial statements.

-20-

SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED
YEAR ENDED JUNE 30, 1999

EXHIBIT"P

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures
Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (SurplUS)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1,1998

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTMTIES

TOTAL

$ 23,738,701,89 $
131,969.25 7,124.90
$ 23,877,796.04 $

279,500.00 $ 279,500.00 $

4,360,268,07 $
6,284,92 700.73
4,367,253,72 $

233,071.63 $ 28,611,541,59

35,134,01 2,089.94

173,388,18 9,915.57

270,295.56 $ 28,794,845,34

$ 23,603,596,25 $

285,414.18 $

$ 4,184,108.76

236,729,73 $ 24,125,740,16 4,184;108.76

89,433,10 1,500.26

657,22

-27,00

89,433,10 2,130.48

$ 23,694,529,61 $

285,414,18 $ 4,184,765.98 $

236,702.73 $ 28,401,412,50

$

183,266.43 $

255,880.97

$ -5,914.18 $ 6,790,38

-213,804.44 -31,316.70 $ 459,305.65

$ 33,592.85 $ 64,385.47

-213,804.44 179,628.40 786,362.47

FUND BALANCES JUNE 30. 1999

$

439,147.40 $

876.20 $

427,988.95 $

97,978,32 $

965,990,87

see notes to the fInanclal statements,

21

See notes to the financial statements.

-23-

SAVANNAH STATE UNIVERSITY

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

. YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1999

The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that may adversely affect the government's operation beyond calendar year 1999.

Savannah State University is a member ofthe University System of Georgia. As such, most of the mission critical systems of the institution are supported by the central office of the Board of Regents Office of Information and fustructional Technology. Savannah State University however, has inventoried computer systems and other equipment not supported by the central office. Systems not found to be year 2000 compliant were either replaced or upgraded. The University assigned the duty of identifying, reporting and remediating year 2000 issues to a task force comprised of Information Technology professionals and department managers. The task force is managed and coordinated by a Professor of Computer Sciences and the Director ofComputer Services. The following stages have been identified as necessary to implement year 2000 compliant systems.

Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.

Assessment Stage - The actual process ofidentifying all systems and individual components ofsystems to check for compliance.

Remediation Stage - The time when changes are made to systems and equipment.

Validationffesting Stage - The process of ensuring that the changes made to systems and equipment

will produce a year 2000 compliant system.

.

It will be necessary for the University to progress through all four ofthese stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.

The status of year 2000 issues for mission critical systems are as follows:

Systems Supported by the Board of Regents

The College and University Fund Accounting System has been remediated, validated and tested.

The Regents Budget Reporting System is reportedly year 2000 compliant. The awareness, assessment, validation/testing phases were completed in 1997.

The Regents Payrol1/Personnel System has been remediated, validated and tested.

See notes to the financial statements.

-24-

SAYANNAB STATE UNNERSITY

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED ruNE 30. 1999

Systems Supported by the Board of Regents
The Regents Property Inventory System is reportedly year 2000 compliant. The awareness, assessment,. validation/testing phases were completed in 1997.
The Banner Student Information System is supported by SCT Banner, Inc. The year 2000 version has been released and distributed to the University.
Systems Supported by Savannah State University
University computer center mainframe hardware systems are reportedly year 2000 compliant.
Programs of institutional operating systems in support of student information system and financial systems are reportedly year 2000 compliant.
A written contingency plan has been developed for all mission critical systems. Management required that all systems be compliant and the written contingency plan developed and tested between all critical areas.
Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. While management is confident that the University will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the University does business will be year 2000 ready.

See notes to the.financial statements.

-25 -

SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUpGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 1999

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$

18.073.787.00

$

5.664.914.89 $ _ _.....:1..:.7.r.:.n.:.:3~.8:::5::::9:.:..7..:..1

1,903,068.00 102,961.46 $

..;.;1.9...1,;.;:;2O=.00~

$

23.738.701.89 $

17.n3.859.71 $

2.006,029.46 $

. ;.;19;.:.,1;.;;;20. ;.;.", 00, -

EXPENDITURES

Personal Services:

Education. General and Departmental Services

$

Sponsored Operations

Operating Expenses:

Education. General and Departmental Services

Sponsored Operations

Capital Outlay

Special Funding Initiative

Year 2000 Project

$

Excess of Revenues over Expenditures

$

18.556.090.52 $
4.611.213.10
373.569.63 . 62.723.00
23.603.596.25 $
135.105.64 $

1,704.751.28 16,069,108.43
$
17,n3,859.71 $ 0.00 $

2,005.360.46 $

17,796.48

2,005.360.46 $ 669.00 $

1..;.;7..:.:,7..;;96.~..;.;48,,1.,.3;;;;2.352. .

(1) To eliminate tuition waivers not budgeted

See notes to the financial statements.

-26-

SCHEDULE .Z'

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

19,976,855.00

$

19,976,855.00 $ 19,976,855.00 $

0.00

23.560,856.06 $

-260,887.69

23,299.968.37

24.639,6n.OO

-1,339.708.63

$

43.537,711.06 $

-260,887.69 $

43,276.823.37 $ 44.616.532.00 $

-1,339,708.63

$

18.556,090.52

1,704,751.28

$

18,556.090.52 $ 18.659,280.00 $

1,704.751.28

3,024,231.00

4.611,213.10 $ 16,069,108.43 2.023,156.94
373,569.63 62.723.00

-260.887.69

4,350,325.41 16,069.108.43 2,023.156.94
373.569.63 62,723.00

4,384.649.00 15.634,755.00
2.496,178.00 367,389.00 50.050.00

103,189.48 1,319.479.72
34.323.59 -434.353.43 473,021.06
-6.180.63 -12,673.00

$

43,400,612.90 $

-260.887.69 $

43.139,725.21 $ 44,616,532.00 $

1,476.806.79

$

137,098.16 $

0.00 $

137,098.16

$

137.098.16

-Xl-

SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30,1999

SCHEDULE "3"

REVENUES State Appropriations
EXPENDITURES Equipment, Technology and Construction
Trust Fund Special Funding Initiatives

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

- - - - - - - 279,500.00 $

279,500.00 $

0.00

$

180,790.01 $

174,000,00 $

104,624.17

105,500.00

$

285,414.18 $

279,500.00 $

-6,790.01 875.83
-_5.;....9_14_.1_8_

Excess of Revenues over Expenditures

$ ===-=5:::,9=14:=.1=8=

$ ===-=5=,9::::14,;,;,,1=8=

See notes to the financial statements,

-29-

SAVANNAH STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30,1999

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

BALANCE JULY 1,1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

$

325,975,16

35,389,112,81

7,654,672.59

9,657,291,24 $

852,734.85 $

373,819,96

4,454,325,57

245,349.12

$

57,481,377,37 $

1,098,083.97 $ ===3=7::3:5,8=19=:,9=:6=

See notes to the financial statements.

- 30-

SCHEDULE "4"

ADDITIONS

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

$

$

1,883,320.37

$

7,514,373.30 $

11,112.00

70,694.35

$

9,343.00

444,153.22

-237.20

BALANCE JUNE 30,1999
325,975.16 44,775,694.48
7,725,366.94 10,449,035.83 4,699,911.89

$

1,954,014.72 $

9,343.00 $

7,514,373.30 $

455,028.02 $ ====67=,=:97:=5::::,9,;,84=.3;;;;;0,=

- 31 -

SAVANNAH STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30.1999

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTTERY FOR

AUXILIARY

EDUCATION

ENTERPRISES

NET INVESTMENT IN PLANT

Investment in Plant Facilities

RESTRICTED

Designated for Subsequent Years' Expenditures

UNRESTRICTED

Designated

For Bus Replacement Reserve

For Intercollegiate Athletics

$

-190,452.99

For Inventory Reserve

$

132,528.42

544,104.34

For Renewals and Replacements Reserve

For Subsequent Years' Expenditures

41,841.49 $

For Year 2000 Project

7.327.00

For Uncollectible Accounts

28.398.89

32.496.11

SurplusJDeflcit

Regular Lottery for Education

270.893.09 ______ $

$

439,147.40 $

--.;8;:;.:7..:,6.::20:_ 876.20 $

427.988.95 $

STUDENT ACTIVITIES
97,978.32 ..:9::.,:7.z::.9:.:.7,::8.:::::32:..

$

439,147.40 $

876.20 $

427.988.95 $ .....-=-=_9.7.,l;.9.7,;;;;8.;;:32:o.,

See notes to the financial statements.

-32-

SCHEDULE "5"

RESTRICTED

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$

67,975,984.30 $ _--:.67:..r.,9::.:7~5J.:,9;::,84.:.:..3::::0~

$ _ _-..:.:18;;.:1~,3:.:.13:::.:.:::80::...

$ _ _-"",18,-,1,1.;;,3;";.13,,,,.8;;.;0,-

$

$

$

181,313.80 $

$

44,260.22

594,088.91

$

44,260.22

-190,452.99

676,632.76

594,088.91

139,819.81

7,327.00

60,895.00

-6,204.90

-6,204.90 $

638,349.13

264,688.19

876.20

$

1,598,135.10

-6,204.90 $

638,349.13 $

67,975,984.30 $

69,755,433.20

-33-

SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30,1999

SCHEDULE "6"

Totals per Annual Supplement

Accruals June 30, 1998 June 30, 1999

Adjustments

Shared Services on Jointly Staffed Personnel

Armstrong Atlantic State University

Eason,

Thomas

Richardson, Joseph

Georgia Southem University

Winston,

Craig

Atlanta Metropolitan College

Silver,

Joseph

SALARIES

$

17,188,839.53 $

TRAVEL 353,612.84

-10,719.88 5,637.71

-10,523,61 -6,723,00
-2,000.00
-538.25

$

17,163,972.50 $ ====35=3::::,6=:12:=.84===

See notes to the financial statements.

- 34-

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

SAVANNAH STATE UNIVERSITY
AUDITEE'SRESPONSE
SUMMARY SCHEPULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

548-96-01 548-96-02 548-96-03 FS-548-98-01 FS-548-98-02 FS-548-98-03 FS-548-98-04 FS-548-98-05 FS-548-98-06 FS-548-98-07 FS-548-98-08

Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

REVENUES/RECEIVABLEIRECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: 548-96-01

The University has increased its collection efforts to reduce accounts receivable. Uncollectible debts under $100.00 will be gradually written offunder House Bi111536, a.C.G.A. Section 50-1617. Surplus funds will he used to increase the reserve for uncollectible debts in excess of$100.00. The institution has put controls in place to ensure deferments are supported by Financial Aid.

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-548-98-01

The University has obtained software from its bank that enables the University to have real time access to its accounts. Procedures have been put in place to utilize this software to post entries in a more timely manner and reduce the number of reconciling items. The bank statements will continue to be monitored to ensure items are not allowed to remain unresolved for extended periods of time.

Additionally, the University has a policy to void checks over ninety (90) days old. The bank statement will be monitored to ensure this policy is adhered to by the appropriate personnel.

- 1-

SAVANNAB STATE lJNNERSITY AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
EXPENDITURESILIABILITIESIDISBURSEMENTS Deficit Cash Balance Finding Control Number: FS-548-98-02
A dollar limit has been established for annual scholarship distribution and a source of funding has been identified to fund the deficit for the Naval Reserve Officers Training Corps Room and Board Scholarship. The program is extremely important to the Institution and must continue. Equally important is the identification of funds to reduce the deficit systematically. Management has established a goal of eliminating the deficit over a five year period.
EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-98-03
The Director of Financial Services is now meeting with the Accounts Payable staff on a weekly basis. These meetings serve as both a training session for personnel and a means to monitor the process. The Director reviews the Accounts Payable list on a monthly basis to ensure outstanding balances are liquidated and the appropriate journal entries are made, ifnecessary.
FUND BALANCE Deficit to be Funded from Subsequent Years' Operation Finding Control Number: FS-548-98-Q4
The Vice President ofBusiness and Finance, the Director ofBudget and Financial Analysis and the Athletics Director have met through most of fiscal year 1999 on a monthly basis to monitor the University's Intercollegiate Athletics' budget. The deficitdid not grow in fiscal year 1999 and a small amount was applied from this year's activities to reduce it. Additionally, the new Athletic Director has secured new sources of revenue, inclusive of the creation of an athletic foundation. Management fully expects a more aggressive reduction in the deficit as it moves forward.
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-98-05
Procedures have been devised to secure the necessary documentation required to make immediate postings to the appropriate account without having to channel these funds through the clearing account. In the event this is not possible, this account will be monitored on a monthly basis and researched to take the appropriate action. Additionally, the University's bookstore error brought to
-2-

SAVANNAH STATE UNIVERSITY AUDIIEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-98-05
the auditor's attention by Savannah State University's personnel has been corrected by a change in accounting procedure for recording sales to ensure the revenue is not duplicated. Procedures have been established to channel all adjustments for Restricted Funds to the Director of Contracts and Grants. The Director also has access to various reports for monitoring. Procedures have been established to fOlWard copies of all documentation on revenue received to the Director ofFinancial Services. The Director monitors the receipt ofrevenue on a monthly basis to ensure it is posted . correctly. Accounting personnel will appropriately label all auditor's reports as such and place in a secure location for presentation during the audit.
GENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-98-06
Procedures will be established to more diligently monitor grant accounts to ensure that funding is spent within the specified time period and to return any unspent funds to the grantor in a timely fashion.
GENERAL LEDGER Inadequacies in Travel Advances/Prepaid Travel Finding Control Ntimber:FS-548-98-07
Procedures have been established to monitor the travel advances and prepaid travel accounts on a monthly basis. All employees receiving a travel advance will be required to sign an authorization for a reduction in payroll for the amount ofthe advance ifit is not cleared within three business days subsequent to return from travel. This policy will be enforced. Additionally, letters are sent to employees on a monthly basis related to outstanding travel authorizations notifying them of the University's intent to cancel unless expenses are claimed. The Director of Financial Services monitors the General Ledger History on a quarterly basis to ensure items are posted correctly.
-3-

SAVANNAH STATE UNNERSITY
AUDITEE'SRESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS .YEAR ENDED ruNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

GENERAL LEDGER Inadequate Documentation of Journal Entries Finding Control Number: FS-548-98-08

The University has procedures to ensure documentation is attached to all journal entries. This policy will be enforced. During the year under review, several journal entries could not be located. The University will perform periodic audits ofjournal entries and enforce existing procedures to ensure journal entries are filed correctly and signed out when in use by University personnel.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-548-98-01 FA-548-98-02 FA-548-98-03 FA-548-98-04 FA-548-98-05 FA-548-98-06 FA-548-98-07

Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

ALLOWABLE COSTS/COST PRINCIPLES Employee Compensation Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-02

The Institution will establish and enforce procedures to ensure that time and effort reports are the basis for salaries charged to the Title ill program. Additionally, action will be taken to ensure that all required information is included on the time and effort reports. Procedures will be established to document and communicate to the appropriate personnel that release time has been granted.

-4-

SAVANNAH STATE UNWERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
DAVIS-BACON ACT Payment ofPrevailing Wage Rates Not Monitored Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-03
All affected personnel have been made aware of this requirement. A procedure is being established to make sure that the locality wage information is secured from the U.. S. Department ofLabor and that a comparison is made to wages paid on the project to ensure compliance with the Davis-Bacon Act.
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Higher Education -Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-04
The inventory control system has been revised to include Federal agency source code and program titles. Records from July 1996 to the present have been revised to include the aforementioned information. The University will continue in its efforts to revise records prior to July 1996 where possible. Physical inventories are diligently conducted every tWo years, with one being held as of June 1999. The University is in the process of drafting a procedure manual for Federal equipment disposal. The University has policies and procedures to ensure that Title ill equipment purchases are utilized for the Title ill program. Additionally, as areas within the University undergo renovations, items are stored in the central warehouse until the ordering department is ready to receive them. This practice will continue. The two computers identified in the finding were being used by the Title ill program for which they were intended. To further ensure that items are being used for the purpose for which they were intended, the Director ofTitle ill will conduct a physical check on a sample ofitems twice a year to enhance the procedures.
PERIOD OF AVAILABILIIY Unallowable Expenditures Higher Education -Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-05
Procedures will be established to more diligently monitor grant accounts to ensure that funding is spent within the specified time period and to return any unspent funds to the grantor in a timely fashion.
-5-

SAVANNAH STATE UNIVERSITY AUDlTEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
PRIOR YEAR FEDERAL AWARD FINDINGS AND Q!JESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES REPORTING Final Performance Report Prepared with Budget Figures Higher Education - fustitutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-07 This was a deviation from past practices as a result ofturnover in personnel. Future reporting will resume the historical practice ofreflecting actual expenditure~.
-6-

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SAVANNAH STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1999

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-548-99-0I

For the year under review, the University's accounting procedures were insufficient to provide for adequate

internal control over the cash accounts and the bank reconciliation process. The following deficiencies were

noted:

)

1) The cash balance on the operating bank statement was not accurately reconciled to the general ledger at June 30, 1999. An audit adjustment was necessary to correct the general ledger cash balance.

2) Quarterly bank statements for the Dr. K. B. Raut Endowment bank account were not obtained by the University, therefore the interest earned was not recorded on the general ledger.

3) Numerous book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods oftime.

These deficiencies were the result ofmanagement's failure to establish internal control procedures which are necessary to adequately safeguard and report the cash and cash equivalents ofthe University. The University should implement appropriate procedures and controls to ensure that bank statements are obtained and reconciled with the accounting records and that required adjustment are' identified and recorded in a timely manner.

EXPENDITURESILIABlllTIESIDISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-99-02
An examination ofthe accounts payable subsidiary records was performed to test transactions for validity and accuracy. The following deficiencies related to accounts payable were disclosed:

1) Payments of accounts payable were incorrectly charged to expenditure accounts rather than as liquidation ofaccounts payable.

2) Residual accounts payable balances were not transferred to the University's surplus account after final payment of all associated invoices.

These deficiencies occurred because of the University's failure to have procedures in place to adequately monitor accounts payable. The University should develop and implement policies and procedures to ensure that accounts payable are adequately monitored and properly liquidated on a timely basis.

- 1-

SAVANNAH STAIE UNIVERSITY
SCHEDULE OF FINrnNGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
. FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03
For the year under review, our examination of employee compensation records for twenty-five employees revealed the following deficiencies:
1) A systematic computer error allowed all ten month employeesto accrue additional leave during the summer months that they were not eligible to receive. According to policy, ten month employees are not eligible to earn leave over the summer months.
2) The vacation and sick leave report revealed that:
a) two employees were not charged for leave taken although their personnel files indicate leave was taken.
b) two employees were charged for leave taken; however, no documentation was available to indicate leave was taken.
3) Documentation in one employees personnel file noted that the employee was on leave for an extended illness; however, this documentation did not indicate the specific dates the employee was on leave.
4) One employee received $1,250.00 in compensation in excess of their contract amount without adequate documentation to support the payment.
5) A review of one employees weekly time sheets for six months revealed that:
a) one time sheet lacked approval.
b) one time sheet was approved fifty-five days late.
c) three time sheets lacked prior approval for overtime and four time sheets lacked any approval for overtime.
According to the Employees Handbook, overtime must have prior approval by the Vice President ofBusiness and Finance before being worked.
6) For the pay period tested, we could not locate two ofthe four checks issued to employees not on direct deposit.
-2-

SAVANNAH STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 3Q. 1999

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03

7) Upon tennination, an employee on direct deposit was also issued a hand drawn check resulting in an overpayment of $2,676.75.

These deficiencies were the result ofthe University's failure to have policies and procedures in place and operational to detennine that personnel files contained adequate documentation, sick leave was correctly calculated and recorded, time sheets and overtime were properly authorized, and canceled checks were properly maintained. The University should implement policies and procedures to ensure that personnel files are properly maintained. The University should determine the excessive sick leave hours granted to ten month employees and make the necessary corrections. The University should also take appropriate action to resolve the questioned cost.

GENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-99-04

For the year under review, the University failed to reconcile the Banner System to the general ledger and could not provide adequate supporting documentation for balance sheet clearing accounts comprised of an accounts receivable balance of$65,005.66, an accounts payable balance of$22,054.39, a financial aid balance of $26,970.31, a returned check balance of $3,233.39 and an unapplied cash balance of (-)$194,897.26. Detail subsidiary records are necessary to support these amounts recorded on the accounting records and financial statements.

These account balances resulted from interfaces between the University's Banner Student Registration System

and the University's accounting system. Management was unable to produce subsidiary records from the

Banner Student Registration System to support the balances recorded on the accounting system's general

ledger.

-

The University should investigate the balances in the Banner clearing accounts, determine the cause and make the appropriate adjustments to the accounting records to ensure that assets and liabilities are accurately represented on the accounting records. Procedures should be implemented to ensure that detailed subsidiary records are generated fonn the Banner Student Registration System that support the balances on the general ledger.

-3-

SAVANNAH STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05
Our examination and testing for the year under review revealed the following deficiencies in accounting for financial transactions by Savannah State University:
1) Numerous journal entries to cancel prior year accounts payables were made in Restricted Funds without the approval or knowledge of the Director of Contracts and Grants. A journal entry to cancel a prior year accounts payable was made eleven times. An audit adjustment of $29,202.00 was made to correct these entries.
2) Rental income was incorrectly recorded in the Agency Fund. An audit adjustment of $22,064.50 was made to correctly record the revenue in the Resident Instruction Fund.
3) The University failed to honor a garnishment of $1 ,054.40 issued by the Magistrate Court against an employee which resulted in a lien being placed on the University's bank account. The University subsequently disbursed the funds as required by the court but failed to recover the funds from the employee. An audit adjustment was made to set up an accounts receivable for this amount.
4) Bookstore and athletic ticket sales were inaccurately recorded resulting in an overpayment of sales tax.
5) Numerous audit adjustments were necessary to reconcile salary and travel amounts reported to the Georgia Department of Audits with the amounts recorded as salaries and travel in the general ledger.
6), Various auditing procedures disclosed ten expenditure vouchers could not be located and therefore were not available for examination.
These deficiencies occurred because the University failed to have adequate accounting policies and procedures in place and operational. The University should review current accounting policies and
procedures, identify weaknesses and implement procedures to ensure that the accounting records are
monitored, revenue is properly recorded and salaries and travel are properly reconciled.
GENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-99-06
During the year under review, management failed to correctly maintain the Payroll Deductions and Employer Liability Accounts as follows:
-4-

SAVANNAH STATE UNIVERSITY

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

.

YEAR ENDED JUNE 30. 1999

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-99-06
1) Variances existed between monthly receipts and disbursements for many of the Payroll Operation Agency Accounts. Management failed to perfonn monthly reconciliations and. to identify variances.
2) The Employee Payroll Deduction (Health, Life and Dental) Accounts had a net deficit of $22,013.87. Also, the U. S. Savings Bond Account had a deficit balance of$I,076.25.
3) The Employer Liability (Health and Life) Accounts had a net balance of $146,194.27 which was not identified as obligated.
The deficiencies were the result of the management's failure to properly monitor and reconcile the Payroll Operation Agency Funds. Management should implement policies and procedures to ensure payroll changes and adjustments are made timely and monthly reconciliationsofreceipts and disbursements are perfonned.
GENERAL LEDGER Donnant Restricted Funds Finding Control Number: FS-548-99-07
For the year under review, eleven restricted fund projects had no activity. It was noted that the grant period had ended on all eleven projects; however, fund balances remained at June 30, 1999.
These donnant accounts are a result ofmanagement's failure to monitor the activity occurring in the Restricted Funds and failure to return excess funds promptly to the grantor when the project is complete. The University should implement procedures that will provide proper monitoring ofthe Restricted Funds and grant periods to ensure that funds are returned to the grantor when the project is complete. The University should contact the grantors to detennine ifthe donnant account funds are to be returned.
GENERAL LEDGER Inadequate Documentation ofJoumal Entries Finding Control Number: FS-548-99-08
For the year under review, numerous journal entries were not available for examination and others lacked adequate documentation. In addition, the University failed to retain computer generated journal entry transactions for six months. These situations occurred because of the University's failure to ensure that journal entries were properly documented and maintained. The University should develop procedures to ensure that all journal entry transactions are properly maintained and supported by adequate documentation.

-5-

SAVANNAH STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequacies in Travel AdvanceslPrepaid Travel Finding Control Number: FS-548-99-09

An examination of prepaid travel and travel advances for the year under review revealed the following deficiencies:

1) Travel advances and prepaid travel to employees were not monitored thrO\lghout the year. As a result, outstanding balances for travel advances and prepaid travel were not cleared in a timely manner.

2) Travel advances were incorrectly recorded between funds. In some cases, travel advances were recorded in one fund and the offsetting credits to clear the advances were incorrectly recorded in another fund.

The deficiencies occurred because of management's disregard of the University's travel policy and management's failure to properly account for travel advances and prepaid travel. The University's travel policy states "advances must be cleared within three days subsequent to returning to campus or the conclusion of the event". The University should follow policies and procedures to ensure that travel advances and prepaid travel are correctly recorded in the proper fund, monitored and cleared in a timely manner.

GENERAL LEDGER Report Not Reconciled to Accounting Records Finding Control Number: FS-548-99-10

For the year under review, the University's H.O.P.E. Scholarship Program reconciliation report, which was provided to the Georgia Sttident Finance Commission, did not reconcile with the accounting records as indicated below:

Report Item

Per H.O.P.E. Reconciliation

Per Accounting
Records

Unreconciled Difference

Amount Awarded to Students

$472,347.00

$468,755.52 $ 3,591.48

The unreconciled difference identified above occurred because management failed to reconcile accounting records to the H.O.P.E. Scholarship Program reconciliation report at year end.

Procedures should be established to ensure that all H.O.P.E. Scholarship Program reconciliation reports are reconciled to the University's formal accounting records. The University should contact the Georgia Student Finance Commission regarding resolution of this finding.

-6-

SAVANNAH STATE UNNERSITY
SCHEDULE OF FlNPINGS AND QlJESTIONED COSTS
YEARENPED JUNE 30.1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Employee Compensation Deficiencies Questioned Costs: $81,444.33 Finding Control Number: FA-548-99-01
Our examination of salaries for ten employees charged to various Federal programs revealed the following deficiencies:
1) It was detennined that salaries were charged to Federal programs based on budgeted amounts rather than actual time and effort reports. An examination oftime and effort reports revealed the following problems:
a. The time and effort reports for nine employees were not available for examination or were incomplete.
b. Time and effort reports for two employees disclosed that those employees worked on Federal programs other than the programs charged.
c. A summer salary for one individual was charged to a Federal program but was not documented by time and effort reports. Determination could not be made as to whether the employee actually worked on the Federal program.
d. The percentage of effort as reflected on time and effort reports for four employees failed to support the salary distributions between Federal programs and non Federal programs.
OMB Circular A-21, requires that activity reports or other payroll documents used as original documentation for payroll charges be prepared and signed by the employee and the responsible official when salaries are charged to a Federal program. Time and effort reports should reflect 100% of an individual's time spent on all activities performed and should be supported by other documentation such as class schedules.
2) Three employees were paid stipends that were incorrectly charged to Federal programs. The stipends were in addition to regular salaries; however, the work performed was part of the employees' regular departmental workload. Also, summer stipends paid for work beyond normal duties were not documented by appropriate time and effort reports.
OMB Circular A-21, requires that additional compensation paid to employees above the base salary is allowed only in cases where the duties are in addition to the regular departmental workload.
The deficiencies described above resulted in questioned costs, for the following Federal Programs:
-7-

SAVANNAH STATE UNNERSITY
SCHE])ULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Employee Compensation Deficiencies Questioned Costs: $81,444.33 Finding Control Number: FA-548-99-01

Federal Program

CFDA

Questioned Cost

National Science Foundation Water Quality Management Planning Program Higher Education Institutional Aid Health Career Opportunity Program Blood Diseases and Resources Research Extramural Associate Research Development

47.0FA 66.454 84.031 93.822 93.839 93.865

$ 3,612.74 16,533.20 . 29,272.79 13,149.50 12,615.10 6.261.00

Total

$.81 a444.33

These conditions occurred because of management's failure to ensure that all time and effort reports were being properly prepared by employees and that salaries were correctly paid to individuals who performed the services. Management should ensure that complete time and effort sheets are prepared by all employees whose salaries are charged to a Federal program. Time and effort reports should contain all required elements so that management can rely on the reports to support accounting and payroll records. Management should ensure that stipends paid to employees for work in addition to employees' regular departmental workloads are properly documented. The University should contact the grantor agencies to resolve these questioned costs.

Federal Programs/Awards Affected: Higher Education - Institutional Aid (CFDA 84.031)
U. S. Department of Education Researc~ and Development Cluster Programs
National Science Foundation Other Financial Assistance (CFDA 47.0FA)
Environmental Protection Agency Water Quality Management Planning Program (CFDA 66.454)
U. S. Department of Health and Human Services Health Career Opportunity Program (CFDA 93.822) Blood Diseases and Resources Research (CFDA 93.839) Extramural Associate Research Development (CFDA 93.865)

-8-

SAVANNAH STAIB UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
, FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
DAVIS-BACON ACT Payment ofPrevailing Wage Rates Not Monitored Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-99-02
cm For the year under review, it was noted that the University did not monitor the wages paid by two contractors
working on Title ill construction projects. Federal regulations, as reflected in Appendix A to 34 74, require that all laborers employed by the contractor who work on construction contracts in excess of $2,000.00 financed by Federal assistance funds must be paid wages not less than those established for the locality ofthe project (prevailing wage rates). This condition resulted from management's failure to ensure that (1) all individuals at the University were aware oftheir responsibilities regarding the Davis-Bacon Act and (2) the requirements ofthe Davis-Bacon Act were being met. The University should take steps to ensure that wages paid for construction projects financed with Federal funds are monitored and are in compliance with the provisions of the Davis-Bacon Act.
ELIGffiILITY Overpayment of Student Financial Aid Weaknesses in Internal Control Structure Student Financial Aid Cluster Program Questioned Cost: $6,321.05 Finding Control Number: FA-548-99-03
A sample of twenty six student files was selected to determine if financial aid was properly calculated, awarded and disbursed to eligible students. The items sampled contained financial aid disbursements of
$306,372.60 out ofa population of$14,676,506.73. Our examination revealed overpayments to five students
who were disbursed a total of$6,321.05 in excess ofneed based on estimated cost of attendance. TitleN of the Higher Education Act of 1986 states an institution must coordinate Title N programs with other Federal and non Federal student financial aid programs it administers and must establish controls to preclude the awarding of assistance in excess of a student's financial need. These errors were caused by management's failure to review awards before disbursements were made. A projection ofthese errors to the total population resulted in likely questioned cost in excess of $10,000.00.
In addition, one student's Promissory Note was not signed until after the disbursement date of the loan. This deficiency occurred because of management's failure to implement procedures that would prevent the disbursing of funds prior to obtaining a signed promissory note as required by the Student Financial Aid Handbook.
The University should develop and implement policies and procedures to ensure that adequate controls over the eligibility process are in place and that student financial aid awards are properly reviewed and approved prior to disbursement. Also, the University should develop and implement a monitoring process to ensure that the controls are being followed. The University should contact the U. S. Department of Education regarding resolution ofthis finding.
-9-

SAVANNAH STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
FEI>ERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Overpayment of Student Financial Aid Weaknesses in Internal Control Structure Student Financial Aid Cluster Program Questioned Cost: $6,321.05 Finding Control Number: FA-548-99-03
Federal ProlU"ams/Awards Affected: Student Financial Aid Cluster Programs
U. S. Department ofEducation Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
ELIGffiILITY Failure to Conduct Meetings for Satisfactory Academic Progress Appeals Student Financial Aid Cluster Program Finding Control Number: FA-548-99-04
For the year under review, student :financial aid-satisfactory academic progress appeals were approved by the Assistant Financial Aid Director rather than the University's Student Financial Aid Appeals Committee. The University's Student Financial Aid Appeals Committee failed to meet once each semester to hear student appeals of:financial aid suspension as prescribed in the University's 1998-2000 General Catalog. Information regarding the time, place and decisions ofthe Committee's meetings was not available.
This deficiency resulted from the Committee's failure to meet as required to review student financial aid satisfactory academic progress appeals and make-its recommendations. Management should establish controls to ensure that meetings are conducted once each semester to hear financial aid appeals and that adequate documentation ofthe Appeals Committee decisions is maintained. -.
Federal ProlU"ams/Awards Affected: Student Financial Aid Cluster Programs
U. S. Department ofEducation Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal D,irect Student Loan Program (CFDA 84.268)
-10 -

SAVANNAH STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $6,030.12 Finding Control Number: FA-548-99-05
For the year under review, our examination included a review ofthe internal accounting controls utilized by the University in maintaining their property management system. Our examination also included testing the system for compliance with Federal laws and regulations. The following conditions existed:
1) The University's response to a prior year finding concerning equipment and real property management, indicated that the inventory control system had been revised to include Federal agency source code and program titles. However, as ofJune 30, 1999, the property management system had not been updated to identify Federal equipment purchases by program title or award number. This deficiency is systemwide and affects all Federal awards.
2) The University was unable to ensure appropriate Federal agencies were notified when disposing of equipment. This occurred because the property management system did not identify equipment purchased by grant award number in the property management records.
3) A sample of58 current year equipment purchases from Title ill funds was examined. This examination
revealed one printer purchased in June 1999 at a cost $1,298.12 was still in its original shipping container as ofthe last day offieldwork.
4) The audit report for June 30, 1998, indicated that two computers were not being used by the Title ill program for which they were acquired. The University has responded that the computers were being utilized in the Title ill program as required. However, our examination noted that these computers were not being utilized in the Title ill program as indicated by the University. The cost ofthese computers was $4,732.00.
The deficiencies above occurred because the University did not have internal controls in place to ensure compliance with Federal requirements for equipment as set forth in 34 CFR 74 and OMB Circular A-IlO, Subpart C.34. The University should establish policies and procedures to ensure that equipment purchases are properly identified in the property records and are maintained in accordance with Federal requirements. Also, the University should establish policies and procedures to ensure Title ill equipment purchases are utilized for the Title ill program. The U. S. Department of Education should review these matters and determine appropriate action by the University to resolve this finding.
-11-

SAVANNAH STATE UNNERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1999
. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
PERIOD OF AVAILABILITY Failure to Properly Refund to Grantor Agency Federal Direct Student Loan Program (CFDA 84.268) Finding Control Number: FA-548-99-06
At June 30, 1999, the University's accounting records reflected $27,687.85 ofFederal. Direct Student Loan proceeds that had accumulated as a result of student withdrawals for the 1996 program award. These funds had not been refunded to the grantor as required by 34 CPR 685.211(d).
This condition occurred because ofmanagement's failure to have written policies and procedures in place to ensure that refunds are returned to the grantor agency as required by Federal regulations. Management should implement procedures to ensure that refunds are remitted in a tiJpely manner according to Federal regulations.
REPORTING Expenditures in Excess ofAuthorization Federal Pell Grant Program (CFDA 84.063) Finding Control Number: FA-548-99-07
The Student Payment Summary (SPS) report and the Statement ofAccount report Federal Pell Grant Program expenditures to the U. S. Department of Education. These reports were not reconciled to the accounting records for the year under review as required by Federal regulations. The Statement of Account report indicated that the University was authorized to expend $3,503,150.00 in Federal Pell Grant Program funds in the state fiscal year 1999. The University's accounting records however, reflect $3,566,619.11 for fiscal year 1999 Pell Grant expenditures. As a result the University expended $63,469.11 in excess of the authorized amount. In order to be reimbursed for the excess Pell Grant Program expenditures, the University, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then provide appropriate adjustments ofthe fiscal year 1999 authorized amount in order to make the funds available to the University.
REPORTING Inaccurate Reporting Student Financial Aid Cluster Programs Finding Control Number: FA-548-99-08
The University's Fiscal Operations and Application to Participate (FISAP) report due October 1, 1999, included fiscal year 1998 enrollment data instead of fiscal year 1999 enrollment data. The Blue Book, Chapter 6, Sec. 2.2.3 requires the University to ensure that the information reported is accurate. The enrollment data is used to determine the Federal Campus - Based program allocations.
In addition, the Federal Pell Grant expenditures reported on the FISAP report did not agree with the final Grants Administration and Payment System (GAPS) report as required by the Blue Book, Chapter 6, Sec. 2.2.4.
-12-

SAVANNAH STATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 3Q. 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Inaccurate Reporting Student Financial Aid Cluster Programs Finding Control Number: FA-548-99-08
The inaccurate reporting described above was the result ofmanagement's failure to obtain correct data from which to prepare the FISAP. The University should implement procedures to ensure that the infonnation reported on the FISAP is accurate.
Federal Programs/Awards Affected: Student Financial Aid Cluster Programs
U. S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063)
REPORTING Failure to Prepare Reconciliations Federal Direct Student Loan Program (CFDA 84.268) Finding Control Number: FA-548-99-09
For the year under review, the University failed to perfonn monthly reconciliations ofFederal Direct Loan disbursements recorded on the College and University Fund Accounting System (CUFA) to the Loan Origination Center (LOC) Direct Loan School Account Statement as required by Chapter 11 of the Federal Student Financial Aid Handbook.
These deficiencies were a result ofmanagement's failure to comply with Chapter 11 of the Federal Student Financial Aid Handbook. The University should implement adequate controls to ensure that the reconciliations are accurately completed on a timely basis and supported by the accounting records. Documentation should be maintained to support any variances.
SPECIAL TEST AND PROVISIONS Failure to Disclose Federal Funding in Public Announcement Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-99-1 0
For the year under review, the University issued two bid solicitations that did not disclose the dollar amount ofFederal funds for the project and the percentage ofthe total cost ofthe project to be financed with Federal funds as required by Attachment S of the Federal Grant Award. Management should review Attachment S of the Federal Grant Award and comply with the conditions under Public Law 105-78, Sec. 508.
- 13 -