SAVANNAH STATE UNIVERSITY SAVANNAH, GEORGIA INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED- UPON PROCEDURES FOR FISCALYEAR ENDED JUNE 30,2011 Georgia ~e~ar&&T( i . AdAudits and kcounts Russell W.Hinton State Auditor - -- - - - - - - - -- SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXHIBITS A SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT 1 B STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE 2 C STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE RUSSELLW. HINTON STATE AUDITOR (404) 866-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 December 1 2 , 2 0 1 1 Members of the State Board of Regents of the University System of Georgia and Honorable Cheryl Dozier, President Savannah State University Independent Accountant's R e ~ o rotn A~Plving&reed-U~on Procedures Ladies and Gentlemen: We have performed the procedures enumerated below, which were agreed to by the University and the University System Office (Oversight Unit) of the Board of Regents of the University System of Georgia, solely to assist you in assessing the accuracy of the financial information reported to the University System Office in the University's 2011 Annual Financial Report for inclusion in the University System of Georgia's Annual Financial Reprt, the State of Georgia's ComprehensiveAnnual Financial Report (CXFR) and Single Audit ReporS and to assist you in assessing the accuracy of the budget basis information provided in the Summary Budget Compaison and Surplus Analysis Reprt, Shtement of Funds Available and Expenditures Compared to Budget By Program and Funding Source, and the Statement of Changes To Fund aalance By Progrm and Funding Source which are attached as Exhibits A, B and C, respectively. Savannah State University's management is responsible for the financial information reported to the University System Office in the University's Annual Financial Report. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures and the associated findings are as follows: 1. Review selected balance sheet items reported on the Annual Financial Report (cash, accounts receivable, accounts payable, deferred revenues, net assets). Confirm that these items have adequate supporting documentation and are properly reconciled to the University's general ledger. No detailed llsting of prepaid items totaling $4,669.94 was provided t o support the balance reported on the Annual Financial Report. A test of students accounts receivable under one year old revealed three instances, totaling $5,998.11in which accounts receivable were not supported by approved student financial aid. 2. Obtain the University's GAAP basis Statement of Net Assets and Statement of Revenues Expenses and Changes in Net Assets (SRECNA) submitted for inclusion in the State's CAFR and Single Audit. Utilizing test scripts, confirm that financial information presented in these statements properly supports activity reported in the University's accounting records. Net Assets Restricted for Nonexpendable was overstated by $163,366.67 and Net Assets Restricted for Expendable was understated by $163,366.67. A correction to reclassify these Net Assets was proposed and made to the Statement of Net Assets. 3. Obtain the University'sStatement of Cash Flows submitted for inclusion in the State's CAFR and Single Audit. Utilizing cash flow worksheets, confirm information reported on Statement of Cash Flows. Cash Flows from Noncapital Financing Activities were improperly reflected on the Statement of Cash flows. Specifically, Agency Fund Transactions were reported as Federal Stimulus - Stabilization Funds and Gifts and Grants Received for Other Than Capital Purposes were shown as Agency Fund Transactions. 4. Obtain the University's Notes to the Financial Statements submitted for inclusion in the State's CAFR and Single Audit. Utilizing notes worksheets and other supporting documentation confirm that note disclosures related to Cash, Investments, Accounts Receivable, Capital Assets, LongTerm Debt, Lease Obligations and Retirement Plans have been properly reported. We did not note any exceptions as a result of our procedures. 5. Review the University's year end GAAP basis journal entries. Obtain documentation for GAAP journal entries and confirm that the entries were posted to the University's Annual Financial Report. Yearend GAAP entries related to GSFlC gifts were made incorrectly. GSFlC aft revenues of $73,885.26 were recorded as Capital Grants and Gifts - State instead of NonoperatingGift Revenueon the Statement of Revenues, Expensesand Changes in Net Assets in error. 6, Confirm that State Appropriation revenues, receivables and remittances of prior year surplus balances have been properly recorded in the University's financial records. Prior year surplus balances should be netted against State Appropriation revenues in the GAAP basis financial statements; however, prior year surplus balances should be reflected as fund balance adjustments on the Budget basis financial statements. We did not note any exceptions as a result of our procedures. 7. Obtain listing of write-off requests for accounts receivable less than $3,000.00 for fiscal year 2011. Confirm that these write-off requests have been approved by the State Accounting Officer and have been posted to the University's financial statements. We did not note any exceptions as a result of our procedures. 8. Verify that the listing of salaries and travel reported to the Department of Audits is in accordance with O.C.G.A. 50-6-27 and reconciles to amounts recorded in the University's financial statements. We did not note any exceptions as a result of our procedures. 9. Review year end Budgetary Statements including the Summaty Budget Comparison and Surplus Analysis Report (Exhibit A), Statement of Funds Available and Expenditures ampared to Budget By Program and Funding Source (Exhibit B) and the Statement of Changes To Fund Balance By Program and Funding Source (Exhibit C). Confirm that budget information presented in these statements supports activity reported in the University's accounting records and determine if any budget overexpenditures exist. Encumbrancestotaling$39,938.19were deemed invalid. The University failed to reclassify activity of $16,657.75 related to prior year payables/expenditures from current year expense to adjustments to Fund Balance. The Universiws Fund Balance Reserved for Inventories was not properly documented. Inventory records were not updated and the Universitywas unable to validate the Reserve for Inventories amount reported. 10. Review the H.O.P.E. Scholarship Program reconciliation between the University and the Georgia Student Finance Commission. Confirm that information reported to the Georgia Student Finance Commission has been reconciled with H.O.P.E. Scholarship activity reported on the University's financial records. We did not note any exceptions as a result of our procedures. 11. Review the Schedule of Expenditures of Federal Awards information submitted by the University for inclusion in the Statewide Single Audit. Confirm that the information is properly presented and supported by the University's accounting records. The University's Schedule of Expenditures of Federal Awards (SEFA) did not agree with the Federal expenditure activity reflected on the University's accounting records. Expenditures for Federal Direct Student Loans were inaccurately reported on the SEFA. An adjustment to increase expenditures reported on the SEFA by $30,990,941.00was made. 12. Review capital asset records to ensure that (1)subsidiary ledgers are appropriately reconciled to the ledgers, (2) capitalization thresholds are being properly followed, and (3) a complete annual physical equipment inventory is being conducted and that issues noted during the physical inventory are being properly addressed by management. Variances noted in the prior year betweenthe capital asset management moduleand capitals ledger for Accumulated Depreciation - Buildings and Equipment have still not been corrected in the capital asset management module. 13. Review bank reconciliations during the year under review to ensure that management is preparing them timely and that reconciling items are being addressed by management timely and in an appropriate manner. We did not note any exceptions as a result of our procedures. 14. Review documentation to ensure that all subsidiary modules including BANNER are reconciled to the general ledger at least quarterly in accordance with the Business Procedures Manual Section 10.6.2. and ensure that reconciling items are adequately explained and resolved in a timely manner. An unidentified variance of $6,975.52 exists between the subsidiary module for purchase orders and the general ledger. These agreed-upon procedures do not constitute an audit of the financial statements or any part thereof, the objective of which is to express an opinion on the financial statements or a part thereof. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~u.$ell W. Hinton, CPA, CGFM State Auditor EXHIBITS SAVANNAH STATE UNlVERSlPl SUMMARY BUDGET COMPARISONAND SURPLUS ANALYSIS REPORT YEAR ENDED JUNE 3 0 , 2 0 1 1 REVENUES State Appropriation State General Funds Other Funds Total Revenues ADJETMENTSAND PROGRAM TRANSFERS CARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance Total Funds Available EXPENDITURES Special Funding Initiative Teaching Total Expenditures Excess of Funds Available over Expenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned to Board of Regents - Untversity System Office Year Ended June 3 0 . 2 0 1 0 Early Return of Fiscal Year 2011. Surplus Prior Year Reserved Fund Balance Included In Funds Available FUND BALANCE JUNE 3 0 SUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recoveries Technolo& Fees Uncollect~bleAccounts Receivable Tuition Carry-Over Inventories Total Reserved Unreserved Surplus Total Fund Balance BUDGET ACTUAL VARIANCE - FAVORABLE (UNFAVORABLE) SAVANNAH STATE UNIVERSITY STATEMENT OF FUNDS AVAllABLE AND EXPENDITURESCOMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE YEAR ENDED JUNE 30.2011 Special FundingInitiative State Appropriation State General Funds Teaching State Appropriat~on State General Funds Other Funds Total Teach~ng Total Operating Activity Original Approprlatlon Amended Appropriation Flnal Budget Current Year Revenues EXHIBIT "B" Funds Avatlable Compared to Budget Pr~orYear Adjustments and Total Carry-Over Program Transfers Funds Available Variance Positive (Negabve) Expend~turesCompared to Budget Variance Actual Positive (Negative) Excess (Deficiency) of Funds Available Over./(.Under). Expenditures SAVANNAH STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE YEAR ENDED JUNE 30.2011 Special FundingInitiative State Appropr~at~on State General Funds Teaching State Appropriation State General Funds Other Funds Total Teaching Total OperatingActivity Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Rece~vable Beglnnlng Fund Balance/(Def~c~t) July 1 Fund Balance Carr~edOver from Pr~oPr erlod as FundsAvallaWe Return of F~scaYl ear 2010 surplus Prlor Perlod Adjustments Budget Unit Totals Other Adjustments Early Return F~scaYl ear 2011 Surplus Excess (Deficiency) of Funds Ava~lable Over/(Under) Expenditures Ending Fund Balance/(Deficit) June 3 0 Analysis of Ending Fund Balance Reserved Surplus/(Deficit) Total Summaly of End~ngFund Balance Resewed Department Sales and Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Rece~vable Tu~tionCarry-Over lnventorles Unreserved Surplus Total Endlng Fund Balance - June 30