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SKIQAWAYi'INSTITUTE-OF OCEANOG'RAPHY ,_1 
 
-SAVANNAH. GEORG'IA 
 
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REPORT QN REVIEW 
 
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OF THE FINANCIAL STATEMENTS 
 
' FOR THE FISCAL YEAR ENDED JUNE 30,' 2002 
 
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Russell W. Hinton 
 
State Auditor 
 
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 SKIDAWAY INSTITUTE OF OCEANOGRAPHY -TABLE OF CONTENTS- 
 
SECTION I 
 
FINANCIAL 
 
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
 
REQUIRED SUPPLEMENTARY INFORMATION 
 
MANAGEMENT'S DISCUSSION AND ANALYSIS 
 
BASIC FINANCIAL STATEMENTS 
 
EXHIBITS 
 
A STATEMENT OF NET ASSETS 
 
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 
 
C STATEMENTOFCASHFLOWS 
 
D NOTES TO THE FINANCIAL STATEMENTS 
 
SUPPLEMENTARY INFORMATION 
 
SCHEDULES 
 
SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO 
 
BUDGET - (NON-GAAP BASIS) 
 
1 
 
RESIDENT INSTRUCTION 
 
2 
 
LOTTERY FOR EDUCATION 
 
3 
 
OTHER ORGANIZED ACTIVITIES 
 
4 RECONCILIATION OF SALARIES AND TRAVEL 
 
Page 
3 
11 12 13 14 
29 
30 31 32 
 
SECTIONil CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
 
 SECTION I FINANCIAL 
 
 R11,,1-.11 \\'. H1,TO""I 
STATE AUC:ITOR i04l 656 2174 
 
DEPARTMENT OF AUDITS AND ACCOUNTS 
'2~4 \\'J,hmg1on Street S 'Vt/. Suite:! 14 Atlanta Georg1.1 10334-84<Kl 
February 7, 2003 
 
Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the Umvers1ty System of Georgia 
and Honorable James G Sanders, Director Sladaway Institute of Oceanography 
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
Ladies and Gentlemen 
We have reviewed the accompanymg basic financial statements (Exlub1ts A through D) ofSladaway Institute ofOceanography, an orgamzatlonal umt ofthe State ofGeorgia, as ofand for the year ended June 30, 2002, m accordance with Statements on Standards for Accountmg and Review ServJces issued by the Amencan Institute of Certified Pubhc Accountants. All mformat1on mcluded m these financial statements 1s the representation ofthe management ofSladaway Institute ofOceanography. 
A reV1ew consists prmc1pally ofmqumes oflnshtute personnel and analytical procedures apphed to fmancial data. It 1s substantially less m scope than an audit m accordance with aud1tmg standards generally accepted m the Umted States of Amenca, the obJect1ve of wluch 1s the expression of an op1mon regardmg the financial statements taken as a whole. Accordmgly, we do not express such an op1mon. 
Based on our reV1ew, with the excephon of the matter discussed m the fourth paragraph, we are not aware of any matenal mod1ficat1ons that should be made to the accompanymg financial statements m order for them to be m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca 
As descnbed m Note 1 to the financial statements, the lnshtute did not recogmze June 30, 2001, encumbrances as expenses m the June 30, 2002, basic financial statements To conform to generally accepted accounhng pnnc1ples, encumbrances should be recogruzed as expenses and hab1ht1es m the penod that goods and services are received. The effects on the basic financial statements of this departure from generally accepted accountmg pnnc1ples were not reasonably deternunable. 
02ARL-67 
 
 As descnbed m Note I, Sk!daway Institute ofOceanography adopted the prov1s1ons ofGovernmental Accountmg Standards Board (GASB) Statement No 35, Basic Financial Statements - and Management's D1scuss1on and Analysis - for Public Colleges and Umversmes, as amended by GASB Statement No. 37, Basic Financial Statements - and }.fanagement's Dtscusswn and Ana(vs1s for State and Local Governments, and GASB Statement No 38, Certain Financial Statements Note Disclosures, as of July I, 2001, to implement a new financial reportmg model 
 
Management's D1scuss1on and Analysis 1s not a required part ofthe basic financial statements but 1s supplementary mformauon reqmred by the GASB We have applied certam limited procedures, which consisted pnnc1pally ofmqumes ofmanagement regarding the methods ofmeasurement and presentaUon oftlus supplementary mformauon, and we are not aware of any matenal mod1ficat1ons that should be made thereto. 
 
Our reVJew was made for the purpose of expressmg limited assurance that there are no matenal modifications that should be made to the financial statements m order for them to be m conformity with accounting pnnc1ples generally accepted m the Uruted States of Amenca The accompanymg supplementary mformatlon (Schedules I through 4) 1s presented for add1honal analysis purposes Such mformauon has been subJected to the mqumes and analytical procedures applied m the reVJew ofthe financial statements, and we are not aware ofany matenal mod1ficahons that should be made to such data 
 
Respectfully subrrutted, 
 
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Hinton State Auditor 
 
RWHas 02ARL-67 
 
 REQUIRED SUPPLEMENTARY INFORMATION  I  
 
 Skidaway Institute of Oceanography 
Management's Discussion and Analysis 
Introduction 
The Sk1daway lnslltute of Oceanography 1s a umque, mul1Id1sc1phnary mslltute, w1thm the Umvers1ty System of Georgia, dedicated to furthenng our understanding of manne and environmental sciences Located sixteen miles southeast ofthe clly ofSavarmah on the north end of Sludaway Island, the Inslltute offers easy access to the bamer islands, estuanes, and contmental shelf ofthe southeastern U S., as well as the open ocean The lnsl!tute conducts leading edge research on manne and coastal systems, trams tomorrow's manne sc1enllsts, serves as a gateway to manne enVJIOnments and integrates Uruvers1ty System manne programs It 1s,comm1tted to excellence m research and educallon and to the commumcat1on ofour understandmg ofmanne systems The goal of the Institute 1s to create a more knowledgeable c11Izen capable of apprecrnllng coastal natural enV1ronments and the cond1t10ns required to sustam them wlnle cap1tal1zmg on coastal econolillc opportuml!es 
Overview ofthe Financial Statements and Financial Analysis 
Sludaway lnslltute of Oceanography 1s proud to present its financial statements for fiscal year 2002 The emphasis of d1scuss1ons about these statements will be on current year data There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes m Net Assets; and, the Statement of Cash Flows. Tins discuss10n and analysis of the lnstJtute's financial statements proV1des an overview of1ts financial acl!V!lles for the year. Sladaway Institute of Oceanography has elected to not restate pnor penods for purposes of prov1dmg the comparallve data for this Management's D1scuss1on and Analysis. However, m future years, when pnor penod mforrnallon 1s available, a comparal!ve analysis will be presented 
Statement ofNet Assets 
The Statement of Net Assets presents the assets, hab1hlles, and net assets of the lnslltute as of the end of the fiscal year. The Statement of Net Assets 1s a pomt of time financial statement The purpose ofthe Statement ofNet Assets 1s to present to the readers ofthe financial statements a fiscal snapshot ofSiudaway lnsl!tute ofOceanography. The Statement of Net Assets presents end-of-year data concemmg Assets (current and non-current), L1ab1hlles (current and non-current), and Net Assets (assets mmus hab1hlles). The difference between current and non-current assets will be discussed m the notes to the financial statements. 
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operallons of the mst1tullon They are also able to determme how much the msl!tut1on owes vendors, investors and lending inslltullons. 
-3- 
 
 Finally, the Statement ofNet Assets provides a picture ofthe net assets (assets minus hab1hhes) and their ava1lab1hty for expenditure by the inshtuhon. Net assets are d1v1ded into two maJor categones The first category, invested in capital assets, net ofdebt, provides the inshtutmn's eqmty m property, plant and eqmpment ovmed by the mstttutton The final category 1s unrestncted net assets Unrcstncted assets are available to the inshtutmn for any lawful purpose of the inshtutton 
 
Statement of Net Assets, Condensed (thousands of dollars) 
 
Assets Current Assets Capital Assets, Net 
 
$ 1,442 5.891 
 
Total Assets 
 
$ 7.333 
 
Liabilities Current L1ab1ht1es Non-Current L1ab1ht1es 
 
$ 1,327 568 
 
Total Liabilities 
 
$ 1.895 
 
Net Assets Invested in Capital Assets, Net of Debt Unrestncted 
 
$ 5,372 66 
 
Total Net Assets 
 
$ 5.438 
 
Statement ofRevenues, Expenses and Changes in Net Assets 
 
Changes in total net assets as presented on the Statement of Net Assets are based on the act:IV!ly presented in the Statement ofRevenues, Expenses and Changes m Net Assets The purpose ofthe statement 1s to present the revenues received by the inshtuhon, both operating and nonoperatmg, and the expenses paid by the mstltuhon, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the 1nshtutlon. Generally speaking operating revenues are received for prov1dmg goods and services to the vanous customers and conshtuenc1es of the IIlStltutlon Operating expenses are those expenses paid to acqwre or produce the goods and serV1ces proV1ded m return for the operating revenues, and to carry out the m1ss10n of the 1nst1tut:1on Nonoperatmg revenues are revenues received for winch goods and serV1ces are not provided For example state appropnauons are nonoperatmg because they are provided by the Legislature to the mstuutton without the Legislature directly receiving commensurate goods and services for those revenues. 
 
-4- 
 
 Statement ofRevenues, Expenses and Changes m Net Assets, Condensed (thousands ofdollars) 
 
Operating Revenues Operating Expenses 
 
S 3.737 6,266 
 
Operating Loss 
 
$ -2.529 
 
Nonoperatmg Revenues and Expenses 
 
2,968 
 
Increase m Net Assets 
 
439 
 
Net Assets at Begmrung of Year, as Ongmally Reported 
 
$ 13,826 
 
Cumulative Effect ofChanges m Accounting Pnnc1ple 
 
-8,827 
 
Net Assets at Begmmng of Year Restated 
 
$ 4999 
 
Net Assets at End of Year 
 
S 5.438 
 
The Statement of Revenues, Expenses and Changes m Net Assets reflects a posiuve year WJth an increase m the net assets at the end ofthe year. Some lughhghts ofthe mformanon presented on the Statement of Revenues, Expenses and Changes m Net Assets are as follows 
 
. 5. 
 
 Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002 
Operatmg Revenue Grants and Contracts Rents and Royalties Sales and Services of Educational Departments Aux1hary Other 
Total Operatmg Revenue 
Nonoperatmg Revenue State Appropnat1ons Grants and Contracts Investment Income Other 
Total Nonoperatmg Revenue 
Total Revenues 
Expenses (thousands of dollars) For The Year Ended June 30, 2002 
Operatmg Expenses Research Academic Support Institutional Support Plant Operations and Mamtenance Aux1hary Enterpnses Unallocated Deprec1at1on 
Total Operatmg Expenses 
Nonoperatmg Expenses Interest Expense (Capital Assets) 
Total Expenses 
 
$ 3,093 38 49 39 
518 $ 3 737 
$ 2,292 277 12 429 
$ 3,010 
$ !2.Z:lZ 
$ 3,355 663 799 
1,3 I 7 26 106 
$ 6,266 
43 
$ '2.J~2 
 
-6- 
 
 Statement ofCasi, Flows 
 
The final statement presented by the Sk1daway Institute of Oceanography 1s the Statement of Cash Flows The Statement of Cash Flows presents detailed mfonnatlon about the cash activity of the mstltut1on dunng the year The statement 1s d1v1ded mto five parts The first part deals with operatmg cash flows and shows the net cash used by the operatmg actlv1t1es of the mst1tut1on The second section reflects cash flows from non-capital financmg act1v1t1es Tlus section reflects the cash received and spent for nonoperatlng, non-mvestmg, and non-capital financmg purposes The third section reflects the cash flows from mvestmg activities and shows the purchases, proceeds, and mterest received from mvestmg activities The fourth section deals with cash flows from capital and related financmg act1V1t1es This section deals with the cash used for the acqws1t1on and construct10n of capital and related items. The fifth section reconciles the net cash used to the operating mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets 
 
Cash Flows for the Year Ended June 30, 2_002, Condensed (thousands of dollars) 
 
Cash Provided (Used) By Operatmg Activities Non-Capital Fmancmg Act1v1t1es Investmg Activities Capital and Related Fmancmg Act1v111es 
 
$ -2,990 3,008 12 -383 
 
Net Change m Cash Cash, Begmrung ofYear 
 
$ -353 428 
 
Cash, End of Year 
 
$ 75 
 
Capital Assets 
 
The lnslltute had one s1gruficant capital asset addition for fac1ht1es m fiscal year 2002 The RIV Savarmah, a 92-foot research vessel, was comrruss1oned m September 2001 and began operations m October 200 I. 
 
For add1t10nal mformatlon concernmg Capital Assets, see Notes 1, 4, 6 and 7 m the notes to the financial statements 
 
Economic Oudook 
 
The Insutute 1s not aware of any currently known facts, dec1s1ons, or conditions that are expected to have a s1gmficant effect on the financial position or results of operations dunng tlus fiscal year beyond those unknown vanatlons havmg a global effect on virtually all types ofbusmess operations. The Inst1tute's overall financial posillon 1s strong. Even with a relatively flat funded year, the Institute was able to generate a modest mcrease m Net Assets. The Institute anticipates that the current fiscal year will be much hke last and will mamtam a close watch over resources to mamtam the Inst1tute's ab1hty to react to unknown mtemal and external issues 
 
James G. Sanders, Director Sk1daway Institute of Oceanography 
- 7- 
 
 BASIC FINANCIAL STATEMENTS -9- 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY STATEMENT OF NET ASSETS 
JUNE 30 2002 
ASSETS 
Current Assets Cash and Cash Equivalents Accounts Receivable Federal Fmanc,al Assistance Other Prepaid Items 
Total Current Assets 
Noncurrent Assets Caprtal Assets, Net /See Note 4/ 
Total Assets 
LIABILITIES 
Current l.Jab1lrt1es Accounts Payable Deferred Revenue Capital Leases Compensated Absences 
Total Current l.Jab1lllres 
Noncurrent l.Jablht1es Caprtal Leases Compensated Absences 
Teta\ Noncurrent L1ab1hbes 
Total L1ab1llbes 
NET ASSETS 
Invested m Capital Assets, Net of Related Debt Unnsstncted 
Total Net Assets 
 
EXHIBIT"A" 
$ 74,531 76 793,533 00 549,057 78 24 622 71 
$ 1 441 745 25 
$ 5,891,498 42 $ 7,333,243 67 
$ 45,842 72 973,252 00 75,134 65 232,243 03 
$ 1,326,472 40 
$ 443,870 95 124 359 40 
$ 568,230 35 $ 1,894,702 75 
$ 5,372,492 82 66 048 10 
$ 5,438,540 92 
 
See Independent Accountant's Combined Report on Review of Basic Fmanc,al Statements and Supplementary lnforrnabon 
The notes to the financaal statements ans an integral part of this statement 
- 11 - 
 
 SKIDAWAY INSTITUTE Of OCEANOGRAPHY 
STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED JUNE 30 2002 
 
EXHIBIT"B" 
 
OPERATING REVENUES 
Grants and Contracts Federal State Local Nongovernmental 
Rents and Royaltles Sales and Serv1ces of Educational Departments Aux,hary Enterpnses 
Residence Halls Other Orgamzsbons Other ()perabng Revenues 
Total Operating Revenues 
OPERATING EXPENSES 
Salanes Faculty Staff 
Employee Benefits Travel Utllllles Suppl18S and Other Serv,oes Depreaabon 
Total Operating Expenses 
Operabng Income (Loss) 
NONOPERAJING REVENUES {EXPENSES) 
State Appropnabons Grants and Contracts 
State Interest and Other Investment Income Interest Expense (Cepltal Assets) Other Nonoporatmg Revenues 
Net Nonoperatlng Revenues 
lnaease/(Deaease) 1n Net Assets 
Nat Assets Net Assets - Beginning al Year, es Ong,nally Reported Cumulative Effect al Changes m Aa:ounbng Prinaple 
Net Assets - Beginning of Year, Restated 
Nel Assets - End of Year 
See lndependlent Acaluntant's Combined Report on Ro.- al Basic Financial Statomonts and Supplementary lnfonnabon 
The notes to the finanaal statements ara an integral part of !111s statement 
-12 - 
 
$ 2,625,144 60 293,195 70 7,812 00 167,234 98 38,325 00 48,691 BO 
32,267 94 6,465 50 518,386 22 
$ 3,737,523 74 
 
$ 1,653,841 42 1,646,500 28 837,005 21 132,36114 352,82912 1,537.4TT 80 106 171 06 
$ 6,266,186 03 
$ -2,528,662 29 
 
$ 2,292,476 42 
2n.ooo oo 
12,097 89 -42,802 48 42901169 
 
$ 2,967,783 52 
 
$ 
 
439121 23 
 
$ 13,826,034 43 -8,826,614 74 
$ 4,899,419 69 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY STATEMENT OF CASH FLOWS 
YEAR ENDED JUNE 30 2002 
CASH FLOWS FROM OPERATING ACTNmES Grants and Contracts Sales and SeMces of EducaUonal Departments Payments to SUpp~ers 
Payments to Employees Awohary Enterpnse Charges 
Resutence Halls Other Organizations Other Receipts (Peymonta) 
Net Cash ProVllled (Used) by Operahng AdMtlas 
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES 
State Appropriations Agency Funds Transactions 
Gifts and Grants Received for Other than Capttat Purposes 
Other Nonoperallng Receipts 
Net Cash Flows Provided (Uled) by Noncapltal F,nanang Actlvrtlea 
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTNITIES Purchases of Caprtal Assets Prtnclpal Pa,d on Caprtal Debt and Le... Interest Paid on Capital Debt and Lease 
Net Cash Provided (Uled) by Capital and Related Financing ~ 
CASH FLOWS FROM INVESTING ACTMTIES 
Interest on Investments 
Net lna,,ase/(Decreue) In Cesh 
Cash and Cash Equlvalenta  Beillnnlng of Year 
Cash and C8ah EqulYSlents - End of Year 
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 
Operating Income (LOSS) AdJUStmonta to Reconcile Net Income (LOBI) to Na1 Ceah 
Provided (Uled) by Operatmg AclMtles Depredation Change m Assets and Llablibes Accounts Receivables, Net lnventones Prepaid Items Accounts Payable Deferred Revenue Compenuted Absences 
Net Ceah Provided (Used) by Oparabng Actlvlbes 
See lndopo-nt Accountanfs Combined Report on Review of Baa,c Flnanclal Statements and Supplementary Information 
The notes to the flnandal statements are an Integral part of ttul statement  13  
 
EXHIBIT"C" 
 
s 3,483,569 44 
48,691 80 -3,854,879 76 -3 262 776 08 
32,267 94 6,485 50 556,711 22 
s -2,989,949 94 
 
s 2 292 476 42 
-8,778 95 277 000 00 447 617 89 
s 3,008,317 36 
 
s -264,825 97 
-75,980 78 -42 802 48 
s -383,609 23 
 
s 
 
12 097 89 
 
s -353,143 92 
 
427 875 68 
 
$ 
 
74 531 76 
 
S -2,528,66229 
106,171 06 -563,069 84 
255 77 -9 384 23 -995 462 26 973,252 00 48 949 85 
S -2:989,949 94 
 
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SKIDAWAY INSTITIJTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXHIBIT "D" 
 
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
NATURE OF OPERATIONS Sk1daway Institute of Oceanography serves the state, and national commurutles by prov1dmg oceanographic research that advances fundamental knowledge, and by dissemmatmg knowledge to the people of Georgia and throughout the country 
REPORTING ENTITY Sladaway Institute of Oceanography, a urut of the Uruvers1ty System of Georgia (an organ1zat1onal urut ofthe State of Georgia), conducts oceanographic research that 1s coordinated with other manne research activities of the Umvers1ty of Georgia The accompanymg financial statements reflect the operations of Sk1daway Institute of Oceanography as a separate reportmg entity 
The Board of Regents has const1tut10nal authonty to govern, control and manage the Umvers1ty System of Georgia Tins authonty mcludes but 1s not hmiled to the power to designate management, the ab1hty to s1gruficantly mfluence operations, the authonty to control mstltutions' budgets, the power to determme allotments of State funds to member mstltutlons and the authonty to prescnbe accountmg systems and adm1mstrat1ve pohc1es for member mstitutlons Sladaway Institute of Oceanography does not have authonty to retam unexpended State appropnatlons (surplus) for any given fiscal year Accordingly, Sladaway Institute ofOceanography 1s considered an organ1zat1onal urut of the Board of Regents of the Uruvers1ty System of Georgia reporting entity for financial reportmg purposes because of the s1gn1ficance of its legal, operational, and financial relatJonslups with the Board of Regents as defined m Section 2100 of the Governmental Accountmg Standards Board (GASB) Codification of Governmental Accountmg and Fmancial Reportmg Standards 
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysisfor State and Local Governments Tins was followed IIl November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia 1s required to implement GASB Statement No 34 as of and for the year ended June 30, 2002. As an orgaruzat1onal unit of the State of Georgia, the Institute so required to adopt GASB Statements No 34 and No. 35 as amended by GASB Statements No 37 and No 38 The financial statement presentation required by GASB Statements No. 34 and No 35 as amended by GASB Statements No 37 and No 38 provides a comprehensive, entity-wide perspective of the lnstitute's assets, hab1ht1es, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective preVIously reqwred 
The Institute has elected to not restate its 2001 financial statements to conform with the new financial statement presentation, therefore comparative financial mformauon will not be presented for fiscal year 2002 S1gruficant accounting changes made m order to comply with the new reqmrements mclude (1) adopt10n of depreciation on capital assets, and (2) recogmt1on of compensated absences. 
- 14 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EX'HIBIT "D" 
 
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
FINANCIAL STATEMENT PRESENTATION At June 30, 2001, encumbrances (contractual obhgat:tons for goods and services not received at fiscal year end) were recorded as expenditures by the Institute mstead of reservations of fund balance as reqmred by generally accepted accountmg prmc1ples For fiscal year 2002, the Institute changed its method of recordmg encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses This change 1s m accordance with generally accepted accountmg pnnc1ples 
No adJustments however, have been made on the financial statements to restate the fund baJance at July I, 200 I for the June 30, 200 I encumbrances recorded as expenditures m fiscal year 200 I The net effect of the above accounttng treatment resulted m an understatement of expenses on the accompanymg financ1aJ statements for pnor year encumbrances wluch should have been reflected as expenses m the penod when goods and services were received. 
BASIS OF ACCOUNTING For financial reportmg purposes, the Institute 1s considered a spec1aJ-purpose government engaged only m busmess-type actlVJ!:tes. Accordmgly, the Inst:ttute's financ1aJ statements have been presented usmg the economic resources measurement focus and the accruaJ basis of accountmg, except as noted m the precedmg paragraphs Under the accruaJ basis, revenues are recognized when earned, and expenses are recorded when an obhgatlon has been mcurred All s1gmficant intra-Institute transactions have been ehmmated 
The Institute has the option to apply aJI FmanciaJ Account:tng Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The Inst:ttute has elected to not apply FASB pronouncements issued after the apphcable date. 
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption of GASB Statement No. 34, the Institute was aJso reqmred to make certam changes m accountmg prmc1ples, spec1ficaJly (I) adoption of depreciation on capital assets, and (2) recordmg of compensated absences Net assets at July I, 2001 were reduced by $8,826,614 74 for the cumuJat:tve effect of these changes. 
CASH AND CASH EQUIVALENTS Cash and Cash Eqmvalents consist ofpetry cash, demand deposits and time deposits m authonzed financial mstltullons, and cash management pools that have the general charactenstlcs of demand deposit accounts 
 
- 15 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
ACCOUNTS RECEIVABLE Accounts receivable consists of aux1hary enterpnse services provided to faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude amounts due from the Federal government, state and local governments, or pnvate sources No prov1s10n has been made for an allowance for doubtful accounts 
PREPAID ITEMS Prepaid Items are payments made to vendors m advance ofthe receipt ofgoods and services that WIii benefit penods subsequent to the balance sheet date 
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqms11Ion, or frur market value at the date of donal!on m the case of gifts. For eqmpment, the lnslltute's cap1tal1zatlon pohcy includes all items with a umt cost of $5,000.00 or more, and an est1mated useful hfe of greater than one year Renovallons to bmldmgs, infrastructure, and land 1mprovements that exceed $100,000 00 and s1gruficantly mcrease the value or extend the useful hfe of the structure are cap1tahzed Routme reprurs and maintenance are charged to operal!ng expense m the year m which the expense was mcurred Deprec1a1Ion 1s computed usmg the stnught-lme method over the estimated useful hves of the assets, generally 40 to 60 years for bmldmgs, 20 to 25 years for infrastructure and land improvements, IO years for hbrary books, and 3 to 7 years for eqmpment 
To obtam the total picture ofplant add1t1ons m the Umvers1ty System, 111s necessary to look at the actlVJl!es of the Georgia State Fmancmg and Investment Corrumss1on (GSFIC)- an organizal!on that 1s external to the System GSFIC issues bonds for and on behalfofthe State ofGeorgia, pursuant to powers granted to 11 m the Constltullon ofthe State ofGeorgia and the Act creating the GSFIC The bonds so issued conslltute direct and general obhgallons of the State of Georgia, to the payment of which the full fruth, credit and taxmg power of the State are pledged 
DEFERRED REVENUES Deferred revenues mclude amounts received from grant and contract sponsors that have not yet been earned. 
COMPENSATED ABSENCES Employee vacal!on pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable m the Statement of Net Assets, and as a component of compensal!on and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Sk1daway lnstitute ofOceanography had accrued hab1hty for compensated absences m the amount of $309,652 58 as of July I, 2001 For Fiscal Year 2002, $279,192.88 was earned m compensated absences and employees were prud $232,243.03, for a net mcrease of $46,949 85 
 
- 16- 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EXHIBIT"D" 
 
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
NON-CURRENT LIABILITIES Non-current hab1ht1es mclude (I) hab1h11es that will not be paid w1thm the next fiscal year, (2) capital lease obhgallons with contractual matunlles greater than one year, and (3) other hab1h11es that, although payable w1tlun one year, are to be paid from funds that are classified as non-current assets 
NET ASSETS The lnslltute's net assets are classified as follows 
Invested m capital assets, net of related debt This represents the lnslltute's total mvestment m capital assets, net of outstanding debt obhgallons related to those capital assets. To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgat10ns" as used m this defirut1on does not mclude debt of the GSFIC as discussed above.) 
Unrestncted net assets Unrestncted net assets represent resources denved from state appropnallons, sales and services of educauonal departments and aux1hary enterpnses These resources are used for transactions relallng to the educallonal and general operations ofthe lnslltute, and may be used at the d!screllon of the govemmg board to meet current expenses for those purposes, except for unexpended state appropnat1ons (surplus) of$75,555 99 Unexpended state appropnallons must be refunded to the Board of Regents of the Uruvers1ty System of Georgia Admrmstratlve Central Office for rCIIllttance to the Office of Treasury and Fiscal Services. These resources also mclude aUX1hary enterpnses, wluch are substanllally self-supportmg acllv111es that provide services for students, faculty and staff. 
When an expense 1s mcurred that can be paid usmg either restncted or unrestncted resources, the lnslltute's pohcy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources 
INCOME TAXES Skidaway lnslltute of Oceanography, as a polillcal subd1v1s1on of the State of Georgia, 1s excluded from Federal mcome taxes under Section 115(1) of the Internal Revenue Code, as amended 
CLASSIFICATION OF REVENUES The lnslltute has classified its revenues as either operatmg or non-operallng revenues m the Statement of Revenues, Expenses, and Changes m Net Assets according to the followmg cntena: 
Operating revenues Operaung revenues mclude acuv1Ues that have the charactenst:Ics ofexchange transacllons, such as (I) sales and services of aux1hary enterpnses and (2) most Federal, state and local grants and contracts and Federal appropnauons. 
 
- I7 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
CLASSIFICATION OF REVENUES Non-operating re1enues Non-operatJ.ng revenues mclude act1v1tJ.es that have the charactensllcs of non-exchange transact10ns, such as gifts and contnbullons, and other revenue sources that are defined as non-operatmg revenues by GASB No. 9, Reporting Cash Flows of Proprietarv and Nonexpendab/e Trust Funds and Governmental Entitles That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropnallons and mvestment IDCOme 
NOTE 2 CASH AND CASH EQUIVALENTS AND OTHER DEPOSITS 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia (and thus Sladaway Institute of Oceanography) cannot be placed ID a depository pa)'lng mterest longer than ten days without the depository prov1d1Dg a surety bond to the State. In heu of a surety bond, the depository may pledge as collateral any one or more ofthe followmg secunlles as enumerated m the Official Code ofGeorgia Annotated Secllon 50-1759 
1. Bonds, bill, certJ.ficates of1Ddebtedness, notes, or other direct obhgallons ofthe Uruted States 
or of the State of Georgia 
2. Bonds, bills, certificates of 1Ddebtedness, notes, or other obhgatJ.ons of the countJ.es or muruc1paht1es of the State of Georgia 
3 Bonds of anypubhc authonty created by the laws of the State ofGeorgia, prov1d1Dg that the statute that created the authonty authonzed the use of the bonds for tlns purpose. 
4. Industnal revenue bonds and bonds of development authonlles created by the laws of the State of Georgia. 
5 Bonds, bills, certificates of indebtedness, notes, or other obhgatJ.ons of a subsidiary corporation ofthe United States government, which are fully guaranteed by the United States government both as to pnnc1pal and 1Dterest, or debt obhgatJ.ons issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Assoc1at1on, and the Federal National Mortgage Assoc1atJ.on 
6 Guarantee or insurance ofaccounts provided by the Federal Deposit Insurance Corporallon. 
As authonzed ID the Official Code of Georgia Annotated Secllon 50-17-53, the State Depository Board has adopted pohc1es winch allow agencies of the State of Georgia (and thus Sladaway Institute of Oceanography), the oplion of exempling demand deposits from the collateral reqwrements. 
- 18 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO TIIE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EXHIBIT"D" 
 
NOTE 2 CASH AND CASH EOUNALENTS AND OTHER DEPOSITS 
 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES The Treasurer ofthe Board ofRegents 1s responsible for all details relative to funnshmg the reqmred depos1toryprotect1on for all uruts of the Uruvers1ty System of Georgia 
 
CATEGORIZATION OF DEPOSITS The lns!!tute's cash deposits are categonzed by nsk as follows: 
 
Category I - Amounts covered by depository msurance or collaterahzed with secuntles (at fair value) held by the lnstltute or by its agent m the lnstltute's name 
 
Category 2 - Amounts collaterahzed with secunt1es (at f3.1r value) held by the pledging financial msutuuon's trust department or agent m the lnslltute's name 
 
Category 3 - Amounts collaterahzed with secunbes (at f3.1r value) held by the pledging financial mstltutlon, or by its trust department or agent but not m the lnstltute's name, and amounts uncollaterahzed. 
 
Cash Deposits as of June 30, 2002 are as follows: 
 
Cash Deposits 
 
Carrymg 
Amount 
 
Banlt 
Balances ~ 
 
Risk Categones 
 
s 73 ;U, 26 s 522 259 25 s 100 ooo oo s_ _..,o..,oo.,. s 497 752 25 
 
NOTE 3: ACCOUNTS RECEIVABLE 
 
Accounts receivable consisted of the followmg at June 30, 2002: 
 
Federal, State, and Pnvate Funds Other 
Total Accounts Receivable 
 
$ 1,338,065 I 6 4,525.62 
$ I.342 590.78 
 
NOTE 4 CAPITAL ASSETS 
 
The balance at July I, 200 I was adJusted for accounting changes required m 1mplementmg GASB Statements 34 and 35 as disclosed m Note I. Followmg are the changes m capital assets for the year endedJune30,2002 
 
- 19 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXrHBIT"D" 
 
NOTE4 CAPITAL ASSETS 
 
Adjusted Balance 
July 1. 2001 
 
Addition~ 
 
Reduct100S 
 
Balance June 30. 2002 
 
Capital Assets, l'.ot Being Dcprec1a1cd 
 
Land and Land Improvements 
 
$ 449 460 00 
 
s 449.460 00 
 
Capnal Assets, Bcmg Depreciated 
 
Bu1ldmg and Bu1ldmg lmprovemmts s 4.525.125 35 
 
Fac1h11es and Other Improvements 
 
335.818 00 
 
Equ1pmmt 
 
4.021.98414 $ 
 
Capital Leases 
 
000 
 
L1 brary Collccuons 
 
166,748 16 
 
$ 2 !M9,67~ 6~ s 
 
154,342 97 s 
594,986 38 
749 J22,35 $ 
 
$ 18.606 20 
 
4,525,125 35 335.818 00 
4,157.72091 594,986 38 
166 748.16 
 
IB,606 20 s 9,780 '2~ 80 
 
Less Accumulated Dcprcc1at1on Bu1ldmgs and Bu1ldmg Improvements S Fac1ht1es and Other Improvements Equ1pmmt 
Capnal Leases Library Collect1ons 
 
1,533,087 03 $ 114,458 10 
2,442.918 67 000 
1411~~.52 
 
s 4 in.1s9 3z $ 
 
16,608 93 s 
1.257 73 22,603 76 59.498 64 
6J02 QQ 
IQ611J.Q6 $ 
 
0 00 $ 0 O!) 
 
1,549.695 % 115,715 83 
2,465,522 43 59.498 64 147 927 52 
 
000 s 4 J}8.360 'B 
 
Total Capital Assets. Bemg Dcprcc1atcd. 
 
Net 
 
s 4,817 486 33 $ 
 
Capital Assets. Net 
 
s 5 266 946 }J s 
 
64315829 s 643 1S8 22 $ 
 
18,606 20 $ 5,442 0'8 42 
1860620 $ S89] 498 42 
 
NOTE 5. DEFERRED REVENUE 
 
Deferred revenue consisted of the followmg at June 30, 2002 
 
Research 
 
S 973,252,00 
 
NOTE 6- LONG-TERM LIABILITIES 
 
Long-term hab1hty activity for the year ended June 30, 2002, was as follows 
 
Balance JuJy I 2QQI 
 
Addmons 
 
ReductJODS 
 
Balance 
June 30 2002 
 
Curren! 
Pon10n 
 
Leases Lease Obl1gat1ons 
 
s 
 
000 s 594,986 38 s 75.980 78 s 519,005 60 s 75. 134 65 
 
Other L1ab1l1t1cs Compensated Absences 
 
309.650 58 
 
279.192 88 
 
232,243 03 
 
,56 602 43 
 
;.32 243.03 
 
Total Long-Tenn Obhgat1ons s J0,2 ~, ~5 s 6Z4 IZ9 2~ s J06 223 SI s sz~ ~us CJ $ JCZ 322 ~ 
 
- 20 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE 7 LEASE OBLIGATIONS 
 
CAPITAL LEASES The capital lease 1s payable in quarterly installments and has a term expmng in year 2008 Expenses for fiscal year 2002 were $118,783 26 ofwh1ch $42,802 48 represented interest and $75,980 78 represented pnnc1pal The interest rate 1s 8 percent The capital lease provides for renewal options 
 
SUMMARY OF LEASE OBLIGATION Future commitments for the capital leases haVJng remaining terms in excess of one year as of June 30, 2002, were as follows 
 
Capital Leases 
 
Year Ending June 30 2003 2004 2005 2006 2007 2008 
 
$ 111,406 69 111,406 69 111,40668 111,406 68 111,406 69 88,019 07 
 
Total Minimum Lease Payments 
 
$ 645,052.50 
 
Less Interest 
 
126,046 90 
 
Pnnc1pal Outstanding NOTES RETIREMENT PLANS 
 
$ 519,005 60 
 
TEACHERS RETIREMENT SYSTEM OF GEORGIA 
 
Plan Description Sladaway Institute of Oceanography part1c1pates in the Teachers Retirement System of Georgia (TRS), a cost-shanng multlple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of proVJding rehrement allowances and other benefits for teachers of the State of Georgia TRS provides service rehrement, d1sab1hty retirement, and sUTVJvor's benefits for its members m accordance wtth State statute. The Teachers Retlrement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts 
 
- 21 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXHIBIT"D" 
 
NOTE 8 RETIREMENT PLANS 
 
TEACHERS RETIREMENT SYSTEM OF GEORGIA 
 
Funding Policy Employees of Sk.Jdaway Institute of Oceanography who are covered by TRS are reqmred by State statute to contnbute 5% ofthe1r gross earrungs to TRS Sk1daway Institute ofOceanography makes monthly employer contnbullons to TRS at rates adopted by the TRS Board ofTrustees m accordance with State statute and as advised by their mdependent actuary For fiscal year 2002, the employer contnbullon rate was 9.24% for covered employees Employer contnbutlons for the current fiscal year and the precedmg two fiscal years are as follows: 
 
Fiscal Year 
 
Percentage Contnbuted 
 
Reqmred Contnbut10n 
 
2002 2001 2000 
 
100% 100% 100% 
 
$ 222,843 72 $ 269,598 84 $ 272,776 49 
 
REGENTS RETIREMENT PLAN 
 
Plan Description The Regents Retirement Plan, a smgle-ernployer defined contnbuuon plan, 1s an optional retirement plan estabhshed and admm1stered by the Board of Regents of the Uruvers1ty System of Georgia, under which 1t may p11rchase annwty contracts for the purpose of proVJdmg rellrement and death benefits for ehgible faculty and pnnc1pal adrnmlstrators. Benefits depend solely on amounts contnbuted to the plan plus mvestrnent eammgs Benefits are payable to part1c1paung employees or their benefic1anes m accordance with the terms of the annwty contracts 
 
Fonding Policy Member contnbut1on requirements are estabhshed by the Board of Trustees of the Teachers Retirement System. Employer contnbut1ons are estabhshed by statute and may be amended only by the General Assembly ofthe State ofGeorgia. The employer contnbutes 9 62% of the part1c1patmg employee's earnable compensation Employees contnbute 5% of their earnable compensation Amounts attnbutable to all plan contnbutlons are fully vested and non-forfe1table at all times 
 
Sk.Jdaway lnsUtutc of Oceanography and the covered employees made the reqwred contnbut1ons of $49,778.88 (9.62%) and $25,352.86 (5%), respectively. 
 
- 22- 
 
 SK.IDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXHIBIT "D" 
 
NOTE 8 RETIREMENT PLANS 
GEORGIA DEFINED CONTRIBUTION PLAN 
Plan Description Skldaway Institute ofOceanographypart1c1pates m the Georgia Defined Contnbul!on Plan (GDCP) wluch 1s a smgle-employer defined contnbut10n plan established by the General Assembly of Georgia for the purpose of proVJdmg retuement coverage for State employees who are temporary, seasonal, and part-tune and are not members of a pubhc rel!rement or pens10n system GDCP 1s admunstered by the Board of Trustees ofthe Employees' Retirement System of Georgia. 
Benefits A member may reure and elect to receive penod1c payments after attamment ofage 65 The payment will be based upon mortahty tables and mterest assumptions to be adopted by the Board ofTrustees Ifa member has less than$ 3,500.00 credited to !us/her account, the Board ofTrustees has the opuon of reqwnng a lump sum chstnbut1on to the member m heu of making penod1c payments Upon the death of a member, a lump sum d1stnbut10n equalmg the amount credited to !us/her account will be paid to the member's designated beneficiary. Benefit prov1S1ons are estabhshed by State statute 
Contributions and Vesting Member contnbutions are seven and one-halfpercent (7 .5%) of gross salary There are no employer contnbul!ons Contnbuuon rates are established by State statute. Eammgs are credited to each member's account m a manner established by the Board of Trustees Upon termmauon of employment, the amount of the member's account 1s refundable upon request by the member 
Total contnbutions made by employees dunng fiscal year 2002 amounted to $9,492 00 which represents 7.5% of covered payroll. These contributions met the requirements of the plm 
NOTE 9. RISK MANAGEMENT 
Sk!daway lnsl!tute of Oc=ography 1s a paruc1pant m the Board of Regents of the Umvers1ty System of Georgia Health Benefits Plan, which 1s a sclf-msurance program of health and dental benefits for employees and retirees of the Uruvers1ty System of Georgia Skldaway lnslltute of Oceanography and partlc1patlng employees and retirees pay prerruums to the Health Benefits Plan for this health msurance coverage. The Health Benefits Plan 1s mcluded m the financial statements of the Board ofRegents ofthe Umvers1ty System ofGeorgia - Achmrustratlve Central Office All uruts of the Uruvers1ty System of Georgia share the nsk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustmrung nsk fund that provides health coverage for its members up to a maxunum hfetJrne benefit of $2,000,000.00 per person and dental coverage up to an annual maxunum of$l,000 00 per person The Board of Regents has contracted with Blue Cross Blue Slueld of Georgia to process clauns m accordance with the Health Benefits Plan as estabhshed by the Board of Regents 
 
- 23 - 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXHIBIT "D" 
 
NOTE 9 RISK MANAGEMENT 
The Department of AdmnustratJve Services (DOAS) has the respons1b1lity for the State of Georgia of makmg and carrymg out dec1s10ns that will mm1m1ze the adverse effects ofaccidental losses that mvolve State goverrnnent assets The State believes 1t 1s more economical to manage Its nsks mtemally and set aside assets for clallil settlement Accordmgly, DOAS processes chums for nsk of loss to which the State 1s exposed, mcludmg general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' mdemruficatJon L1m1ted amounts of commercial msurance are purchased applicable to property, employee and automobile liability, fidelity and certam other nsks. Sk1daway Institute of Oceanography, as an orgaruzatJonal urut of the Board of Regents of the Uruvers1ty System of Georgia, 1s part of the State of Georgia reportmg entity, and as such, 1s covered by the State of Georgia nsk management program adm1rustered by DOAS Premiums for the nsk management program are charged to the vanous state organizations by DOAS to provide chums serv1cmg and claims payment 
A self-msured program of professional liability for its employees was established by the Board of Regents of the Uruvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Secnon 45-9-1. The program insures the employees to the extent that they are not immune from liability agamst personal liability for damages ansmg out of the performance of their duties or m any way connected therewith The program 1s adm1rustered by DOAS as a SelfInsurance Fund 
NOTE IO CONTINGENCIES 
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. Tlus couJd result m refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount ofexpenditures wluch may be disallowed by the grantor cannot be determmed at this tllile although Skldaway lnstJtute of Oceanography expects such amounts, 1f any, to be IIIlffiatenal to its overall financial position 
L1tJgatJon, clallilS and assessments filed against Skldaway Institute of Oceanography (an orgaruzatJonal unit of the Board of Regents of the Uruvers1ty System of Georgia), 1f any, are generally considered to be actJons agamst the State of Georgia. Accordmgly, s1gruficant lit1gat10n, claims and assessments pendmg agamst the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmanc1al Report for the fiscal year ended June 30, 2002 
NOTE 11  POST-EMPLOYMENT BENEffiS OTHER THAN PENSION BENEffiS 
Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board of Regents ofthe Uruvers1ty System of Georgia has established group health and life !IlSurance programs forregular employees of the Uruvers1ty System ofGeorgia It 1s the policy ofthe Board ofRegents to permit employees ofthe Uruvers1ty System ofGeorgia eligible for retJrement or that become permanently and totally disabled to continue as members of the group health and life 
- 24- 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 
 
EXHIBIT "D" 
 
NOTE 11 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS 
 
msurance programs Employees who are eligible for retirement or d1sab1lity under the cntena established by the Teachers Retirement System of Georgia and who have at least ten years ofservJce with the Umvers1ty System of Georgia are eligible for these post-employment health and life msurance benefits Organizational units of the Board of Regents of the Umvers1ty System of Georgia pay the employer portion for group msurance for affected md1V1duals 
 
As of June 30, 2002, there were 2 I employees who had retired or were disabled that were rece1vmg these post-employment health and life insurance benefits For the year ended June 30, 2002, Sladaway Institute ofOceanography recogmzed as mcurred $61,844 71 ofexpenses, which was net of $24,005 13 of partJc1pant contnbutions 
 
NOTE 12 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS 
 
The Institute's operatmg expenses by functional class1ficat1on are shown below 
 
Staltment of Operatmg Expenses - Natural vs Funcb0fla1 C\assifitaboni I-or the Fiscal ) ear Ended June 30, 2002 
Narum! Clau,ficanon 
S.lancs Faculty Staff 
Employee Benefit, Travel Ub!lbcs Supp1lCS and Other 
Services r>eprec1at1on 
Total Opcraimg Expenses 
 
FuncMnal Qa,wficanon 
 
Banm:b 
 
Acaderruc $ypport 
 
lnstJ:rutJOOal Syrmort 
 
s s s 1,533.347 03 
 
43,600 47 
 
76,893 92 
 
347,432 37 
 
319,961 82 
 
412,442 60 
 
399,887 26 
 
81,96620 
 
209,988 68 
 
95,739 45 
 
24,271.22 
 
10,808 53 
 
18.343 67 
 
5,49211 
 
1,033 01 
 
960,122 80 
 
187,426 74 
 
87,631 45 
 
s J}Y 872 58 s 662 718 56 s 728 798 l9 
 
Natural Oau1ficat1on 
Salanes Faculty Staff 
~loyee Benefits Tni.vel Ut:1htJcs 
Suppl,es and Other Serv>= 
OC'prcclatJon 
Tool Opennng Expenses 
 
Plant 
()penbons and 
Ma1ntenaru;t; 
 
Functwnal C1ass1ficanon 
 
Aux,lwy 
Entgpnscs 
 
Unallocated Pcm:cc11t1on 
 
Total Openimg 
ExPCOW 
 
S 566,663 49 
145,163 07 
1,541 94 
321,80325 S 
281,967 48 
s 1JIZIJ221 s 
 
6,157 08 
 
S 1,653,841 42 
1,646,500 28 837,005 21 132,361 14 352,829 12 
 
20,329 33 
S 106 171 06 
 
1,537,47180 
106 171 06 
 
761M11 s 10617106 s 626618693 
 
- 25 - 
 
 SUPPLEMENTARY INFORMATION - 27 - 
 
 SKIDAWAY INSffil/TE OF OCEANOGRAPHY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO 
BUDGET -(NON-GAAP BASIS\ RESIDENT INSTRUCTION 
YEAR ENDED JUNE 30 2002 
 
SCHEDULE "1" 
 
REVENUES 
State Appropnabons Other Revenues Retained 
 
BUDGET 
 
ACTUAL(1) 
 
VARIANCEFAVORABLE (UNFAVORABLE) 
 
$ 
 
368,11300 $ 
 
368,113 00 $ 
 
000 
 
447 617 89 
 
0 00 447 617 89 
 
s 
 
36811300 $ 
 
815,730 89 $ _ __c44..:,7:..,.,6=..1"-7..;:8.=..9 
 
EXPENDITURES 
Operating Expenses Educabon, General and Departmental Serv,ces 
Capltal Outlay 
 
s 
 
195,000 00 $ 
 
567,235 70 $ 
 
173113 00 
 
17311300 
 
-372,235 70 000 
 
$ 
 
36811300$ 
 
740,348 70 $ _ _ _.,;:3"'72c;.,2C-'3'-"5..:.7.=..0 
 
Excess of Revenues over Expenditures 
 
$ 
 
75 38219 $ _ _ _~75::,;3:::8::;2_,:1.::,9 
 
( 1) Actual amounts were prepared on a presa1bed basis of aa:ounbng that demonstrates compliance wrth budgetary statutes and regulabons of the State of Georgia, which ,s a comprehensive bas,s of aecx>unbng other than generally accepted aecx>untlng pr1naples 
 
See aecx>mpany,ng notes and Independent Accountant's Combined Report on Review of Bas,c Finanaal Statements and Supplementary lnformabon 
-29- 
 
 SKIDAWAY INSTITUTE Of OCEANOGRAPHY 
SCHEDULE Of REVENUES ANO EXPENDITURES COMPARED TO BUDGET {NON-OAAP BASIS} LOTTERY FOR EDUCATION 
YEAR ENPEP JUNE 30. 2002 
 
SCHEDULE "2" 
 
REVENUES 
State Appropnabons 
 
BUDGET 
 
ACTUAL (1) 
 
VARIANCE FAVORABLE (UNFAVORABLE) 
 
s 
 
66 276 00 $ 
 
66.215 oo s_____"'o"'oo"' 
 
EXPENDITURES 
Equipment Technology and Construction Trust Fund 
Speaal Funding lmba11Vas 
Excess of Revenues over Expenditures 
 
$ 
 
46.276 00 $ 
 
46,276 00 $ 
 
000 
 
20 000 00 
 
20 000 00 
 
000 
 
s 
 
6627600 $ 
 
66,276 oo s____-=o-'o"--o 
 
$ 
 
0 00 S _ _ _ _...,::0~0:::,0 
 
(1) Actual amourrts were prepared on a prescnbed bas,s of accounting that demonstrates compliance with 
budgetary staMes and regulatrons of the State of Georgia. which is a comprehensive baSls of accounbng other than generally accepted accounting pnnaples 
 
See accompanying notes and Independent Accountant's Combined Report on Review of Bas,c Fmanaal Stalements and Supplementary lnformallon 
-30- 
 
 SKIDAWAY INSTITUTE OF OCEANOGRAPHY 
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO 
BURGET - /NON:GAAP BASIS! OTHER ORGANIZED ACTIVITIES 
YEAR ENDED JUNE 30 2002 
 
SCHEDULE "3" 
 
BUDGET 
 
ACTUAL(1) 
 
VARIANCEFAVORABLE (UNFAVORABLE) 
 
REVENUES 
State Appropnat,ons Other Revenues Retained 
 
$ 
 
1,859,122 00 $ 1,859,122 00 $ 
 
3,343,420 00 
 
4198 219 68 
 
000 854 799 68 
 
$ 
 
6,057 34168 $ _ _~8~54-",7_99~68~ 
 
EXPENDITURES 
 
Personal SeMces 
 
Educabon, General and Departmental SeMces 
 
s 
 
Sponsored Operabons 
 
Operabng Expenses 
 
Educabon, General and Departmental Serv,ces 
 
Sponsored Operabons 
 
2,172,426 00 $ 
1,692,948 00 
530,116 00 807 052 00 
 
2 068, 195 83 $ 2,022,201 23 
719,088 13 1247756 49 
 
104 230 17 -329,253 23 
-188,972 13 -440 704 49 
 
Excess of Revenues over Expenditures 
 
$ 
 
512021542 oo s 6,051.241 ss s___-854-=-"6~9'-=9-"68"'" 
 
s 
 
10000 s _____100__.o_o 
 
(1) Actual amounts were prepared on a presa,bed basis of accounbng that demonstrates a,mphance With budgetary staMes and regulations of the Sta19 of Georgia, which 1s a a,mprehens,ve basis of accounbng 
other than generally accepted accounbng pnnaples 
 
See accompanying notes and Independent Accountant's Combined Report 
on Review of BaSlc Financial Statements and Supplementary lnfonnabon 
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 SKIDAWAY INSTITUTE OF OCEANOGRAPHY 
RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 2002 
 
SCHEDULE "4" 
 
Totals per Annual Supplement 
Compensated Absences June 30, 2002 June 30, 2001 
AdJustments Shared Services on Jointly Stalled Personnel Armstrong Atlantic State University Holliman, Patncaa Momson, Chnstel 
 
SALARIES $ 3,254,144 55 $ 
 
TRAVEL 132,361 14 
 
331,260 97 -287,660 50 
 
3,756 99 -1 160 31 
$ 313001341 70 $ -.,...:.1;;;:32;,.136=1~1;;4:,. 
 
See accompanying notes and Independent Accountant's Combmed Report on Review of Basic Fmancaal Statements and Supplementary lnformebon 
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 SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS 
 
 SKIDAWAY INST111JTE OF OCEANOGRAPHY SCHEDULE OF F11'.'DINGS AND QUESTIONED COSTS 
YEAR ENDED JUNE 30, 2002 
FINANCIAL STATEMEJ\'T FINDINGS AND QUESTIONED COSTS 
ACCOUNTING CONTROLS (OVERALL) Inadequate Closmg Procedures Fmdmg Control Number FS-593-02-01 
Dunng fiscal year 2002, the Board ofRegents ofthe Uruvers1ty System ofGeorgia converted uruts of the Uruvers1ty System from the College Umvers1ty Fmancial Accountmg (CUFA) legacy system lo the new GeorgiaFJRSTSystem (Fmanc1al, Information and Reportmg Systems for Tomorrow) In October of2001, Sk1daway Institute ofOceanography placed this accountmg system mto producuon 
The management ofSk1daway Institute ofOceanography 1s responsible for 1mplementmg procedures to establish and mamtam adequate control over the operation, utllizatlon, and mtegnty of their data processed with the Georg1aF/RST System We encountered problems v11th the financial data presented by the Institute. The Instltute's failure to establish and adhere to a final closing for the year ended June 30, 2002, created a s1tuat10n where data presented for reVJew was mcomplete. Extensive review procedures were necessary to determme the val1d1ty of the mformat1on proVJded 
To reduce the nsk ofreportmg incomplete mformatlon, the institute should work with the Board of Regents Central Office to develop procedures that will result m complete reporting of all financial data m a more efficient and timely manner. 
CASH AND CASH EQUIVALENTS Inadequate Cash Procedures Findmg Control Number FS-593-02-02 
For the year under reVJew, Sladaway Institute of Oceanography failed to reconcile the bank statements for the operatmg and payroll accounts to the general ledger m a timely manner. Book errors were earned as reconc1hng items for extended penods of time. 
These defic1enc1es occurred because ofmanagement's failure to establish procedures to analyze and reconcile balances on the general ledger with supportmg records and mmagement's failure to ensure that reconc1liatlons were made m a timely manner. Sk1daway Institute of Oceanography should implement appropnate procedures to ensure that bank statements are reconciled to the general ledger and that required adjustments are identified and recorded ma timely manner 
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 SKIDAWAY INSTITUTE OF OCEANOGRAPHY SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
YEAR ENDED JUNE 30, 2002 
FINANCIAL STATEME:t\'T FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Inadequacies m Control Over Accounts Receivable Subs1d1ary Ledger Fmdmg Control Number FS-593-02-03 Our exammauon mcluded a reVJew ofthe procedures utilized by Sladaway Insutute ofOceanography m recordmg transactions to the vanous modules compnsmg the Georg1aFJRSTaccountmg system Our testmg revealed that, at June 30, 2002, the Insutute's general ledger module did not balance with the accounts receivable subs1d1ary module Tins condition was pnmanly due to errors m posting subs1d1ary records dunng the conversion from the old College Umvers1ty Fmancial Accountmg (CUFA) legacy accounung system to the new GeorgiaFIRST accounUng system and due to transactions bemg posted to the general ledger module rather than the appropnate subs1d1ary module The Institute did not proVJde a reconc1hat1on ofthe general ledger balances to the subs1d1ary records winch resulted m extensive work by the auditors to identify reconc!lmg items at June 30, 2002 Management's failure to ensure that subsidiary records are reconciled with the general ledger causes mtemal reports to management, generated from the accounts receivable subs1d1ary module, to be maccurate and nusleadmg. Tins condition can lead to erroneous dec1S1ons by the lnslltute's management and result m maccurate reporting of financial mformat1on. To ensure accurate and timely reporting of financial mformallon from subsidiary records, the lnslltute should post transactions correctly to the accounts receivable subs1d1ary ledger rather than as Journal entnes m the general ledger. The Institute should develop mtemal accountmg controls and procedures to ensure that reconc1hatJons ofthe accounts receivable subs1d1ary ledger and the general ledger are perfonned on a regular basis 
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