Management report, South Georgia College, Douglas, Georgia, an organizational unit of the state of Georgia, year ended June 30, 2008

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
MANAGEMENT REPORT SOUTH GEORGIA COLLEGE
DOUGLAS, GEORGIA
AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2008
Russell W. Hinton State Auditor

SOUTH GEORGIA COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMITTAL

SELECTED FINANCIAL INFORMATION

EXHIBITS

A STATEMENT OF NET ASSETS - (GAAP BASIS)

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS -

(GAAP BASIS)

3

C STATEMENT OF CASH FLOWS - (GAAP BASIS)

5

D SELECTED FINANCIAL NOTES

6

SUPPLEMENTARY INFORMATION

SCHEDULES

I BALANCE SHEET- (STATUTORY BASIS) BUDGET FUND

18

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

19

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(STATUTORY BASIS) BUDGET FUND

20

4 RECONCILIATION OF SALARIES AND TRAVEL

23

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

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 658-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 25, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly of Georgia Members ofthe State Board of Regents of the University System of Georgia
and Honorable Virginia M. Carson, President South Georgia College
Ladies and Gentlemen:
As part ofour audit ofthe basic financial statements ofthe State ofGeorgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State ofGeorgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2008, we have performed certain audit procedures at South Georgia College. Accordingly, the financial statements and compliance activities ofSouth Georgia College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of South Georgia College as of and for the year ended June 30, 2008. Information contained in this report is a by-product of our audit ofthe basic financial statements ofthe State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.

This report is intended solely for the information and use of the management of South Georgia College, members of the Board of Regents of the University System of Georgia and the Southern Association ofColleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully s u b m ~

RWH:as

R sell W. Hinton, CPA, CGFM State Auditor

SELECTED FINANCIAL INFORMATION -I-

SOUTH GEORGIA COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30, 2008
ASSETS
Current Assets Cash and Cash Equivalents
Accounts Receivable, Net (Note 3)
Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments Notes Receivable, Net
Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deposits
Deferred Revenue (Note 5)
Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets
-2-

EXHIBIT"A"

$

428,341

84,282 581,278 249,680
19 758

$ 1,363,339

$

3,798

150,000

49,273

30,010,486

$ 30,213,557

$ 31,576,896

$

113,725

76,195

50,600

930

209

129,283

72,499

237107

$

680,548

$ 16,487,459 134 301
$ 16,621,760
$ 17,302,308

$ 13,450,528
153,798 116,986 553,276

$ 14,274,588

SOUTH GEORGIA COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2008

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal Other
Sales and Services of Educational Departments Auxiliary Enterprises
Residence Halls Bookstore Food Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Gifts Interest and Other Investment Income Interest Expense Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses. Gains, or Losses
Capital Grants and Gifts State
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year (Restated)
Net Assets - End of Year

$

3,532,229

-2,040,103

3,594,504 17,118 67,906

1,146,335 993,746 785,348 232,171 33,419 94,662

$

8 457,335

$

2,437,435

4,263,299

2,258,026

97,969

123,944

1,491,235

860,916

3,836,572

1,112,168

$

16,481,564

$

-8,024,229

$

7,716,606

86,137

21,237

-672,415

-85,927

$

7,065,638

$

-958,591

2,408 818

$

1,450,227

12,824,361

$ ====14=:!'=27=4=1=,5=8=8

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(This page left intentionally blank)

SOUTH GEORGIA COLLEGE STATEMENT OF CASH FLOWS- (GAAP BASIS)
YEAR ENDED JUNE 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Intercollegiate Athletics Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Accrued Interest Payable Affecting Interest Paid Gift Reducing Proceeds of Gifts and Grants Received for Other than Capital Purposes
-5-

EXHIBIT"C"

$

1,408,625

3,526,160

67,906

-7,225,187

-6,569,756

-1,491,236

1,182,004 738,829 762,825 230,007 241,872 25388

$

-7,102,563

$

7,716,606

11 793

$

7,728,399

$

2,408,818

-2,465,322

-330 747

$

-387 251

$

21 237

$

259,822

172 317

$

432139

$

-8,024,229

1,112,168
-184,424 -66,250 -7,722 86,348 -690 -69,050 51 286

$ ==-7;.;,,.;;10=2.,.,5..,63=

$ ====1,.,6..,3.11..!i0=4=1 $ ===-=24=8=li9=1==7 $ ===-=86.,.1.,.3=7

SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY South Georgia College is one of thirty-five (35) State supported member institutions of higher 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 South Georgia College as a separate reporting entity.
The Board of Regents 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. South Georgia College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, South Georgia College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
NET ASSETS The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $23,885.78. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.
RESTATEMENT OF PRIOR YEAR NET ASSETS South Georgia College has a restatement of prior year net assets increasing beginning net assets by $1,162,081. This is due to an overstatement of depreciation expense in prior years.
NOTE 2: DEPOSITS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the South Georgia College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) 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 any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
I. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations 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 Association and the Federal National Mortgage Association.
-7-

SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 2: DEPOSITS

DEPOSITS 6. Guarantee or msurance of accounts provided by the Federal Deposit Insurance
Corporation.

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.

At June 30, 2008, the carrying value of deposits was $580,581 and the bank balance was $699,913. Of the College's deposits, $599,913 were uninsured. Of these uninsured deposits, $64,126 were collateralized with securities held by the financial institution's trust department or agent in the College's name, $535,787 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2008.

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State and Private Funds Other

$

98,229

77,453

84,282

443,226

Less Allowance for Doubtful Accounts

$ 703,190 37,630

Net Accounts Receivable

$===6==65=",5==6==0

NOTE 4: CAPITAL ASSETS

Following are the changes in the College's capital assets for the year ended June 30, 2008:

-8-

SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections
Total Assets Being Depreciated
Less: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections
Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, Net

Beginning Balance July 1, 2007 (Restated)
$ 197,146 2,380,031
$ 2,577,177
$ 1,293,392 20,973,555 1,239,613 978,999 0 1,209,742
$ 25,695,301
$ 391,898 12,516,698 954,065 928,780 0 1,134,957
$ 15,926,398
$ 9,768,903
$ 12.346.080

Additions $ 2,446,389 $ 2,446,389

$ 16,311,041 18,933
$ 16,329,974

$

46,562

551,688

23,290

20,387

455,615

14,626

$ 1,112,168

$ 15,217,806
$ 17 664 )95

Reductions

$

0

$

0

$

2 147

$

2 147

$

211

2 147

$

2,358

$

-211

$

-211

Ending Balance June 30, 2008
$ 197,146 4,826,420
$ 5,023,566
$ 1,293,392 20,973,555 1,239,613 978,999 16,311,041 1,226,528
$ 42,023,128
$ 438,460 13,068,386 977,355 948,956 455,615 I, 147,436
$ 17,036,208
$ 24,986,920
$ 30.0J0 486

NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2008.

Other Deferred Revenue NOTE 6: LONG-TERM LIABILITIES

$===9~3==0

The College's Long-Term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences
Total Long-Term Obligations

Beginning Balance Julx 1, 2007

$

0

320,121
$ 320 121

Additions $ 16,559,958
296,923
$ 16,856.881

Reductions
$ 245,636
$ 245 636

Ending Balance June 30, 2008
$ 16,559,958
371,408
$ 16.931,366

Current Portion

$

72,499

237,107
$ 309.606

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2008 are as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets
Total Net Assets

Balance July I, 2007
(Restated)

Additions

Reductions

Balance June 30, 2008

$ 12,346,080 $ 1,104,237 $

-21 I

257,690

3,642,243

3,629,149

220,591

12,639,072

12,306,387

$ )2.824.361 $ 17 385 552 $ 15.935.325

$ 13,450,528 270,784 553,276
$ 14,274 588

NOTE 8: LEASE OBLIGATIONS

South Georgia College is obligated under various operating leases for the use of equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

CAPITAL LEASES Capital leases are payable in semi-annual installments and have terms expiring in fiscal year 203 7. Expenses for fiscal year 2008 were $672,415 which was comprised entirely of interest. Of the $672,415 in interest expense, $248,917 was added to the principal balance. Interest rates are 4.48 percent.

OPERATING LEASES South Georgia College's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2012. Certain operating leases provide for renewal options. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are noncapital property leases, copiers and other small business equipment.

Noncancellable operating lease rental expenses in 2008 were $83,919 for real property and/or equipment.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 8: LEASE OBLIGATIONS
FUTURE COMMITMENTS
Year Ending June 30: 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2037
Total Minimum Lease Payments
Less: Interest Executory Cost
Principal Outstanding
NOTE 9: RETIREMENT PLANS

Capital Leases

Operating Leases

$ 863,902 $ 888,408 911,959 934,557 956,202
5,146,674 5,654,532 6,130,230 6,534,609 5,465,851
$ 33,486,924 $
14,657,110 2,269,856
$ 16,559.958

91,395 86,591 25,867 6,198
210,051

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description South Georgia College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS 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 TRS offices or the Georgia Department of Audits and Accounts.

Funding Policy Employees of South Georgia College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. South Georgia College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Fiscal Year

Percentage Contributed

Required Contribution

2008

100%

$ 415,901

2007

100%

$ 363,798

2006

100%

$ 321,013

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description South Georgia College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.

The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT"D"

NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description The ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $24,596. The College's total payroll for all employees was $6,700,734.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41 % of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$

2,560

$

2,430

$

0

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et. seq. and is administered by the Board of Regents of the University System of Georgia.

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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Plan Description O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy South Georgia College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State Statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
South Georgia College and the covered employees made the required contributions of $95,732 (8.13% or 8.15%) and $58,731 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description South Georgia College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer 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 1s 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 of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making 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.
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SOUTH GEORGIA COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2008

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
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 of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2008 amounted to $9,788 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although South Georgia College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against South Georgia College (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008.
NOTE 11: AFFILIATED ORGANIZATIONS
The South Georgia College Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support South Georgia College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization is not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from South Georgia College.

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SUPPLEMENTARY INFORMATION
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SOUTH GEORGIA COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2008
ASSETS
Accounts Receivable Federal Financial Assistance Other
Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Salaries Payable Accounts Payable Encumbrance Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

84,281.57

316,572.15

19,758.39

$ ====42=0,=61=2.=11=

$

89,610.39

72,620.01

-37,733.65

114,283.40

930.00

$

239,710.15

$

5,893.38

26,194.46

337.39

64,920.39

24,761.00

34,909.56

23,885.78

$

180,901.96

$ ===42=0=,6=1=2.=1=1

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
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SOUTH GEORGIA COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Special Funding Initiatives 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 - University System Office Year Ended June 30, 2007
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 7,731,643.00 $ 7,731,643.00 $

3,614,068.00

3,594,502.71

6,262,786.00

5,743,691.59

$ 17,608,497.00 $ 17,069,837.30 $

0.00 -19,565.29 -519 094.41
-538,659.70

0.00

55 879.44

$ 17,608,497.00 $ 17 125 716.74 $

55 879.44 -482 780.26

$

3,918.00 $

3,918.00 $

17,604,579.00

16,958,144.93

$ 17,608,497.00 $ 16,962,062.93 $

$

0.00 $

163,653.81 $

0.00 646434.07
646434.07
163 653.81

74,879.44 15,037.38

-7,512.85 5,761.00
-15,037.38 -55 879.44
$ ==1=8=0,=9.0.1==.9=6==

SUMMARY OF FUND BALANCE
Reserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over
Total Reserved
Unreserved Surplus

$

5,893.38

26,194.46

337.39

64,920.39

24,761.00

34,909.56

$

157,016.18

23,885.78

Total Fund Balance
Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
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$

180 901.96

SOUTH GEORGIA COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Funds Available Come!!red to Budget

Current Year Revenues

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

$

3 918.00 $

3918.00 $

3918.00 $

0.00 $

3918.00 $

0.00

Teaching State Appropriation State General Funds Federal Funds Other Funds
Total Teaching

$ 7,588,459.00 $ 7,727,725.00 $ 7,727,725.01 $

0.00 $ 7,727,725.01 $

0.01

2,569,088.00

3,614,088.00

3,594,502.71

0.00

3,594,502.71

-19,565.29

3 318,686.00

6,262 786.00

5,743,691.58

55,879.44

5,799,571.02

-463,214.98

$ 13.476,213.00 $ 17.604,579.00 $ 17.085.919.30 $ 55.879.44 $ 17121.798.74 $ -482 780.26

Grand Totals - All Programs

$ 13,480,131.00 $ 17,608,497.00 $ 11,069,837.30 $ 55,879.44 $ 17,125,716.74 $ -482,780.26

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
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SCHEDULE "3"

Exe!:nditures Comeared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total Fund Balance

$

3 918.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

$ 7,703,839.23 $ 3,592,526.87 5,661,778.83
$ 16 958 144.93 $

23,885.77 $ 21,541.13 601 007.17
646434.07 $

23,885.78 $ 1,975.84
137 792.19
163 653.81 $

0.00 $ 0.00 -1 751.85
-1751.85 $

0.00 $ 0.00 -5 761.00

23,885.78 $ 1,975.84
130 279.34

-5 761.00 $ 156,140.96 $

0.00 $ 0.00 0.00

0.00 $ 1,975.84 130,279.34

23,885.78 $ 0.00 0.00

23,885.78 1,975.84
130 279.34

0.00 $ 132,255.18 $ 23 885.78 $ 156140.96

$ 16,962,062.93 $

646,434.07 $

163,653.81 $ -1,751.85 $ -5,761.00 $ 156,140.96 $

0.00 $ 132,255.18 $ 23,885.78 $ 156,140.96

Unexpendable Reserves Uncollectible Accounts Receivable

24 761.00 $ 180,901.96

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SOUTH GEORGIA COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

Totals per Annual Supplement

Accruals June 30, 2008

Compensated Absences June 30, 2008 June 30, 2007

Adjustments

Shared Services on Jointly Staffed Personnel

Valdosta State University

Benson,

Duane

Carson,

Paul

McCarty,

Celeste

Reiman,

Richard

Schifando, Fred

Stelzer,

Jiri

Georgia Highlands College

Carson,

Virginia

SALARIES

$

6,523,602 $

TRAVEL 123,944

76,195

345,014 -297,373

-10, 119 -6,728 -1,725
-12,812 7,264
10,550
66,866

$

6,700,734 $===12=3=,9=4=4

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

SOUTH GEORGIA COLLEGE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-587-06-01

Previously Reported Corrective Action Implemented

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SOUTH GEORGIA COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the South Georgia College's ability to initiate, authorize, record, process, or report financial data reliability in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe South Georgia College's financial statements that is more than inconsequential will not be prevented or detected by the South Georgia College's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the South Georgia College's internal control.

Internal control deficiencies identified during the course ofthis engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

GENERAL LEDGER CAPITAL ASSETS Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-587-08-01

Condition:

Accounting procedures ofSouth Georgia College were insufficient to provide adequate controls over reporting of capital leases.

Criteria:

According to instructions contained in Board of Regents of the University System of Georgia's Business Procedures Manual Section 7.1.5, land, buildings and/or equipment acquired through capital leases should be capitalized if lease agreement meets capitalization criteria.

Questioned Cost: NIA

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SOUTH GEORGIA COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER CAPITAL ASSETS Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-587-08-01

Information:

South Georgia College entered into capital leases during the year under review with South Georgia College Foundation, Inc. Neither the capital lease liability nor the capital assets obtained through the leases were recorded within the financial accounting records of the College. Correcting entries were proposed and made by the Institution to properly reflect capital lease activity in the accompanying financial statements.

Cause:

Management ofSouth Georgia College failed to implement adequate controls and procedures to ensure that all activity of the College was recorded in accordance with generally accepted accounting principles.

Effect:

The lack of proper accounting policies and procedures could materially impact the College's reporting of its financial position and results of operations.

Recommendation:

South Georgia College should review the accounting procedures currently in place, identify weaknesses, and design and implement procedures to ensure that all capital lease activity is properly reflected on the financial statements.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No findings were reported.

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

EXPENDITURES/LIABILITIES/DISBURSEMENTS The College erroneously reported $24,434.16 ofoperating lease payments as professional services on the continuous audit information submitted to the Georgia Department of Audits and Accounts in accordance with O.C.G.A. 50-6-32. The College should implement appropriate steps to ensure that professional services payments are properly reported on the continuous audit information.

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SOUTH GEORGIA COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2008
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) GENERAL LEDGER Restricted Fund activity is required to be maintained on a project-by-project basis; however, the College failed to distribute $1,946.29 of activity in the Salaries Payable account to the individual programs. The College should implement procedures to ensure that all activity for the Restricted Funds is distributed on a project-by-project basis in order to properly manage and report grant activity by project or grant award. REPORTING The College failed to report monetary activity totaling $26,194.46 on their Schedule ofExpenditures ofFederal Awards. The omitted information consisted of$17,816.55 for the TRIO-Student Support Services (CFDA No. 84.042), $3,389.71 for the Federal Work-Study Program (CFDA No. 84.033) and $4,988.20 for the Federal Supplemental Educational Opportunity Grants (CFDA No. 84.007). Management should enhance procedures to ensure that all Federal activity is properly reflected within the Schedule of Expenditures of Federal Awards information submitted to the State Accounting office for inclusion in the State of Georgia Single Audit Report.
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