Southern Polytechnic State University, Marietta, Georgia, report on review of the financial statements for the fiscal year ended June 30, 2000

STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
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SOUTHERN POLYTECHNIC STATE UNIVERSITY
MARlmA, GEORGIA

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REPORT ON REVIEW OF THE FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2000

Russell W. Hinton state Auditor

SOUTHERN POLYTECHNIC STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

7

D NOTES TO THE FINANCIAL STATEMENTS

8

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

22

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

24

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

26

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

28

2

LOTTERY FOR EDUCATION

31

3 CHANGES IN INVESTMENT IN PLANT

32

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

34

5 RECONCILIATION OF SALARIES AND TRAVEL

36

6 RECONCILIATION OF PER DIEM AND FEES

37

SOUTHERN POLYTECHNIC STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
January 5, 2001

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Lisa A. Rossbacher, President Southern Polytechnic State University
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) of Southern Polytechnic State University as of and for the year ended June 30, 2000, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Southern Polytechnic State University.
A review consists principally ofinquiries ofUniversity personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, with the exception ofthe matters described in the fourth and fifth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
As disclosed in Note 1 to the financial statements, generally accepted accounting principles require encumbrances to be recorded as a reservation offund balance. However, in accordance with Georgia Law and State budgetary policy, management recorded encumbrances as expenditures and liabilities. The effects of this departure from generally accepted accounting principles on the financial statements were not reasonably determinable.

00ARL-67

As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $957,128.59 as of June 30, 2000, and the net change in fund balance for the year ended June 30, 2000, would be increased by $66,393.79.
Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 6) are presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review ofthe financial statements, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, we are not aware of any material modifications which should be made thereto.
Respectfully submitted,

RWH:jb OOARL-67

Rus ell W. Hinton State Auditor

FINANCIAL STATEMENTS - 1-

SOUTHERN POLYTECHNIC STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30, 2000

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

CURRENT FUNDS UNRESTRICTED RESTRICTED

LOAN FUNDS

$

892,371.20 $

966.73 $

55,265.97

2,970.00

1,091,012.56

1,550,541.60

1,062,031.63

886,239.60

1,312,615.04

$

4,182,238.40 $ 1,551,508.33 $ 1,120,267.60

$

1,000,393.46

82,205.90

1,544,509.00 102.67

$ 1,273,772.14

$

2,627,211.03 $ 1,273,772.14

$

980,556.73

139,710.87

$

277,736.19

$

1,555,027.37

$

1,555,027.37 $

277,736.19 $ 1,120,267.60

$

4,182,238.40 $ 1,551,508.33 $ 1,120,267.60

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-2-

EXHIBIT "A"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$ 811,176.93 $ 612,106.47 $

347,885.84

$

177,219.97 $ 2,896,993.11

2,970.00

75,269.74

3,778,855.53

886,239.60

1,312,615.04

_ _ _ _ _ _ $ 75,445,279.62

75,445,279.62

$

811,176.93 $

687,376.21 $

347,885.84 $ 75,445,279.62 $ 177,219.97 $ 84,322,952.90

$ 753,495.59 $

$

38,842.90

$

38,842.90 $ 753A95.59 $

$ 483,934.00 288AOO.03

$

-66,119.38 $

$

772,334.03 $

-66,119.38 $

236,714.40
$ 236,714.40 $

$
7,000.04 7,000.04 $

29,534.83 $ 2,020,138.28 82,205.90

147,685.14

1,544,509.00 102.67
147,685.14 1,312,615.04
7,000.04

177,219.97 $ 5,114,256.07

$ 75A38,279.58 111,171.44 111,171.44 $ 75A38,279.58

$

980,556.73

139,710.87

483,934.00

288AOO.03

75,438,279.58

277,736.19

1,600,079.43

$ 79,208,696.83

$

811,176.93 $

687,376.21 $

347,885.84 $ 75,445,279.62 $ 177,219.97 $ 84,322,952.90

- 3-

SOUTHERN POLYTECHNIC STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30, 2000

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Re9ular Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income
Endowment Other Net Increase/Decrease in Fair Value of Investments Interest on Loans Receivable Funded by the Board of Regents of the University System of Georgia
Prior Year's Unrestricted Fund Balance (Deficit) Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Renewals and Replacements Georgia State Financing and Investment Commission Other Additions Proceeds from Sale of Plant Assets Late Fees
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (SurplUS)
Adjustments Prior Years' Revenues/Accounts Receivable
Administrative and Collection Costs Loan Cancellations and Write-Offs Expended for Plant Facilities
Capitalized Noncapitalized Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Mandatory Investment Income for Endowment Principal
Nonmandatory Renewals and Replacements
Total Transfers Between Funds
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1 1999

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

33,887,202.37

$

6,288,322.30 $

1,590,727.03

1,060,962.04

36,671.94

8,660.57
14,342,33 -3,975.86

32,982.00
-307.50 12,009.29

$

33,906,229.41 $

8,976,683.31 $

78.90 44,762.69

$

31,464,842.10 $

8,915,006.28

1,811,334.02

139,118.87

26.65
-27,380,79 $

5,945.27 618.35

$

33,248,821.98 $

9,054,125.15 $

6,563.62

$

-3,597.92

$

-91,976,72

$

-91,976.72 $

-3,597.92

$

565,430.71 $

-81,039.76 $

38,199.07

989,596,66

358,775.95

1,082,068.53

FUND BALANCES JUNE 30, 2000

$

1,555,027.37 $

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.

-4-

277,736.19 $ 1,120,267.60

EXHIBIT "B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

$

23,025.00

50,983.88

925,400.00 194,901.23

18,544.10 $

221.37

$

74,008.88 $

1,139,066.70 $

$ 33,887,202.37
925,400.00 6,321,304.30 1,590,727.03 1,083,987.04
36,671.94 194,901.23 50,676.38
12,009.29

605.90 $
605.90 $

8,660.57

33,492.33 -3,975.86

1,400,031.83

1,400,031.83

1,181,523.69 48,679.25
2,788,372.97

1,181,523.69 48,679.25
2,788,372.97

221.37 78.90

5,418,607.74 $ 49,559,964.63

$

0.00

$ 40,379,848.38 1,811,334.02 139,118.87

$

2,462.56

2,489.21

-27,380.79 5,945.27 618.35

'1 ,181,523.69 $ 23,662.39

48,679.25 243,527.38
$

866,083.69

1,230,202.94 267,189.77 866,083.69

$

0.00 $

1,207,648.64 $

292,206.63 $

866,083.69 $ 44,675,449.71

$

3,597.92

$

3,597.92

$

77,606.80 $

694,727.23

$

772,334.03 $

$ $ -68,581.94 $ 2,462.56

$

0.00

91,976.72

0.00

91,976.72

$

0.00

-199,624.01 $ 4,552,524.05 $ 4,884,514.92

310,795.45

70,885,755.53

74,324,181.91

-66,119.38 $

111,171.44 $ 75,438,279.58 $ 79,208,696.83

-5-

SOUTHERN POLYTECHNIC STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 2000

EXHIBIT "CO

Net Increase/(Decrease) in Fund Balances

$

565,430,71 $

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
-7-

-81,039.76 $ =~4~84~,3~9~0,,g;95~

SOUTHERNPOLYTEC~CSTATE~ERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Southern Polytechnic State University is one ofthirty-four (34)State supported member institutions ofhigher education in Georgia which comprise the University System ofGeorgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Southern Polytechnic State University 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. Southern Polytechnic State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Southern Polytechnic State University is considered an organizational unit ofthe Board ofRegents ofthe University System ofGeorgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or obj ectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements are as follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, research, public service, etc.
RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.
-8-

SOUTHERN POLYTECHNIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
LOAN FUNDS
The fund used to account for resources which have been made available for financial loans to students.
ENDOWMENT AND SIMILAR FUNDS
The fund used to account for endowment funds and quasi-endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized. While quasi-endowment funds have been established by the University for the same purposes as endowment funds, any portion ofquasi-endowment funds may be expended. Restricted quasi-endowment funds may be expended only for the purposes established by the source of such funds.
PLANT FUNDS
UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes.
RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties.
INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations.
BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period.
- 9-

SOUTHERNPOLYTECH}ITCSTATE~ERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations ofthe University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $957,128.59 and a related net reduction of current year expenditures of $66,393.79 have not been reported in the current funds as required by generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but differs from generally accepted accounting principlesin that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements.
To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
It is the policy of Southern Polytechnic State University to record assets acquired through capital leases as additions to Investment in Plant when received at the total acquisition cost including interest. The liability for such leases at fiscal year-end is recorded in Investment in Plant including interest. This presentation differs from generally accepted accounting principles in that the assets and the related liability resulting from capital leases should be recorded in Investment in Plant at the inception of the agreement at the net present value of the future minimum lease payments, not to exceed the fair value ofthe leased property. The effect ofthis departure is deemed to be immaterial to the fair presentation of the financial statements.
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SOUTHERN POLYTECHNIC STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses.

BUDGET The Board ofRegents ofthe University System of Georgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of 1999-2000. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the College by the Administrative Central Office. In addition, the College receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

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

Resident Instruction Capital Outlay Year 2000 Project

$ 571.992.71 $ 35.909.00

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the Board object class level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash and demand deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.

INVESTMENTS Investments are reported at fair value. Funds received by the University as endowments or for restricted purposes are invested according to conditions stipulated by the donor, grantor, or in accordance with the Board of Regents authorizing resolutions. Gains and losses on investment transactions are accounted for in the funds where such assets are recorded.

ACCOUNTS RECEIVABLE
Accounts receivable consist ofreimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements.

- 11 -

SOUTHERN POLYTECHNIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHffiIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt of goods and services that will benefit periods subsequent to the balance sheet date.
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have notbeen made in the aggregation ofthis data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws ofthe 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 ofdevelopment authorities created by the laws ofthe 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, or 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.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
- 12 -

SOUTHERN POLYTECHNIC STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERA,LIZATION STATUTES AND POLICIES As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.

The treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2000, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

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

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

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

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ \.623,058.28 $ 3,77.259.l9 $ lOO 000.00 $===o~.o~o $ 3678259.19

CATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as of June 30, 2000, are categorized below:

- 13-

SOUTHERNPOLYTECH}ITCSTATE~ERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS

Type of Investment

Common Stock

$

Investments Not Subject to Categorizations:

Board of Regents Balanced Income Fund Total Return Fund Short-Term Investment Fund

Total Investments

Risk Categories

1

2

2,970.00 $

0.00 $

Canying

3

Amount

0.00 $ 2,970.00

469,279.28 342,864.38 452,561.17
$ 1.267,674.83

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

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 2000:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 753,396.56 52,868,770.17 3,143,679.43 14,194,325.42 4.485,108.04

Total Investment in Plant

$75.445.279.62

NOTE 4: CAPITAL LEASES

Southern Polytechnic State University acquires equipment through multi-year capital leases with varying terms and options. These agreements contain fiscal funding clauses in accordance with Official Code of Georgia Annotated Section 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

As of June 30, 2000, future minimum lease payments under capital leases are as follows:

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SOUTHERN POLYTECHNIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT"D"

NOTE 4: CAPITAL LEASES

Fiscal Year Ending June 30

2001

$ 7,000.04

NOTE 5: RISK MANAGEMENT

Southern Polytechnic State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements ofthe Board of Regents of the University System of Georgia - Administrative Central Office. All units of the University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of$l ,000,000.00 per person and dental coverage up to an annual maximum of $1 ,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents.

The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers1 indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by . DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund.

- 15 -

SOUTHERN POLYTECHNIC STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Southern Polytechnic State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing 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 Georgia Department of Audits and Accounts.

Funding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2000, the employer contribution rate was 11.29% for covered employees. In addition, the University contributed 2.35% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2000 1999 1998

100% 100% 100%

$ 1,684,254.59 $ 1,782,285.01 $ 1,678,485.91

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia. The employer contributes 8.79% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
- 16-

SOUTHERNPOLYTECH}ITCSTATE~ERSITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Policy The University and the covered employees made the required contributions of$421,816.32 (8.79%) and $239,941.16 (5%), respectively.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Southern Polytechnic State University 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 is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. If a member has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross 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 ofthe member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2000 amounted to $54,802.67 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 7: LEAVEPOUCffiS
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)

- 17 -

SOUTHERN POLYTECHNIC STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHillIT"D"

NOTE 7: LEAVEPOUCffiS
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Certain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.
NOTE 8: CONTINGENCffiS
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 ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Southern Polytechnic State University (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, 2000.
NOTE 9: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents ofthe University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible forretirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the University System of Georgia are eligible for these postemployment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals.
As ofJune 30, 2000, there were 46 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2000, Southern Polytechnic State University recognized as incurred $265,194.25 of expenditures, which was net of $46,628.70 of participant contributions.
NOTE 10: ENROLLMENT
The equivalent full-time student enrollment ofSouthern Polytechnic State University was as follows:
- 18 -

SOUTHERN POLYTECHNIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000

EXHIBIT "D"

NOTE 10: ENROLLMENT
Regular Term Fall Semester, 1999 Spring Semester, 2000
Average
Summer School, 1999

3,631 3,403

- 19-

SUPPLEMENTARY INFORMATION - 21 -

SOUTHERN POLYTECHNIC STATE UNIVERSITY COMBINING BALANCE SHEET
CURRENT FUNDS - UNRESTRICTED JUNE 30, 2000

ASSETS Cash and Cash Equivalents Accounts Receivable Prepaid Items Due from Other Fund Groups
Total Assets

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$

9,080.00 $

155,047.04

819,284.23

881,355.60

729,079.12

$ 2,438,798.95 $======1=55~,0=4=7.=04=

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Student Deposits Deferred Revenue Tuition and Fees Other
Total Liabilities
Fund Balances Unrestricted

$

800,216.32 $

155,047.04

1,196,560.35 102.67
$ 1,996,879.34 $

155,047.04

441,919.61

0.00

Total Liabilities and Fund Balances

$ 2,438,798.95 $ ======1=55=,0:.:4=7.::::.04=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 22-

EXHIBIT"E"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$

289,714.30 $ 438,529.86 $ 892,371.20

269,667.37

2,060.96

1,091,012.56

4,189.00

695.00

886,239.60

468,391.69

115,144.23

1,312,615.04

$ 1,031,962.36 $ 556,430.05 $ 4,182,238.40

$

44,731.28 $

398.82 $ 1,000,393.46

82,205.90

82,205.90

187,362.65

160,586.00

1,544,509.00 102.67

$

314,299.83 $ 160,984.82 $ 2,627,211.03

717,662.53

395,445.23

1,555,027.37

$ 1,031,962.36 $ 556,430.05 $ 4,182,238.40

- 23-

SOUTHERN POLYTECHNIC STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30. 2000

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Funded by the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Deficit)
Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements In Lieu of State Appropriations
Total Transfers Between Funds
Net Increase/(Decrease) for the Year
FUND BALANCES JULY 1. 1999

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 30,568,577.29 $

470,586.00

8,660.57
12,138.54 -4,817.81
$ 30,584,558.59 $

470,586.00

$ 30,496,863.78 $

470,586.00

-26,682.54

26.65

$ 30,470,181.24 $

470,612.65

$

269,120.00

$

269,120.00

$

383,497.35 $

58,422.26

-26.65 26.65

FUND BALANCES JUNE 30, 2000

$ 441,919.61 $ =========0=.0=0=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.

- 24-

EXHIBIT "F"

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 2,058,846.09 $ 789,192.99 $ 33,887,202.37

8,660.57

1,623.70 15.00

580.09 826.95

14,342.33 -3,975.86

$ 2,060,484.79 $ 790,600.03 $ 33,906,229.41

$ 497,392.32 $ 31,464,842.10

$ 1,811,334.02

1,811,334.02

-698.25

26.65 -27,380.79

$ 1,810,635.77 $ 497,392.32 $ 33,248,821.98

$

-91,976.72

$

-70,522.00 $ -198,598.00

$

-162,498.72 $ -198,598.00 $

$

87,350.30 $ 94,609.71 $

630,312.23

300,835.52

-91,976.72 0.00
-91,976.72 565,430.71 989,596.66

$

717,662.53 $ 395,445.23 $ 1,555,027.37

- 25-

SOUTHERN POLYTECHNIC STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30, 2000

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts Private Gifts, Grants, and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources
Total Revenues
EXPENDITURES
Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Student Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/(DEDUCTIONS)
Transfers for Renewals and Replacements Transfers in Lieu of State Appropriations Prior Period Adjustments (Net) Funded by/Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (SurpluslDeficit)
Total Other Transfers and Additions/(Deductions)

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

$ 20,895,196.00 $ 7,848,487.77 39,901.25 100,866.62 8,834.92
1,675,290.73
$ 30,568,577.29 $

470,586.00 470,586.00

$ 16,531,518,76 $ 5,670.01 8,320.49
2,656,298.09 2,500,106,32 4,670,970.99 2,943,130.12 1,180,849.00

435,417,11 35,168.89

$ 30,496,863.78 $

470,586.00

$

269,120.00

34,003.27

8,660.57 $

$

311,783.84 $

-26.65 -26.65

Net Increase/(Decrease) in

Fund Balances

$

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 26-

383,497.35 $ ====-=26....6:=5=

EXHIBIT IIGil

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 21,365,782.00

$ 780,922.78

8,629,410.55

39,901.25

100,866.62

8,834.92

$ 2,040,804.92

2,040,804.92

18,041.17

8,270.21

1,701,602.11

$ 2,058,846.09 $ 789,192.99 $ 33,887,202.37

$ 16,966,935.87

5,670.01

8,320.49

2,691,466.98

$ 497,392.32

2,997,498.64

4,670,970.99

2,943,130.12

1,180,849.00

$

809,261.46

166,326.97

70,605.81

359,235.70

405,904.08

809,261.46 166,326.97 70,605.81 359,235.70 405,904.08

$ 1,811,334.02 $ 497,392.32 $ 33,276,176.12

$

-91,976.72

$

-91,976.72

-70,522.00 $ -198,598.00

0.00

2,336.95

1,407.04

37,747.26

8,633.92

$

-160,161.77 $ -197,190.96 $ _ _.....;-4;.;:.5"-=,5~95::;.;,.5=-4.:....

$

87,350.30 $ 94,609.71 $ ====5=:6=5=,4=30:=.=71=

- 27-

SOUTHERN POLYTECHNIC STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2000

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS

RENEWALS AND

UNEXPENDED

REPLACEMENTS

$ 20,895,196.00

$

9,673,381.29 $ _-=8"",9:..,:1""5,,,,,00;:,;6::.:;.2:.:8:...

925,400.00 $ 195,122.60

0.00

$ 30,568,577.29 $

8,915,006.28 $

1,120,522.60 $

0"-'.;,;;,00,;,...

EXPENDITURES

Persona I Services:

Education. General and Departmental Services $ 23,706,088.48

Sponsored Operations

$

Operating Expenses:

Education, General and Departmental Services

5,867,913.31

Sponsored Operations

Capital Outlay

Special Funding Initiative

886,952.99

Year 2000 Project

35.909.00

1,011.383.31
7.903,622.97 $

1,205,186.08 $

292,206.63

$ 30.496.863.78 $

8,915.006.28 $

1,205,186.08 $ _ _.......;;2;,;;9.;;;2,::;.2""0"-'6.;,;;,63,;,...

Excess of Revenues over Expenditures

$

71,713.51 $

0.00 $

-84,663.48 $ _ _....,;-2.9.2..,2..0.;;;,;6.6...3..

(1) To eliminate tuition waivers not budgeted and to reclassify current year transfers and prior year fund balances budgeted as revenues.

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-28 -

SCHEDULE "1"

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 21,820,596.00 18,783,510.17 $

$ 21,820,596.00 $ 21,820,596.00 $

-619,522.37

18,163,987.80

18,644,119.00

0.00 -480,131.20

$ 40,604,106.17 $

-619,522.37 $ 39,984,583.80 $ 40:464,715.00 $

-480,131.20

$ 23,706,088.48 1,011,383.31
5,867,913.31 $ 7,903,622.97 1,497,392.71
886,952.99 35,909.00

$ 23,706,088.48 $ 23,937,970.00 $

1,011,383.31

1,198,933.00

-1,180,849.00

4,687,064.31 7,903,622.97 1:497,392.71
886,952.99 35,909.00

4,860,927.00 8,652,159.00
925,400.00 889,326.00
0.00

231,881.52 187,549.69
173,862.69 748,536.03 -571,992.71
2,373.01 -35,909.00

$ 40,909,262.77 $

-1,180,849.00 $ 39,728:413.77 $ 40:464.715.00 $

736,301.23

$ -305,156.60 $

561,326.63 $

256,170.03

$

256,170.03

29

SOUTHERN POLYTECHNIC STATE UNIVERSITY

SCHEDULE "2"

SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

LOTTERY FOR EDUCATION

YEAR ENDED JUNE 30, 2000

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$

470,586.00 $ 470,586.00 $

0::.;..0.:.;0:....

EXPENDITURES

Equipment, Technology and Construction

Trust Fund

$

360,586.00 $ 360,586.00 $

0.00

Special Funding Initiatives

110,000.00

110,000.00

0.00

$

470,586.00 $ 470,586.00 $

.....,;0:..:..0;;:.:0:....

Excess of Revenues over Expenditures

$======0=.0=0,=

$====.,,;0~.0~0~

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information;
- 31 -

SOUTHERN POLYTECHNIC STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT YEAR ENDED JUNE 30, 2000

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections
SUMMARY OF INVESTMENT College Capital Leases

BALANCE JULY 1,1999

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

753,396.56

49,416,410.72

3,049,947.13

13,483,650.47 $

1,027,138.32 $ 97,095.58

4,209,310.11

275,797.93

$ 70,912,714.99 $

1,302,936.25 $ =='=9=7,=09=:5=.5=8=

$70,885,755.53 $ 26,959.46

1,302,936.25 $ 97,095.58

$ 70,912,714.99 $

1,302,936.25 $ =====97=,=09=5=.5=8=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 32-

SCHEDULE "3"

ADDITIONS
PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 2000

$

753,396.56

$

911,337.66 $

7,691.50 $

2,533,330.29

52,868,770.17

93,732.30

3,143,679.43

176,453.73

40,987.75

255,042.68 $

886,043.11

14,194,325.42

4,485,108.04

$ 1,181,523.69 $

48,679.25 $

2,788,372.97 $

886,043.11 $ =~75;;;,4=4=5&,2=7=9.=62==

$ 1,181,523.69 $ $ 1,181,523.69 $

48,679.25 $

2,788,372.97 $

866,083.69 $
19,959.42

75,438,279.58 7,000.04

48,679.25 $

2,788,372.97 $

886,043.11 $ ===75~,=44=5=,2=7=9.=62==

- 33-

SOUTHERN POLYTECHNIC STATE UNIVERSITY SCHEDULE OF FUND BALANCES
CURRENT FUNDS AND PLANT FUNDS JUNE 30. 2000

$ 441,919.61 $

717,662.53 $ ==3=9:=5:l:i.4:=4=5,:=23=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 34-

SCHEDULE "4"

RESTRICTED

UNEXPENDED REGULAR

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 75,438,279.58 $ 75,438,279.58

$ _--.:2::..:7....:..7.1.:.,7.::.;36::..:..1.:....:9:,...

$ _---=2::.;,7...;.,7...7".,;:;,36::.;.,..:.;19:;..

$

111,171.44

$

3,000.00

$

45,100.28

86,847.74

86,920.63

111,171.44

872,869.56

325,217.85

-69,119.38

$

-66,119.38 $ _ _--'-11.,;..;1"'-1,;.;.7"",1';.;.44.;.;.

71 ,951.93 $ 1,600,079.43

$

277,736.19 $

-66,119.38 $

111,171.44 $ 75,438,279.58 $ 77,316,095.20

- 35-

SOUTHERN POLYTECHNIC UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2000

SCHEDULE "5"

Totals per Annual Supplement

Prepaid Salaries June 30,1999 June 30, 2000

Adjustment

Shared Services on Jointly Staffed Personnel

Kennesaw State University

Huilin,

Li

SALARIES $ 20,687,573.26 $

TRAVEL 242,108.94

679,345.68 -702,832.75

-600.00 $ 20,663,486,19 $ =====24=2:1::::,1=08=.9=4=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 36-

SOUTHERN POLYTECHNIC STATE UNIVERSITY RECONCILIATION OF PER DIEM AND FEES YEAR ENDED JUNE 30. 2000

SCHEDULE "6"

Totals per Annual Supplement
Adjustments Ergo, Incorporated

FEE AMOUNT

EXPENSE AMOUNT

$ 700,001.79 $

19,360.70 $

TOTAL 719,362.49

12,940.00

12,940.00

$ 712,941.79 $

19,360.70 $=~73~2~,3;.;0~2'..;.;49~

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 37-

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

SOUTHERNPOLYTEC~CSTATE~ERSITY
AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FlNDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000

PRIOR YEAR FINANCIAL STATEMENT FlNDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-550-98-0l FS-550-98-02 FS-550-99-0l FS-550-99-02 FS-550-99-03

Partially Resolved - See Corrective ActionlResponses Further Action Not Warranted Partially Resolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

CASH AND CASH EQUNALENTS REVENUESfRECEIVABLESfRECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS EMPLOYEE COMPENSATION INFORMATION TECHNOLOGY CONTROLS Inadequate Internal Controls Finding Control Number: FS-550-98-0l

Cash and Cash Equivalents (Resolved): Bank Statement is reconciled on a monthly basis and reviewed by the Controller. This function is performed by a full time seasoned employee that is trained in all areas of fund accounting.

Revenues/Receivables/Receipts (Partially Resolved): Focused resources have been devoted at this functional area. Duties have been divided so that prompt response and accounting of University's revenue collections will occur. A Bursar, two accounting assistants, student accounts' coordinators and collector focus on current and long term accounts receivable activities while the Bursar oversees timely and accurate receipting of all Universities revenue collections. Although much work has been performed in researching receivables, further effort is warranted to resolve this finding.

ExpenditureslLiabilitieslDisbursements (Partially Resolved): With the exception of $6,864.68 of accounts payable in auxiliary enterprises (ftmd 50), all prior year accounts payable have either been paid or liquidated (funds 10, 82 and 95). The University Fiscal Affairs staffwill diligently work to correct the remaining exceptions. At present, on-going analysis of payables is being conducted and appropriate fOllow-ups with vendors and/or departments occur to ensure that payables are not overlooked.

Employee Compensation/Information Technology Control (Resolved): All payroll information forms (ElF's) are approved by the Budget staff prior to processing in the Payroll Office to ensure that adequate authority has been given to proceed with payment to the employee. The payroll data is balanced to accounting each month by coordination

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SOUTHERN POLYTECHNIC STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS EMPLOYEE COMPENSATION INFORMATION TECHNOLOGY CONTROLS Inadequate Internal Controls Finding Control Number: FS-550-98-01
between the Payroll Supervisor and the Accounts Payable Supervisor. The Payroll interfaces are reconciled prior to interface each pay period. All payrolls are then reconciled quarterly in preparation ofthe quarterly 941 report. Prompt and immediate contact is made with the Board of Regents OIT help desk for assistance should any payroll processing procedure fail.
REVENUES/RECEIVABLES/RECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures Finding Control Number: FS-550-99-01
The University has employed a full time collector to address the volume of past due University debt. In addition to the oversight and administration of loan programs, this individual is in the process of researching and recreating the required documentation to support the accounts receivable and pursue collections either in house or through contracted collection agencies.
Procedures have been established to provide checkpoints to check for signatory authority prior to initiating the purchase and prior to payment of goods and services. Also the accounting assistant that oversees travel has been retrained to monitor travel expense statements more closely and to return incomplete requests.
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-550-99-02
During Fiscal Year 2000 the University completed an approximate 80% equipment inventory. During this process documentation was found to support every item. Lost equipment was found and equipment that was listed but had been surplused was identified. One remaining department, the Information Technology department, did not complete the inventory prior to fiscal year end. During Fiscal Year 2001 resources will be focused on
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SOUTHERNPOLYTECH}ITCSTATE~RSITY
AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-550-99-02

completing the final department that remained. Procedures and processes have been reintroduced to strengthen the internal controls from the purchase of equipment to the delivery of equipment to the department. The Inventory Clerk now decals the equipment upon delivery from the vendor.

GENERAL LEDGER Agency Fund Deficits Inadequate Documentation of New Agency Funds Finding Control Number: FS-550-99-03

Agency Fund Deficits (Unresolved) The University accounting staffhas identified various discrepancies in subsystem account designations occurring over a number of prior fiscal years. The errors created by these incorrect designations must be researched and corrected to ascertain the identity and amount of actual deficit accounts. The University will continue its efforts to research historical accounts, correct the appropriate accounts and resolve this finding.

Inadequate Documentation of New Agency Funds (Resolved) All existing agency fund accounts have been reviewed and updated with appropriate documentation. Requests for new agency accounts are administered by the Senior Secretary of Fiscal Affairs and are approved by the Controller. Upon approval, written procedures are given to each participant that explains how the funds are to be expended and!or receipted. All payment requests are reviewed by the Senior Secretary to ensure that funds are available prior to disbursement of funds. An annual review ofAgency Account Request Forms is conducted by the Senior Secretaryto ensure that current signatures are on file at all times.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-550-98-01 FA-550-99-01 FA-550-99-02

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

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SOUTHERN POLYTECHNIC STATE UNNERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
REPORTING Inadequate Internal Controls and Compliance Deficiencies for FISAP Reporting Student Financial Aid Cluster Program Finding Control Number: FA-550-99-01
FISAP Reporting - This report represents expenditures of federal programs as of the financial statement date ofJune 30 each year. However, the actual expense at this time are not the final expenses for the program year as the financial aid office continues to adjust awards of students after the close of the reporting period. The Financial Aid Staff and Fiscal Affairs Staffwill work together and reconcile financial data on all aid programs each month. Additional internal controls will be put in place to ensure that prompt research and follow-up occurs to resolve eligibility, award, disbursement and reporting issues related to each aid program.
SPECIAL TESTS AND PROVISIONS Inadequate Internal Controls and Compliance Deficiencies for Promissory Notes and Exit Counseling Student Financial Aid Cluster Program Finding Control Number: FA-550-99-02
Promissory Notes - The Financial Aid Staff and Fiscal Affairs Staff will work jointly to ensure promissory notes are properly executed prior to award of aid and subsequent disbursement. Prompt research and follow-up will occur to resolve eligibility, award, disbursement and reporting issues related to loan programs. The University Fiscal Affairs staffhas reviewed all Perkins loan notes from 7/1/98 to current. Of164 accounts reviewed, 26 lacked some fonn of required documentation. Twenty-five (25) accounts have been resolved. The University is still pursuing resolution on the one remaining account.
Exit Counseling - The University is currently relying upon the web based exit interview process. The University sends letters to students who petition to graduate notifying them ofthe exit interview requirement as well as identifying these students prior to the last tenn of enrollment and focus resources on ensuring that all students have satisfied this requirement. Additional automated controls will be developed to ensure exit interview requirements are met for students who either withdraw or drop below half-time status.
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SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SOUTHERN POLYTECHNIC STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECENABLESIRECEIPTS Inadequate Accounting Procedures Finding Control Number: FS-550-00-01

Our examination included testing of accounts receivable in excess ofone year old. This examination noted that the University could not document that collection efforts were made for four (4) accounts receivables offifteen (15) items tested. In addition, all accounts receivable were not aged regularly. These deficiencies occurred because management failed to ensure that controls in place were operating effectively. Management should review its system ofinternal controls, initiate necessary changes and monitor the effectiveness of controls implemented.

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Failure to Reconcile Equipment Inventory Records to Accounting Records Finding Control Number: FS-550-00-02

The University was unable to reconcile the equipment inventory records to amounts recorded on the accounting records. This deficiency occurred because ofmanagement's failure to adequately monitor the subsidiary equipment inventory records. The University should take a complete physical inventory of equipment and make appropriate adjustments to the accounting records as necessary. In addition, management should establish appropriate procedures to strengthen internal controls and to ensure that assets are safeguarded against loss from unauthorized use or disposition.

GENERAL LEDGER Agency Fund Deficits Finding Control Number: FS-550-00-03

At June 30, 2000, the University had several agency funds with deficit balances totaling $80,792.33.

A number ofthese funds have been in deficit positions for several years and the deficit balances have

increased steadily over the past three years.

.

These deficits were the result ofthe University disbursing funds prior to or in excess ofthe receipt of funds. The University should implement procedures to monitor the individual agency funds and to ensure that funds are received prior to disbursements.

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SOUTHERN POLYTECHNIC STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
MATCHING, LEVEL OF EFFORT AND/OR EARMARKING REQUIREMENTS Failure to Provide Institution Capital Contribution Federal Perkins Loan Program (CFDA 84.038) Finding Control Number: FA-550-00-01
For the year under review, the University failed to provide matching funds for the Institution Capital Contribution for the Federal Perkins Loan Program as required by Federal Regulations (34 CFR 674.19).
This condition occurred because management failed to adequately monitor controls to ensure that matching requirements were met. Management should establish appropriate procedures to strengthen internal controls and to ensure that matching requirements are met.
REPORTING Failure to Reconcile Program Reports Student Financial Aid Cluster Program Finding Control Number: FA-550-00-02
For the year under review, amounts reported by the University on the following reports to the U. S. Department of Education were not reconciled as follows:
1) The Pell Year to Date Data and the Pell Electronic Statement ofAccount (ECOA) were not reconciled to the accounting records.
2) Federal Perkins Loan Program Institutional Capital Contribution and Repayments of Capital to Institution reported on the Fiscal Operations and Application to Participate (FISAP) report were not reconciled to the accounting records.
Federal Regulations (34 CFR 668.24 and 690.83) require the University to ensure that financial information reported is accurate and reconciled to the accounting records. Management should ensure that reports are reconciled to the accounting records prior to being submitted to the U. S. Department of Education.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063)
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SOUTHERNPOLYTECH}ITCSTATE~ERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Exit Counseling Not Conducted Student Financial Aid Cluster Program Finding Control Number: FA-550-00-03
For the year under review, the University failed to provide exit counseling for students who withdrew or dropped below half-time status. Federal regulations require the University to conduct exit counseling for each Perkins or Direct Loan borrower shortly before the student graduates or drops below half-time status.
Management should implement policies and procedures to ensure that the University is properly conducting all required exit counseling and maintaining adequate documentation.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Perkins Loan Program (CFDA 84.038) William D. Ford Federal Direct Loan Program (CFDA 84.268)
SPECIAL TESTS AND PROVISIONS Failure to Reconcile Program Reports William D. Ford Federal Direct Loan Program (CFDA 84.268) Finding Control Number: FA-550-00-04
For the year under review, Federal Direct Loan program reports were not properly reconciled to the University's accounting records. Also, loan infoqnation contained in these reports was not accurately submitted to the Federal Direct Loan Servicer on a monthly basis. As a result, the Loan Origination Center's Direct Loan Account Statement, which the Loan Servicer produces from the information provided, could not be reconciled to the University's accounting records as required by Federal Regulations (34 CFR 685.102 (b), 685.301 and 685.303).
These deficiencies were the result of management's failure to properly report and reconcile Direct Loan activity in accordance with Federal Regulations. The University should implement adequate controls to ensure that the reconciliations and required reporting are completed on a timely basis and supported by the accounting records.
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