Audit report, state of Georgia, Valdosta State University, Valdosta, Georgia, year ended June 30, 1998

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AUDIT REPORT STATE OF GEORGIA VALDOSTA STATE UNIVERSITY VALDOSTA, GEORGIA YEAR ENDED JUNE 30, 1998

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

VALDOSTA STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

22

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - UNRESTRICTED

23

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

25

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

26

2

LOTTERY FOR EDUCATION

29

3 CHANGES IN INVESTMENT IN PLANT

30

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

32

5 RECONCILIATION OF SALARIES AND TRAVEL

34

6 RECONCILIATION OF PER DIEM AND FEES

35

VALDOSTA STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION II AUDlTEE'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

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
December 7, 1998

Governor ofthe State of Georgia Members ofthe General Assembly of Georgia Members of the Board of Regents ofthe University System of Georgia
and . Honorable Hugh C. Bailey, President Valdosta State University
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through D) ofValdosta State University as of and for the year ended June 30, 1998. These fmancial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues,
requires disclosure of certain matters regarding the year 2000 issue. Valdosta State University has included such disclosures in the Notes to the Financial Statements. Because of the unprecedented nature of the year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support Valdosta State University's disclosures with respect to the year 2000 issue made in the Notes to the Financial Statements. Further, we do not provide assurance that Valdosta State University is or will be year 2000 ready, that Valdosta State University's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Valdosta State University does business will be year 2000 ready.
98ARL-62A

As described in Note 1 to the fmancial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation offund balance. The effects on the financial statements ofthis departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material.
As disclosed in Note 1 to the fmancial 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 $2,032,541.35 as of June 30, 1998, and the net change in fund balance for the year ended June 30, 1998, would be decreased by $110,917.78.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures, and except for . the effects on the financial statements ofthe matters discussed in the fourth and fifth paragraphs, the financial . statements referred to above present fairly, in all material respects, the financial position of Valdosta State University as ofJune 30, 1998, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose offorming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibits E through G and Schedules 1 through 6) is presented for purposes of additional analysis and is not a required part of the financial statements of Valdosta State University. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects ofsuch adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, such information is fairly presented in all material respects in relation to the fmancial statements taken as a whole.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:gp 98ARL-62A

FINANCIAL STATEMENTS - 1-

VALDOSTA STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30,1998

ASSETS
Cash and Cash EqUivalents Accounts Receivable Inventories Prepaid Items 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 Capital Lease Obligations
Total Liabilities
Fund Balances U. S. Government Grants Refundable Institutional Loans Restricted Endowment Term Endowment Quasi-Endowment - Restricted Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

$

5,943,974.70 $

1,499,183.48 $

568,817.51

419,649.64

852,731,89

175,279.51

346,710.07 688,460.62

$

7,540,803.61 $

1,918,833.12 $ ==::::!1,=03=5=,1=70:=,:=69=

$

2,876,886,28 $

200.00

2,757,834.02 206,276.12

$

5,841,196.42 $

82,772.22

82,772.22 $

762,363.43 272,807.26

$

1,836,060.90

$

1,699,607.19

$

1,699,607.19 $

1,836,060.90 $

1,035,170.69

$

7,540,803.61 $

1,918,833.12 $

1,035,170.69

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

EXHIBIT "A"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

4,634,670.87 $

1,369,193.68 $

5,100.00

844,456.66

$

$

99,122,062.21

683,620.28 $ 2,607.93

15,321,809.74 1,684,635.70 852,731.89 175,279.51
99,122,062.21

$

4,634,670.87 $

1,374,293.68 $

844,456.66 $

99,122,062.21 $

686,228.21 $ 117,156,519.05

-3-

VALDOSTA STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30, 1998

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

LOAN FUNDS

REVENUES AND OTHER ADDITIONS

Unrestricted Current Fund Revenues

$

76,123,940,48

State Appropriations

Regular

Federal Grants and Contracts

$

32,103,131,39 $

-74,033,19

State Grants and Contracts

7,707,705.24

Private Gifts, Grants, and Contracts

577,981,65

6,456.80

Investment Income

"J"

Endowment

718,417.20

Other

344,11

Net Increase (Decrease) of Fair Value on Investment

333.21

Interest on Loans Receivable

40,708.10

Adjustments

Prior Years' Expenditures/Accounts Payable

103,652.72

Prior Years' Checks Voided

8,743.89

Funded by the Board of Regents of the

University System of Georgia

Prior Year's Unrestricted Fund Balance (Deficit)

Expended for Plant Facilities

Current Funds

Plant Funds

Unexpended

Renewals and Replacements

Georgia State Financing and Investment Commission

Total Revenues and Other Additions

$

76,236,337.09 $

41,107,235.48 $

-26,190.97

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
Loans Assigned to Federal Government Loan Cancellations and Write-Offs Administrative and Collection Costs Expended for Plant Facilities
Capitalized Noncapitalized DisposalslDeletionS/Adjuslments

$

65,228,734.19 $

40,456,454.35

10,183,761.27

134,813.60

118,989.60
15,098.23 $

5,246.73 42,881.63 16,884.09

Total Expenditures and Other Deductions

$

75,546,583.29 $

40,591,267.95 $

65,012.45

TRANSFERS BElWEEN FUNDS

Nonmandatory Renewals and Replacements

$ ,"

-645,537,97

Net Increase/(Decrease) for the Year

$

44,215.83 $

515,967.53 $

-91,203.42

FUND BALANCES JULY 1. 1997 (Restated - See Note 1)

1,655,391.36

1,320,093.37

1,126,374.11

FUND BALANCES JUNE 30, 1998

$

The notes to the financial statements are an integral part ofthis statement.

-4-

1,699,607.19 $

1,836,060.90 $

1,035,170.69

EXHIBIT"B"

ENDOWMENT AND SIMILAR
FUNDS

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

$

9,211.13

757,127.79

1,189,000.00 $
475,579.33 27,826.84 132,347.28

$

766,338.92 $

1,824,753.45 $

0.00 $
0.00 $

$ 340,742.74

76,123,940.48
1,189,000.00 32,029,098.20 7,707,705.24
934,392.32
718,417.20 475,923.44 757,461.00
40,708.10
131,479.56 8,743.89

5,554,635.00
1,609,556.59 967,575.18
1,260,968.97
9,733,478.48 $

132,347.28
5,554,635.00
1,609,556.59 967,575.18
1,260,968.97
129,641,952.45

$

0.00

$ 105,685,188.54 10,183,761.27 134,813.60

118,989.60

$

41,446.25

56,544.48 5,246.73
42,881.63 16,884.09

1,609,556.59 $

967,575.18

2.577,131.77

~-

34,386.06

62,461.34

96,847.40

$

925,558.52

925.558.52

$

0.00 $

1,685,388.90 $

1,030,036.52 $

925.558.52 $ 119,843,847.63

$

766,338.92 $

3,868,331.95

$

4,634,670.87 $

$ _ _....;;.64.;.;;55~3.;.;7.;,;;.97;...

139,364.55 $

-384,498.55 $

-132,347.28

1,213,169.21

$ 8,807,919.96 $ 90,258,609.55

...;0;;.;;.0:.;:0'9,798,104.82 99,309,622.27

7,017.27 $

828,670.66 $

99.066,529.51 $ 109,107,727.09

-5-

VALDOSTA STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30, 1998

EXHIBIT"C"

UNRESTRICTED RESTRICTED

TOTAL (Memorandum
OnlY)

REVENUES

State Appropriations

Tuition and Fees

Federal Grants and Contracts

State Grants and Contracts

Private Gifts, Grants, and Contracts

Endowment Income

'j,

Sales and Services of Educational Activities

Sales and Services of Auxiliary Enterprises

Other Sources

$ 41,786,239.00

$ 41,786,239,00

22,139,431.42

22,139,431.42

129,314.81 $ 31,991,079,48

32,120,394.29

503,160.23

7,611,583.29

8,114,743,52

2,338.56

553,045,09

555,383.65

300,746.49

300,746.49

47,678.09

47,678.09

9,576,604,56

9,576,604.56

1,939,173.81

1,939,173.81

Total Revenues

$ 76,123,940.48 $ 40,456,454.35 $ 116,580,394,83 .

EXPENDITURES

Educational and General Instruction Research 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

$ 34,186,240,85 $ 1,074,735.66 $ 35,260,976,51

11,790.00

11,790,00

6,141,797.81

491,836,79

6,633,634.60

4,409,456,23

48,226.63

4,457,682,86

12,381,834.79

1,302,083.21

13,683,918.00

5,483,842,76

5,483,842.76

2,613,n1.75

37,539,572,06

40,153,343.81

2,839,150,44 2,613,097.96
761,055,96 1,875,433.26 2,095,023.65

2,839,150,44 2,613,097.96
761,055.96 1,875,433.26 2,095,023,65

.Total Expenditures

$ 75,412,495,46 $ 40,456,454.35 $ 115,868,949.81

OTHER TRANSFERS AND ADDITIONSICDEDUCTIONS)

Excess of Restricted Receipts over Transfers to Revenues
Transfers for Renewals and Replacements Prior Period Adjustments (Net) Remittances to the Board of Regents
of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)

$ 515,967.53 $

515,967.53

$

-645,537.97

-645,537.97

97,298,38

97,298.38

-118,989.60

-118,989,60

Total Other Transfers and Additions/(Deductions)

$

-667,229,19 $ 515,967.53 $

-151,261.66

Net Increase/(Decrease) in Fund Balances

$

44,215.83 $

515,967.53 $ ======5=60=,1=8=3.=36....

The notes to the financial statements are an integral part of this statement -6-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Valdosta State University is one ofthirty-four (34) 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 Valdosta 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. Valdosta State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Valdosta State University is considered an organizational unit of the Board ofRegents ofthe University System of Georgia reporting entity for fmancial 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 objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.
Within each fund group, the University's fund balance allocations and designations represent those portions ofthe 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 perforniing 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.
-7-

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

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, term 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. Term endowment funds are similar to endowment funds except that upon the passage of a stated period oftime or the occurrence of a particular event, all or part ofthe principal may be expended. While quasi-endowment funds have been established by the University for the same purposes as endowment funds, any portion of quasi-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 ofaccounting, which is materially the same as the accrual basis ofaccounting 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 ofthe fiscal period.
-8-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

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 of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition ofencumbrances 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 offund balance. Further, revenue rec9gnition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.

. Compensated absences represent obligations of the University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $2,032,541.35 and the related net current year expenditure of $11 0,917.78 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 ofcurrent funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation 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.

The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of fmancial 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.

RESTATEMENT OF PRIOR YEAR FUND BALANCE In fiscal year 1998, Valdosta State University implemented GASB Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools". The statement requires certain investments to be reported at fair value rather than at cost. As a result, the beginning fund balance of the Endowment arid Similar Funds has been increased by $1,120,712.93 to implement this change in accounting
principle.

- 9-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units ofthe University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19971998. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation of the appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office.

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

Resident Instruction Operating Expenses: Sponsored Operations

$ 1,148.322.38

Special Funding Initiative

$ 260,582.55

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 departmental level.

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

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

INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the first-in, first-out method.

Inventories of goods for resale are valued at cost using the average cost method.

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

- 10-

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the fmancial statements are captioned "Memorandum Only" because they do not represent consolidated fmancial information and are presented only to facilitate fmancial 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 not been made in the aggregation of this 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 ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia.
(5) Bonds, bills, certificates 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.
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.

- 11 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 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.

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, 1998, 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

$ 8967186,87 $ 14496:250,64 $ 157 07217 $,=~_0!Ooo~ $ 14 339,178 47

CATEGORIZATION OF INVESTMENTS Investttlents are summarized below:

Type oflnvestttlent

Carrying Amount

Board ofRegents Short-Term Investttlent Fund Total Return Fund

$ 65,930.50 6,265,078.54

Totallnvestttlents

$ 6.331.009.04

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

- 12-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 1998:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 1,589,514.21 56,535,807.77 7,336,499.23 21,972,032.72 11.688,208.28

Total Investment in Plant

$99,122,062.21

. NOTE 4: OPERATING LEASES

Valdosta State University has entered into certain agreements to lease land, buildings and equipment which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the University has the option of renewing the lease on a year-to-year basis. Future minimum lease payments for operating leases as of June 30, 1998, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30

1999

$ 681.355.78

Expenditures for rental of land, buildings and equipment under operating leases for the year ended June 30, 1998, totaled $671,981.04.

NOTE 5: CAPITAL LEASES

Valdosta State University acquires certain copiers and 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 ifappropriated 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, 1998, future minimum lease payments under capital leases are as follows:

- 13 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 5: CAPITAL LEASES

Fiscal Year Ending June 30

1999 2000

$ 45,363.39 14.372.33

Total 'Future Minimum Lease Payments

$ 59,735.72

Less: Amounts Representing Interest

4,203.02

Present Value of Future Minimum Lease Payments

$ 55.532.70

NOTE 6: RISK MANAGEMENT

Valdosta State University is a participant in the Board ofRegents ofthe 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 audit report of the 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 $1,000,000.00 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 ofRegents.

The Department ofAdministrative 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 officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe Board of Regents ofthe University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

A self-insured program 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 Self-Insurance Fund.

- 14-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 7: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights ofthe State of Georgia subject only to the claims of the State's general creditors. Participants' rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account for each participant. : Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual , Financial Report for the fiscal year ended June 30, 1998.
A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999, all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan was converted effective July 1, 1998.
NOTE 8: RETIREMENTPLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Valdosta State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defmed 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 1998, the employer contribution rate was 11.81% for covered employees. In addition, the University contributed 3.91% 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:

- 15 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXIllBIT "0"

NOTE 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 3,927,474.47 $ 3,682,575.51 $ 3,461,687.40

REGENTS RETIREMENT PLAN

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

Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State of Georgia. The employer contributes 7.75% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

The University and the covered employees made the required contributions of $784,089.57 (7.75%) and $498,095.00 (5%), respectively.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description Valdosta State University participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the" General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. Gncp is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

- 16-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 8: RETIREMENTPLANS
GEORGIA DEFINED CONTRIBUTION PLAN
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. Ifa member has less than $ 3,500.00 credited to his/her account, the Board ofTrustees has the option of requiring a lump sum distribution to the member in lieu 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.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board ofTrustees. Upon 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 1998 amounted to $91,438.04 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan.
NOTE 9: 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 ofcontinuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph.
Effective July 1, 1998, certain employees who retire with a minimum ofthree months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.
NOTE 10: 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.

- 17 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1998

EXHIBIT"D"

NOTE 10: CONTINGENCIES

Litigation, claims and assessments filed against Valdosta State University (an organizational unit ofthe 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, 1998.

NOTE 11: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the University System ofGeorgia are eligible for these postemployment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals.

As of June 30, 1998, there were 231 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1998, Valdosta State University recognized as incurred $454,371.50 ofexpenditures, which was net of$183,266.30 ofparticipant contributions.

NOTE 12: YEAR 2000 SYSTEMS READINESS

The year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the University's operations as early as calendar year 1999. The University has identified computer systems and other electronic equipment that may be affected by the year 2000 issue and are necessary to conducting University operations. The following stages have been identified as necessary to implement year 2000 compliant systems.

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

Assessment Stage - The actual process ofidentifying all systems and individual components ofsystems

to check for compliance.

..

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

Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.

- 18-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1998

EXHIBIT"D"

NOTE 12: YEAR 2000 SYSTEMS READINESS
It will be necessary for the University to progress through all four ofthese stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.
The following financial systems utilized by the University are supported by the Board ofRegents, University System of Georgia. The Board intends to remediate all systems which it maintains for use by its member institutions.
The College and University Fund Accounting System is in the remediation stage and final testing is scheduled for April, 1999.
The Regents Budget Reporting System and Property Inventory System are beyond the validation/testing stage and management considers them year 2000 compliant.
The Regents Payroll/Personnel System is in the remediation stage with validation and testing scheduled for completion in July, 1999.
The Banner Student Information System is supported by SCT Banner, Inc. Their Banner2000 product is year 2000 compliant. All centrally supported institutions are scheduled to install Banner2000 by May 16, 1999.
The University has completed an inventory of computer systems and other equipment necessary to University operations. Based on this inventory, the University is in the process of making deficient areas compliant. Following is a summary of systems likely to be affected by year 2000 and the status of remediation, if any:
PC's and other computer hardware - Teams have been assigned to verify that each PC is compliant and make remediation. TestingIValidation is currently 70% complete in this area. The MIS Department is currently assessing other hardware at the University.
Physical Plant Equipment - Plant Operations is responsible for assessing compliance for power systems, elevators, emergency generators, chiller and hot water systems. Testing and validation ofthese systems is currently underway.
Auxiliary Services - The Bookstore, Health Center, Food Services and other similar operational activities of the campus are currently performing testing and validation of items such as point of sale cash registers, pharmacy software and student ill card systems.
Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. While management is confident that the University will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the University does business will be year 2000 ready.
- 19-

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT"D"

NOTE 13: ENROLLMENT

The equivalent full-time student enrollment of Valdosta State University was as follows:

Regular Tenn Fall Quarter, 1997 Winter Quarter, 1998 Spring Quarter, 1998

8,584 8,316 7,841

. Average

Summer School, 1997

- 20-

SUPPLEMENTARY INFORMATION - 21 -

Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items
Total Assets

VALDOSTA STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30, 1998

EXHIBIT "eo

RESIDENT INSTRUCTION

LOITERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 4,230,722.96 $ 246,694,13 54,530.46 70,959.57

141,312.50 $

330,918.28 318,027.21 798,201,43 103,444.94

$ 1,241,020.96 $ 4,096.17
875.00

5,943,974.70 568,817,51 852,731.89 175,279.51

$ 4,602,907.12 $ 141,312.50 $ 1,550,591.86 $ 1,245,992.13 $ 7,540,803.61

See notes to the financial statements.

-22-

VALDOSTA STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 1998

EXHIBIT"F"

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1, 1997

RESIDENT

LOTTERY FOR

AUXILIARY

INSTRUCTION

EDUCATION

ENTERPRISES

STUDENT ACTMTIES

TOTAL

$ 63,275,197,32 $
.50,578.04 7,373,99
$ 63,333,149,35 $

734,693.00 $ 10,481,726,62 $ 1,632,323,54 $ 76,123,940.48

3,269,25

40,693,16 933,36

9,112,27 436,54

103,652,72 8,743,89

737,962,25 $ 10,523,353,14 $ 1,641,872.35 $ 76,236,337.09

$ 63,355,195,62 $

734,693.00

$ 1,138,845,57 $ 65,228,734,19

$ 10,183,761,27

10,183,761.27

118,511.14 5,860,81

478.46 271,00

8,905.42

61.00

118,989.60 15,098.23

$ 63,479,567,57 $ 735,442,46 $ 10,192,666.69 $ 1,138,906.57 $ 75,546,583,29

$ -146,418,22 $ 203,881,96

$ 2,519,79 $

-645,537,97 -314,851,52 $ 823,261,79

$ -645,537.97

502,965,78 $

44,215,83

610.189.85

1,655,391.36

FUND BALANCES JUNE 30,1998

$

57,463.74 $

20,577.55 $ 508,410.27 $ 1,113,155,63 $ 1,699,607,19

See notes to the financial statements,

- 23-

THIS PAGE LEn BLAHK

See notes to the financial statements.

-25-

VALDOSTA STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 1998

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 41,051,546,00

$ 1,189,000,00

22,223,651.32 $ 40,456,454.35

475,579.33 $

0,00

$ 63,275,197.32 $ 40,456,454,35 $ 1,664,579,33 $

0,00

."
EXPENDITURES

Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Capital Outlay Special Funding Initiative Research Consortium

$ 48,059,739,51 $

1,002,975.97

14,739,423,56
517,102,55 38,930,00

39,453,478.38 $ 1,643,942.65 $

1,030,036.52

$ 63,355,195.62 $ 40,456,454.35 $ 1,643,942.65 $

1,030,036.52

Excess of Revenues over Expenditures

$

-79,998.30 $

0,00 $

20,636,68 $

-1,030,036,52

(1) To eliminate tuition waivers not bUdgeted and to reclassify prior year fund balances budgeted as revenues,

See notes to the financial statements,

-26-

SCHEDULE "1"

TOTAL

ADJUSTMENTS (1)

TOTAL (Budget Basis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 42,240,546.00 63,155,685.00 $

$ 42,240,546.00 $ 42,240,546.00 $

-1,583,735.23

61,571 ,949.n

61,231,796.00

0.00 340,153.n

$ 105,396,231.00 $ -1,583,735.23 $ 103,812,495.77 $ 103,472,342.00 $ _ _.;;.34.;.;0;.:.,1;.;;5.,;;.3.;.;..n,;,...

$ 48,059,739.51 1,002,975.97
14,739,423.56 $ 39,453,478.38 2,673,979.17
517,102.55 38,930.00

$ 48,059,739.51 $ 48,309,377.00 $

1,002,975.97

1,273,341.00

-2,613,n1.75

12,125,651.81 39,453,478.38 2,673,979.17
517,102.55 38,930.00

12,207,444.00 38,305,156.00
3,081,574.00 256,520.00 38,930.00

249,637.49 270,365.03
81,792.19 -1,148,322.38
407,594.83 -260,582.55
0.00

$ 106,485,629.14 $ -2,613,n1.75 $ 103,871,857.39 $ 103,472,342.00 $ _ _-.;;.3;;.;99;.:,;,5;.,;1.,;;.5.,;;.39,;,...

$ -1,089,398.14 $

1,030,036.52 $ ==-=59:l:,3..6.,;,;1'o;;6.2...

$ ===-5;.;,;9:l:,3..6.,;,;1'6o;;2ii:::

-27 -

TIDS PAGE LEFT BLANK

VALDOSTA STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEAR ENDED JUNE 30,1998

SCHEDULE "2"

REVENUES State Appropriations

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

734,693.00 $

734,693.00 $

--:.;o.~OO;;..

EXPENDITURES Equipment, Technology and Construction
Trust Fund Special Funding Initiatives
Excess of Revenues over Expenditures

$

425,000.00 $

425,000.00 $

0.00

309,693.00

309,693.00

0.00

$

734,693.00 $

734,693.00 $

--:.;O.~OO;;..

$ ====.;;;.0.;,;;;,00;;,.,

$ ====~O,;,;;.O,;;,.,O

See notes to the financial statements.

- 29-

VALDOSTA STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30, 1998

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

BALANCE JULY 1,1997

CURRENT FUNDS

UNRESTRICTED

RESTRICTED

$

1,589,514,21

54,144,260,09 $

452,659,76

4,892,889,57

743,100,09

18,881,065,87

3,405,214,62 $

120,004,38

10,834,592,17

847,446,11

$

90,342,321,91 $ 5,448,420,58 $ =======12=0=,0=04..;;,=38=

$

90,258,609,55 $ 5,434,630.62 $

83,712,36

13,789.96

120,004.38

$

90,342,321,91 $ 5.448,420,58 $ =======12=0=,0=04..;;,=38=

See notes to the financial statements,

-30-

SCHEDULE "3"

ADDITIONS
PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

911.42 $

1,608,645.17

677,007.53 $
91,864.40 198,703.25

1,260,968.97
$

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 1998

$ 1,589,514.21

56,535,807.77

7,336,499.23

330,572.74 $

963,528.14

21,972,032.72

10,170.00

4,000.00

11,688,208.28

$ 1,609,556.59 $

967,575.18 $

1,260,968.97 $

340,742.74 $

967,528.14 $ 99,122,062.21

$ 1,609,556.59 $

967,575.18 $

1,260,968.97 $

340,742.74 $

925,558.52 $ 99,066,529.51

41,969.62

55,532.70

$ 1,609,556.59 $

967,575.18 $

1,260,968.97 $

340,742.74 $

967,528.14 $ 99,122,062.21

- 31 -

VALDOSTA STATE UNIVERSllY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30,1998

NET INVESTMENT IN PLANT Investment in Plant Facilities
RESTRICTED Designated for Subsequent Years' Expenditures
UNRESTRICTED Designated For Intercollegiate Athletics For Inventory Reserve For Renewals and Replacements Reserve For Subsequent Years' Expenditures For Uncollectible Accounts Surplus/Deficit Regular Lottery for Education

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTTERY FOR

AUXILIARY

EDUCATION

ENTERPRISES

$

75,000.00

$

38,550,00

798,201.43

7,474,96

-330,906.59 2,565.43

-25,011.22

_ _ _ _ _ $ _~2;;,;0~,5;.;.7.;..;7.,;;,;55;...

$

57,463.74 $

20,577.55 $ _ _5;;.;0;.;;8,:",;,4;.;.10;;.;.;;;.;27;....

$

57,463.74 $

20,577,55 $ _===5..0...8._,4=10.,2=7=

See notes to the financial statements.

-32-

SCHEDULE "4"

STUCENT ACTIVITIES

RESTRICTED

UNEXPENDED REGULAR

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 99,066,529.51 $ 99,066,529.51

$ 1,836,060.90

$ 1,836,060.90

$ 1,113,155.63

$

828,670.66

$

38,550.00

873,201.43

828,670.66

782,249.04

10,040.39

$ 1,113,155.63

$

7,017.27

$

7,017.27 $ _ _.;:;82::;.:;8;.l,;,6;.;.7.;;.;0'.;;.;66;..

-17,993.95 20,577.55 $ 2,535,295.12

$ 1,113,155.63 $ 1,836,060.90 $

7,017.27 $

828,670.66 $ 99,066,529.51 $ 103,437,885.53

-33-

VALDOSTA STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

$ 44,003,693.09 $ 849,482.46

See notes to the financial statements.

- 34-

Totals per Annual Supplement

Adjustments Lafrate, Mcintyre,

R. Peter Keith

VALDOSTA STATE UNIVERSITY RECONCILIATION OF PER DIEM AND FEES
YEAR ENDED JUNE 30, 1998

SCHEDULE "6"

TYPE PAYMENT
Other Expenses Other Expenses

FEE AMOUNT

EXPENSE AMOUNT

$

922,956.73 $

123,950.58 $

63.00 299.45

TOTAL 1,046,907,31
63.00 299.45

$

922,956.73 $

124,313,03 $

1,047,269.76

See notes to the financial statements.

- 35-

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

VALDOSTA STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

551-96-03 FS-551-97-01 FS-551-97-02 FS-551-97-03

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

CORRECTIVE ACTIONIRESPONSES

REVENUEIRECEIVABLESIRECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-551-97-02

Student accounts receivable (incurred prior to Summer Quarter 1997) had decreased to $163,631.21 as of June 30, 1998. Valdosta State University implemented procedures wherein all student accounts over one year old are notified in writing ofthe balance due and reported to a credit bureau (Equifax) when account is over one year old.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

551-96-02 551-96-04 FA-551-97-01

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

CORRECTIVE ACTIONIRESPONSES

ELIGIBILITY Deficiencies in Awarding/Disbursing Student Financial Aid Finding Control Number: 551-96-04

The overpaid student has been notified and charged. The overpaid monies have been returned.

The two underpaid students have yet to be"" disbursed. Per the Department of Education, the University must submit a "Federal Pell Grant Program - Increase Award Report" to the Department since the award year under question is now closed. A certification statement is needed from the independent auditor to accompany this report. The awards will be disbursed upon approval from the Department of Education.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

VALDOSTA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS 551-98-01

On June 30, 1998, Valdosta State University had $163,631.21 in student accounts receivable which were incurred prior to Summer quarter, 1998, and had no financial aid as of June 30, 1998, to support the receivable. This condition occurred because of management's failure to obtain approved documentation to support forthcoming financial aid before recording of the receivables. There is no provision in the policies of the Board of Regents for deferments of student accounts without the student having approved documentation of financial aid at the time of registration.

Collections ofstudents accounts receivable should be made on at least a quarterly basis, and no student should be granted a deferment without having approved fmancial aid. It is recommended that legal means be used to collect all student accounts receivable, if necessary.

EXPENDITURESILIABILITIESIDISBURSEMENTS H.O.P.E. Disbursements Made to Ineligible Students Questioned Costs: $2,827.00 Finding Control Number: FS 551-98-02

For the year under review, an examination of thirty students receiving H.O.P.E. Scholarship funds revealed

$2,827.00 was awarded and disbursed to two students who had exceeded their attempted 190 quarter hours

limit. These deficiencies occurred because the transfer hours for these students did not interface from the

BANNER system with the H.O.P.E. module.

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Procedures should be implemented to insure transfer hours are properly interfaced from the BANNER system with the H.O.P.E. module. The University should contact the Georgia Student Finance Commission regarding the resolution of these questioned costs.