GA. Agoe . RI Vb Aq IQQ5-Cj(, STATE OF GEORGIA DEPARTMENT OF AUDITS 254 WASHINGTON STREET ATLANTA. GEORGIA 30334 REVIEW REPORT STATE OF GEORGIA AUGUSTA TECHNICAL INSTITUTE AUGUSTA, GEORGIA YEAR ENDED JUNE 30, 1996 AUGUSTA TECHNICAL INSTITUTE - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATJON EXHIBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS 2 B' STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) GOVERNMENTAL FUND TYPE 4 C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND .5 STATEMENTS OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND D "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 9 E "B" LOTTERY FOR EDUCATION 11 F NOTES TO THE FINANCIAL STATEMENTS 12 SUPPLEMENTARY INFORMATJON G COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND 28 H COMBINING STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) BUDGET FUND 29 I COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 30 J COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS 33 SCHEDULES 1 CASH AND CASH EQUIVALENTS 34 2 INVESTMENTS 35 3 SCHEDULE OF FEDERAL REVENUES 36 4 RECONCILIATJON OF SALARIES AND WAGES, AND TRAVEL 37 AUGUSTA TECHNICAL INSTITUTE - TABLE OF CONTENTS - SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS SECTION I FINANCIAL CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 October 16, 1996 Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members of the State Board of Technical and Adult Education Members ofthe Local Board ofDirectors and Honorable Jack B. Patrick, President Augusta Technical Institute 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 F) of Augusta Technical Institute as of and for the year ended June 30, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation ofthe management of Augusta Technical Institute. A review consists principally of inquiries of Institute 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, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1. Our review was made for the purpose ofexpressing 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 the basis of accounting described in Note 1. The accompanying supplementary information (Exhibits G through J and Schedules 1 through 4) is presented only for supplementary analysis purposes. Such information has been 96ARL-4T Subjected to the inquiries and analytical procedures applied in the review of the financial statements, and we are not aware of any material modifications that should be made thereto. Respectfully submitted, ~~A,.;o:~ Claude L. Vickers State Auditor CLV:dt 96ARL-4T FINANCIAL STATEMENTS - 1- AUGUSTA TECHNICAL INSTITUTE COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1996 EXHIBIT "A" See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. 2 AUGUSTA TECHNICAL INSTITUTE COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30 1996 EXHIBIT "A" LIABILITIES AND FUNPEQUITY Liabilities Accounts Payable Salaries Payable Payroll Withholdings Deferred Revenue Tuition and Fees Funds Held In Custody for Others Compensated Absences Total Liabilities Fund Equity Investment in General Fixed Assets Fund Balance Reserved Federal Financial Assistance For Refund to Georgia Department of Technical and Adult Education Administrative Central Olfice Inventories Live Work Projects Prior Year Local Funds State Grants and Contracts Student Services Unreserved Designated Surplus Regular Lottery for Education Total Fund Equity GOVERNMENTAL FUND TYPE BUDGET FIDUCIARY FUND TYPE AGENCY ACCOUNT GROUPS GENERAL GENERAL FIXED LONG-TERM ASSETS DEBT TOTALS (Memorandum Only) JUNE 30, 1996 JUNE 30, 1995 $ 1,270,056.72 35,535.48 6.499.27 2n,557.74 $ 217,344.12 $ 1,589,649.21 $ 217.344.12 $ 1,270,056.72 $ 35,535.48 6,499.27 905,080.60 18.627.97 4,066.n $ 466,218.21 2n.557.74 217,344.12 466,218.21 220,282.50 175.829.19 416.854.35 $ 466,218.21 $ 2,273,211.54 $ 1,740,741.38 $ 4,971,193.72 $ 4,971,193.72 $ 4,768,940.39 $ 39.43 332,834.35 116.669.26 133,087.34 0.00 166,373.41 294.80 96.68 $ 749,395.27 $ 4,971,193.72 39.43 332,834.35 116.669.26 133,087.34 0.00 166,373.41 0.00 203,312.17 109,074.33 135,935.63 13,351.49 446,373.71 294.80 0.00 96.68 0.00 $ 5,720,588.99 $ 5,676,987.72 Total Liabilities and Fund Equity $ 2,339,044.48 $ 217,344.12 $ 4,971,193.72 $ 466,218.21 $ 7,993,800.53 $ 7,417,729.10 See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -3- AUGUSTA TECHNICAL INSTITUTE STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1996 EXHIBIT"B" See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -4- AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30, 1996 EXHIBIT"C" FUNDS AVAILABLE REVENUES STATE FUNDS Allotment from Georgia Department of Technical and Adult Education - Administrative Central Office FEDERAL REVENUES (See Schedule) OTHER REVENUES RETAINED Allotments from Georgia Department of Technical and Adult Education - Administrative Central Office Construction Reserve Trust Fund Contracts Georgia Department of Administrative Services Distant Learning Project Georgia Department of Human Resources PEACH Project Georgia Institute of Technology Satellite Technology Project Fees Application Graduation Registration/Continuing Education other Interest Earned Rents Sales and Services (Net) Tuition other Sources Total other Revenues Retained Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Live Work Projects Prior Year Local Funds State Grants and Contracts Student Services Total Carry-Over from Prior Year TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995 $ 9,694,739.70 $ 9,412,451.46 $ 1,975,956.25 $ 1,691,403.67 $ 357.820.00 $ 0.00 4,719.37 59,717.91 57,272.60 86,853.65 18,032.95 10,840.26 37,135.00 16,852.75 946,554.58 1,156.39 2.473.75 13,340.00 454.450.76 1,777,513.27 0.00 38,660.00 17,533.00 575,218.62 517.50 2,338.19 7,819.49 261.992.86 1,385,268.65 6,774.37 $ 3,687,321.42 $ 2,453,534.50 $ 15,358,017.37 $ 13,557,389.63 $ 109,074.33 $ 108,416.38 135,935.63 136,364.99 13,351.49 11.87 446,373.71 366,473.13 $ 704,735.16 $ 611,266.37 Total Funds Available $ 16,062,752.53 $ 14,168,656.00 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -5- AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30,1996 EXHIBIT"C" EXPENDITURES PERSONAL SERVICES-INSTITUTIONS Salaries and Wages Employer's Contributions for: F.I.C.A Retirement Health Insurance Unemployment Compensation Insurance Workers' Compensation Insurance OPERATING EXPENSES-INSTITUTIONS Other Costs Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses Publications and Printing Travel Motor Vehicle Purchases Equipment Equipment Purchases Rental of Equipment Computer Charges Software Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts QUICK START PROGRAM Personal Services Salaries and Wages Employer's Contributions for: F.I.C.A Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Utilities Other Operating Expenses See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -6- TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30,1995 $ 8,009,096.82 $ 7,249,204.77 212,218.55 826,897.48 838,024.64 5,344.00 20,584.00 181,223.84 766,519.36 777,376.03 4,849.00 18,901.00 $ 9,912,165.49 $ 8,998,074.00 $ 9,373.67 $ 4,146.28 695,829.12 462,367.68 297,152.20 149,025.30 447,157.61 445,255.13 0.00 10,882.48 45,886.18 48,431.25 523,273.36 829,775.06 18,607.40 38,423.53 102,163.61 90,696.11 0.00 12,884.60 748,412.86 8,274.86 204,028.31 5,032.54 74,974.42 24,443.50 0.00 11,257.10 36,085.20 51.10 90,007.30 2,550.00 214,925.45 17,562.00 $ 3,088,106.09 $ 2,580,829.12 $ 44,285.94 $ 33,402.98 819.11 451.38 360.76 1,474.54 . 2,580.60 2,013.45 19,541.20 37.40 21,179.34 10,665.94 20,030.26 2,531.64 20,092.98 11,340.44 AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30.1996 EXHIBIT"C" EXPENDITURES QUICK START PROGRAM Travel Equipment Equipment Purchases Computer Charges Software Per Diem, Fees and Contracts Per Diem and Fees ADULT LITERACY GRANTS Personal Services Salaries and Wages Employer's Contributions for: F.I.C.A. Retirement Health Insurance other Costs Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities other Operating Expenses Publications and Printing Travel Equipment Equipment Purchases Rental of Equipment Computer Charges' Software Real Estate Rentals Per Diem, Fees and Contracts Per Diem and Fees JOB TRAINING PARTNERSHIP ACT Personal Services Salaries and Wages Employer's Contributions for: F.I.C.A Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Utilities See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -7- TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995 $ 5,223.78 $ 1,130.05 3,267.89 290,346.03 $_....::..3;:9..;7..,.3L0;:8.;.:=8=2- $ 1,809.72 20,513.92 7,289.89 462,350.88 585,431.30 $ 423,693.97 $ 418,763.02 16,113.09 36,819.05 32,000.99 16,097.94 35,336.00 31,123.37 1,281.38 13,130.99 1,895.18 14,474.01 71,768.03 0.00 9,138.05 0.00 22,992.58 1,392.71 3,631.28 45,086.77 519.38 2,545.92 2,700.62 700.77 8,736.40 0.00 164.00 400.00 0.00 0.00 0.00 2,878.70 624,280.13 $ 589,104.07 $ 172,664.77 $ 7,447.47 22,935.35 20,999.17 5,847.24 1,749.34 11,329.34 35,071.06 579.13 4,118.47 4,254.04 232.24 440.00 0.00 AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30, 1996 EXHIBIT"C" $ 16,062,752.53 $ 14,168,656.00 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -8- AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "An DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDED JUNE 30, 1996 EXHIBIT"D" FUNDS AVAILABLE REVENUES State Funds Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 9,621,063,00 $ 9,619,458.70 $ 2,406,099.00 1,975,956.25 4,286,519.00 3,329,501,42 $ 16,313,681.00 $ 14,924,916.37 $ -1,604.30 -430,142.75 -957,017.58 -1,388,764.63 25,000.00 704,735.16 679,735.16 $ 16,338,681.00 $ 15,629,651.53 $ _ _-_7_09..:..,0_2_9._47_ EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Quick Start Program Adult Literacy Grants Job Training Partnership Act $ 10,242,919.00 $ 3,649,667.00 397,309,00 642,167.00 1,406,619.00 9,912,165.49 $ 3,088,106.09 397,308.82 624,280.13 1,058,635.06 330,753.51 561,560.91 0.18 17,886.87 347,983.94 $ 16,338,681.00 $ 15,080,495.59 $ _----:.1.:.:;::.,2;,.;;.58~,..;..;18;..;..5..;..;,4...;...1 Excess of Funds Available over Expenditures $ 549,155.94 $ ===5::::49=,1=5=5,:=94= See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -9- ~ Ir(.~" t 1)5 IV I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I AUGUSTA TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED to BUDGET BUDGET FUND "B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 1996 EXHIBIT"E" FUNDS AVAILABLE REVENUES State Funds Other Revenues Retained BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 75,281.00 $ 75,281.00 $ 0.00 357,820.00 357,820.00 0.00 EXPENDITURES Equipment-TechnicallnstiMes Repairs and Renovations - - - - - - $ 433,101.00 $ 433,101.00 $ 0.00 $ 75,281.00 $ 75,281.00 $ 357,820.00 357,820.00 0.00 0.00 Excess of Funds Available over Expenditures - - - - - - $ 433,101.00 $ 433,101.00 $ 0.00 $ 0.00 $=====O=.O~O See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. - 11 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Augusta Technical Institute is one of twenty-nine (29) State supported member institutes of postsecondary education in Georgia which comprise the Georgia Department of Technical and Adult Education, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Augusta Technical Institute as a separate reporting entity. The Institute's Local Board ofDireetors is composed of eleven (11) members serving staggered three-year terms who are appointed by the State Board of Technical and Adult Education. Appropriation of State funds is made to the Georgia Department of Technical and Adult Education by the General Assembly of Georgia. The Department's Administrative Central Office determines the amount of State funds to be received by Augusta Technical Institute. The Institute does not have authority to retain unexpended State funds (surplus) for any given fiscal year. Accordingly, Augusta Technical Institute is considered an organizational urnt of the Georgia Department of Technical and Adult Education for financial reporting purposes because of the significance ofits legal, operational, and financial relationships as defined in Section 2100 ofthe Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING Augusta Technical Institute uses funds and account groups to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting 'segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows: GOVERNMENTAL FUND TYPE BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1995-1996. This fund also includes operations from various institutional services provided to students, faculty, and/or staff which are funded by fees charged to participants that are directly related to, but not necessarily equal to, the eost of service. The Budget Fund is similar in nature to a General Fund as defined in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund. FIDUCIARY FUND TYPE AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals. - 12 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 1: SUM:MARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING ACCOUNT GROUPS GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. 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 general fixed assets. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life ofthe assets are included in the General Fixed Assets Account Group. GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain govemmentallong-term liabilities, such as claims, judgments, and compensated absences, which will be paid from future resources. BASIS OF ACCOUNTING MEASUREMENT FOCUS The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund returns its unreserved fund balance (surplus) to the Administrative Central Office of the Department of Technical and Adult Education for remittance to the Office of Treasury and Fiscal Services in the subsequent fiscal year. GOVERNMENTAL FUND TYPE BUDGETFUND Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily State funds, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. - 13 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGET FUND 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 offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. Contractual terms ofcertain Federal grant agreements received by the Institute for vocational training services require that grant funds earned be recorded as Federal revenues rather than as revenue~ from tuition and fees. Accordingly, it is the Institute's policy to record certain Federal grant funds as Federal revenues and also as other revenues retained with offsetting expenditures for student expenses charged to the other operating expenses expenditure account. This accounting policy results in an overstatement of both revenues and expenditures in the financial statements for such Federal grants. This policy 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. Prior period adjustments and certain other items are reported as additions to and deductions from fund balance of the Budget Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. FIDUCIARY FUND TYPE AGENCY FUNDS Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities. BUDGET The Georgia Department of Technical and Adult Education - Administrative Central Office receives State appropriation allotments and certain Federal funds for the various technical institutes throughout the State. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 1995-1996. The budget allocation and disbursement of these funds is made to the various technical institutes by the Administrative Central Office. In addition, the technical institutes receive certain Federal funds and other funds directly and include these funds in the budget filed with the Administrative Central Office. - 14 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand and demand deposits with banks and other authorized financial institutions. INVESTMENTS Investments are defined as those financial instruments with terms in excess of three months from the date of purchase held for the production of revenue. Investments are stated at cost. ACCOUNTS RECEIVABLE Accounts receivable consist of allotments due from the Georgia Department of Technical and Adult Education - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. Accounts receivable (Other) arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for such amounts. INVENTORIES Expendable supplies are recorded as expenditures at the time of purchase and are not reflected on the Combined Balance Sheet (Statutory Basis). Inventories ofgoods for resale are recorded as assets at cost at the time of purchase. The Institute uses the weighted average method in costing-out inventories based on sales. RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements: FEDERAL FINANCIAL ASSISTANCE REFUND TO GEORGIA DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE Augusta Technical Institute receives Federal funds for the Adult Education Act and the Carl D. Perkins Vocational and Applied Technology Education Act through the Georgia Department of Technical and Adult Education - Administrative Central Office. As provided by the respective budget allocation to the Institute, these funds were required to be expended by June 30, 1996. At June 30, 1996, the following programs had unexpended Federal funds which should be refunded to the Administrative Central Office: - 15 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RESERVED FUND BALANCE FEDERAL FINANCIAL ASSISTANCE REFUND TO GEORGIA DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE Adult Education Act Adult Education Carl D. Perkins Vocational and Applied Technology Education Act Vocational Education - Basic Grants to States $ 16.56 22.87 $ 39.43 INVENTORIES Reported inventories (resale), under the consumption method, are offset by a portion of State funds reserved to provide working capital for managing a reasonable level of inventories for resale. LIVE WORK PROJECTS In accordance with the Official Code of Georgia Annotated Section 20-4-14(c), the accumulated balance ofunexpended funds derived from student live work projects. This amount is restricted to expenditures for live work projects or for the benefit of instructional programs at the technical institute in subsequent fiscal years. PRIOR YEAR LOCAL FUNDS Effective July 1, 1987, Augusta Technical Institute became a part of the Georgia Department ofTechnical and Adult Education. The Official Code of Georgia Annotated Section 20-4-23 provides the Institute may retain for future operations"...any unexpended nonstate funds that have been collected by, appropriated for, or otherwise earmarked for use by said postsecond.ary technical school operated by a local board of education or an area board...". These unexpended local funds are available for use in subsequent fiscal years. STUDENT SERVICES The unexpended balance of student services provided throughthe Institute's bookstore operations. These funds are restricted for bookstore operations in subsequent fiscal years. UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is returned to the Georgia Department of Technical and Adult Education - Administrative Central Office for remittance to the Office of Treasury and Fiscal Services in the subsequent fiscal year as surplus, as follows: - 16- AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 E:x::HlBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UNRESERVED FUND BALANCE REGULAR- An amount ofunexpended regular appropriations designated for reappropriation by the State in subsequent years. LOITERY FOR EDUCATION - An amount ofunexpended lottery appropriations designated for future reappropriation by the State for Lottery for Education. COMPENSATED ABSENCES Compensated absences represent obligations of the Institute relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual and compensatory leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the Budget Fund for the current portion of this obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the allotment of State funds each year to the Institute to cover the cost of annual leave paid to terminated employees. The liability for compensated absences at year-end is reported in the General Long-Term Debt Account Group for governmental funds. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Balance Sheet (Statutory Basis) 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 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. COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding ofthe changes in the Institute'S financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Institute's financial position and operations or would cause the statements to be unduly complex and difficult to understand. NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia 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: - 17 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996 EXHIBIT "Fit NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or ofthe State of Georgia. (2) Bonds, bills, certificates ofindebtedness, notes, or other obligations of the counties or municipalities ofthe State of Georgia. (3) Bonds ofany 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 of development authorities created by the laws of the State of Georgia. (5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, 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 include technical institutes) the option of exempting demand deposits from the collateral requirements. 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, 1996, 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 market value) held by the Institute or by its agent in the Institute's name. Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Institute's name. Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution, or by its trust department or agent but not in the Institute's name, and amounts uncollateralized. - 18 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996 EXHIBIT "F" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS CATEGORIZATION OF DEPOSITS Canying Amount Bank Balances Risk Categories 2 3 Cash Deposits $ 124696233 $ 2375621 61 $ 200000.00 $ 2 175621 61 $'==dO~O~O NOTE 3: OPERATING LEASE Augusta Technical Institute has entered into a certain agreement to lease equipment which is classified as an operating lease (a lease on an asset not recorded on the balance sheet). This lease contains a provision that, at the expiration date ofthe original term of the lease, the Institute has the option of renewing the lease on a year-to-year basis. Future minimum lease payments for the operating lease as of June 30, 1996, 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 1997 1998 1999 2000 $ 2,580.00 2,580.00 2,580.00 215.00 Total Future Minimum Lease Payments $====:!=7~95~5~0~0 Expenditures for rental of equipment under operating leases for the year ended June 30, 1996, totaled $2,580.00. NOTE 4: CHANGES IN GENERAL FIXED ASSETS In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of$l,OOO.OO or greater are reflected in the General Fixed Assets Account Group. The following is a summary of changes ofequipment for the General Fixed Assets Account Group during the fiscal year: Balance July 1, 1995 Additions Deductions Balance June 30, 1996 $ 4,768,940.39 3,630,366.18 3,428,112.85 $ 4,971.193.72 - 19 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXIllBIT "F" NOTE 5: GENERAL LONG-TERM DEBT CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1996, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group: Balance July 1, 1995 Additions Annual Leave Earned and Utilized (Net) Salaries and Wages Salary-Related Fringe Benefits Balance June 30, 1996 NOTE 6: RISK MANAGEMENT $ 416,854.35 47,320.80 2,043.06 $ 466,218.21 Public Entity Risk Pool The State Personnel Board - Merit System ofPersonnel Administration administers for the State of Georgia a program ofhealth benefits for the employees ofunits of government ofthe State of Georgia, units of county governments, and local education agencies located with the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid' by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board - Merit System ofPersonnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board. Other Risk Management The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making 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 Institute, as an organizational unit of the Georgia Department of Technical and Adult Education, 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. . NOTE 7: DEFERRED COMPENSATION PLAN The State ofGeorgia 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 oftheir 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 - 20- AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 7: DEFERRED COMPENSATION PLAN 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 or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's 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 of 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, 1996. NOTE 8: RETmEMENTPLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Augusta Technical Institute participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer public employee retirement system (PERS) established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. The Institute's payroll for the year ended June 30, 1996, for employees covered by TRS was $5,066,800.68. The Institute's total payroll for all employees was $8,649,741.50. Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years of creditable service, (2) has at least 30 years of creditable service, regardless of age, or (3) has attained the age of 55 years and has at least 25 years of creditable service. For those members with 30 years of service or those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years ofservice multiplied by the number of years of creditable service up to 40 years. Any member who has between 25 and 30 years of creditable service and is at least 55 years ofage shall receive a benefit which is reduced by the lessor of 1/12 of7% for each month the member is below age 60, or by 7% for each year or fraction thereof by which the member has less than 30 years of service. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death. Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability. Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest. - 21 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXIllBIT "F" NOTE 8: RETrnEMENTPLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Contributions Required and Contributions Made Employees ofthe Institute who are covered by TRS are required to pay 5% of their gross earnings to TRS. The Institute makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1996, the employer contribution rate was 11.81% for covered employees. The interest rate assumption (rate of return on investments) was 7.50%. Total contributions to the plan made during fiscal year 1996 amounted to $851,729.58, of which $598,389.14 was made by the Institute and $253,340.44 was made by employees. These contributions represented 11.81% (Institute) and 5% (employees) of covered payroll. Funding Status and Progress Pension Benefit Obligation The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No.5 of the Governmental Accounting Standards Board (GASB) that is required to be used for reporting purposes. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any step-rate benefits. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers of the PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among similar PERS. The total unfunded pension benefit obligation ofTRS as of June 30,1995, which was the latest information available, was as follows: Total pension benefit obligation $ 17,442,607,000.00 Net assets available for benefits, at cost 15,857,066,000.00 Unfunded pension benefit obligation $ 1 585 541 00000 The measurement ofthe total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1995. Net assets available for benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers. Retirement System Contributions Total contributions from all employers to TRS for the year ended June 30, 1996, were $607,274,559.00. The Institute's contribution for the year ended June 30, 1996, of $598,389.14 was actuarially determined and represented .0985% of total contributions made by all participating employers. - 22- AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXfllBIT "F" NOTE 8: RETffiEMENTPLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Trend Information Historical trend information is presented in the TRS June 30, 1996, financial report. This information gives an indication ofthe progress made in accumulating sufficient assets to pay benefits when due. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description Augusta Technical Institute participates in the Employees' Retirement System of Georgia (ERS), a singleemployer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Institute's payroll for the year ended June 30, 1996, for employees covered by ERS was $1,846,455.32. The Institute's total payroll for all employees was $8,649,741.50. Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions. Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Contributions Required and Contributions Made As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. Under the 01<:1 plan, member contributions consist of employee contributions paid by the employee of 1.25% ofcompensation and 4.75% of compensation paid by the Institute on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of compensation paid by employee. The Institute also is - 23 - AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 8: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Contributions Required and Contributions Made required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Institute amounted to 14.890.10 ofcovered payroll and included the 4.75% contributed on behalfofthe employee under the old plan referred to above. The employer contributions are projected to liquidate the unfunded actuarial liability within 20 years based upon the actuarial valuation of June 30, 1995. Employer contributions are also made on amounts paid for accumulated leave to retiring employees. Actuarial assumptions used by the ERS to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation. Total contributions to the plan made during fiscal year 1996 amounted to $298,017.91, of which $274,937.22 was made by the Institute and $23,080.69 was made by employees. These contributions met the requirements ofthe plan. Funding Status and Progress Funding status and progress information is presented in the ERS June 30, 1996" financial report which may be obtained through ERS. Trend Information Historical trend information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Augusta Technical Institute 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 ofa public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. The Institute's payroll for the year ended June 30, 1996, for employees covered by GDCP was $1,425,646.78. The Institute's total payroll for all employees was $8,649,741.50. Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $ 3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump - 24- AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1996 EXIllBIT "F" NOTE 8: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Benefits 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. Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 1996 amounted to S106,924.56 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan. NOTE 9: LEAVE POLICIES 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 a maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1- Compensated Absences Employees earn one and one-quarter days of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment. Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. NOTE 10: NONMONETARY TRANSACTIONS The Georgia Department of Technical and Adult Education - Administrative Central Office used lottery proceeds to purchase S6,070,729.00 ofequipment for Augusta Technical Institute during the fiscal year ended June 30, 1996. Those items with an acquisition cost ofS1,000.00 or greater will be reflected as received in the General Fixed Assets Account Group in the accompanying financial statements. However, revenues and expenditures for these lottery proceeds are not reflected in these financial statements. The Georgia State Financing and Investment Commission (GSFIC), a unit of State government, is responsible for the issuance of state debt and for the investment and accounting for proceeds derived from the issuance of state debt. In addition, GSFIC is authorized to acquire and construct projects for the benefit of units of State government or to contract with units of State government for the construction or acquisition of capital - 25- AUGUSTA TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 10: NONMONETARY TRANSACTIONS outlay projects. During the fiscal year ended June 30, 1996, the Georgia State Financing and Investment Commission paid $2,292,871.06 to various vendors for approved projects for the benefit of Augusta Technical Institute. NOTE 11: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institute expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against Augusta Technical Institute (as an organizational unit of the Department ofTechnical and Adult Education), ifany, are generally considered to be actions against the State ofGeorgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1996. NOTE 12: BONDING INFORMATION The President and all employees ofAugusta Technical Institute are bonded under a Public Employees Blanket Bond written by the Employers Insurance ofWausau, their Bond No. 1450-02-110723, on which the premium was paid to October 1, 1996. Under this agreement, the public employee dishonesty coverage insures Augusta Technical Institute to a maximum of$l,OOO,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees. The faithful performance of duty coverage insures the Institute to a maximum of $1,000,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment. All employees ofAugusta Technical Institute are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 011675 2 and 626 012294 4, on which the premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Institute to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully. - 26- SUPPLEMENTARY INFORMATION - 27 - ASSETS Cash ancl Cash Equivalents Investments Accounts Receivable State Funds Federal Financial Assistance Other Inventories Total Assets AUGUSTA TECHNICAL INSTITUTE COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30,1996 MAM DEPARTMENT OF TECHNICAL AND ADULT EDUCATION IIB" LOTIERYFOR EDUCATION TOTAL $ 1,059,745.51 $ $ 20,000.00 97.49 $ 1,059,843.00 $ 20,000.00 $ 70,262.31 $ 70,262.31 126,868.32 126,868.32 401,266.07 $ 324,207.00 725,473.07 $ 598,396.70 $ 324,207.00 $ 922,603.70 $ 336,597.78 $ 336,597.78 $ 2,014,739.99 $ 324,304.49 $ 2,339,044.48 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 28 - AUGUSTA TECHNICAL INSTITUTE COMBINING STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 3D, 1996 EXHIBIT "H" See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 29 - AUGUSTA TECHNICAL INSTITUTE COMBINING STATEMENT OF FUNDS AVAILABLE AND EXpEND'TURES BUOOETFUND yEAR ENDED JUNE 30 1996 EXHIBIT-r FUNDS AVAILABLE REVENUES STATE FUNDS Allotment from Georgia Department of Technical and ~ult Education Administrative central 0lIice FEDERAL REVENUES OTHER REVENUES RETAINED Allotments from Georgia Department of Technical and Adult Education - Administrative central OIIice Construction Reserve Trust Fund Contracts Georgia Department of Administrative Services Distant Leaming Project Georgia Department of Human Resources PEACH Project Georgia Institute of Technology Satellite Technology Project F_ Application Graduation Registration/Continuing Education Other Interest Earned Rents Sales and Services (Net) Tuition Total Other Revenues Retained Total Revenues CARRY.Q\fER FROM PRIOR yEAR Transfer from Reserved Fund Balance Live Work Projects Prior Year Local Funds State Grants and Contracts Student Services Total Carry-Qver from Prior Year Total Funds Available EXPENDITURES PERSONAL SERVICESINSTITUTIONS Salaries and Wages Employer's Contributions for: F.I.CA. Retirement Health Insurance Unemployment Compensation Insurance Workers' Compensation Insurance See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 30 - -A- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION -a- LOITERYFOR EDUCATION TOTAL $ 9,619,458.70 $ 75,281.00 $ 9,694,739.70 $ 1,975,956.25 $ 1,975,956.25 $ 357,820.00 $ 357,820.00 $ 4.719.37 4.719.37 57.272.60 57,272.60 18,032.95 18.032.95 37,135.00 16.852.75 946.554.58 1,156.39 2,473.75 13.340.00 454.450.76 1,m.513.27 37.135.00 16,852.75 946.554.58 1.156.39 2,473.75 13.340.00 454.450.76 1.m,513.27 $ 3,329,501.42 $ 357.820.00 $ 3,687.321.42 $ 14.924,916.37 $ 433,101.00 $ 15,358,017.37 $ 109.074.33 135.935.63 13,351.49 446,373.71 $ 704,735.16 $ 109,074.33 135.935.63 13.351.49 446,373.71 $ 704,735.16 $ 15,629,651.53 $ 433,101.00 $ 16,062,752.53 $ 8,009,096.82 212,218.55 826.897.48 838.024.64 5.344.00 20,584.00 $ 9,912,165.49 $ 8,009,096.82 212,218.55 826,897.48 838.024.64 5.344.00 20,584.00 $ 9,912,165.49 AUGUSTA TECHNICAL INSTITUTE COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENPED JUNE 30 1996 EXHIBIT "I" EXpENDITURES OpERATING EXPENSESINSTITUTIONS Other Costs Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Insurance and Bonding OIhar Operating Expenses Publications and Printing Travel Equipment Equipment Purchases Rental of Equipment Computer Charges Software Real Estate Rentals Per Diem, Fees and Contracts Per Diem and Fees Contracts QUICK START PROGRAM Personal Services Salaries and Wages Employer's Contributions for: F.J.CA Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Utilities Other Operating Expenses Travel Equipment Equipment Purchases Computer Charges Software Per Diem, Fees and Contracts Per Diem and Fees APULT LITERACY GRANTS Personal Services Salaries and Wages Employer's Contributions for: F.J.C.A. Retirement Health Insurance Other Costs Motor Vehicle Purchases Supplies and Materials Repairs and Maintenance Utilities Other Operating Expenses See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information. 31 "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION "S" LOITERYFOR EDUCATION TOTAL $ 9,373.67 695,829.12 297,152.20 447,157.61 45,886.18 523,273.36 18,607.40 . 102,163.61 748,412.86 8,274.86 74,974.42 24,443.50 90,007.30 2,550.00 $ 3,088,106.09 $ 44,285.94 819.11 451.38 360.76 19,541.20 37.40 21,179.34 10,665.94 5,223.78 1,130.05 3,267.89 290,346.03 $ 397,308.82 $ 423,693.97 16,113.09 36,819.05 32,000.99 1,281.38 13,130.99 1,895.18 14,474.01 71,768.03 $ 9,373.67 695,829.12 297,152.20 447,157.61 45,886.18 523,273.36 18,607.40 102,163.61 748,412.86 8,274.86 74,974.42 24,443.50 90,007.30 2,550.00 $ 3,088,106.09 $ 44,285.94 819.11 451.38 360.76 19,541.20 37.40 21,179.34 10,665.94 5,223.78 1,130.05 3,267.89 290,346.03 $ 397,308.82 $ 423,693.97 16,113.09 36,819.05 32,000.99 1,281.38 13,130.99 1,895.18 14,474.01 71,768.03 AUGUSTA TECHNICAL INSTITUTE COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUNp YEAR ENDEp JUNE 30, 1996 EXHIBIT "I" EXPEND'TURES ApULT LITERACY GRANTS Travel Equipment Equipment Purchases Rental of Equipment Computer Charges Software Real Estate Rentals JOB TRAINING PARTNERSHIP ACT Personal Services Salaries and Wages Employe"s Contributions for: E.J.CA Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Utilities Other Operating Expenses Travel Equipment Equipment Purchases Lease/Purchase of Equipment Per Diem, Fees and Contracts Per Diem and Fees EQUIPMENTTECHNICAL INSTITUTES Equipment Equipment Purchases REpAIRS ANp RENOyATIONS Other Costs Repairs and Maintenance Other Operating Expenses Equipment Equipment Purchases Total Expenditures Excess of Funds Available over Expenditures "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION "8" LOTTERY FOR EDUCATION TOTAL $ 9,138.05 2,700.62 700.n 164.00 400,00 $ 624,280,13 $ 9,138.05 2,700.62 700.n 164.00 400.00 $ 624,280,13 $ 172,664.n 7,447.47 22,935.35 20,999,17 5,847.24 1,749.34 11,329.34 802,432.03 10,469.23 53,12 2,580.00 128,00 $ 1,058,635.06 $ 172,664.n 7,447.47 22,935.35 20,999,17 5,847.24 1,749.34 11,329.34 802,432.03 10,469.23 53.12 2,580.00 128.00 $ 1,058,635,06 $ 75,281.00 $ 75,281,00 $ 355,403,02 $ 355,403.02 564.48 564.48 1,852,50 1,852.50 $ 357,820.00 $ 357,820,00 $ 15,080,495.59 $ 433,101,00 $ 15,513,596,59 549,155,94 0,00 549,155,94 $ 15,629,651,53 $ 433,101,00 $ 16,062,752,53 See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information, 32 AUGUSTA TECHNICAL INSTITUTE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30, 1996 EXHIBIT-J- FUND ASSETSI LIABILITIES JULY 1,1995 ADDITIONS DEDUCTIONS ASSETSI LIABILITIES JUNE 30, 1996 General Scholarship Fund $ 11,866.87 $ 41,596.86 $ 31,970,58 $ , 21,493.15 HOPE Scholarship Program 17.00 970,289.46 967,477.66 2,828,80 Ucensed Practical Nurse Examination Fees 2,298.29 4,610.70 3,837.81 3,071.18 Ucensed Practical Nurse Insurance 2,607.64 19,878.00 6,768,00 15,717.64 Pell Grant Program -576.83 905,611,16 905,034.33 0.00 Student Activities Fund 130,350,96 142,654.97 149,148.92 123,857.01 Student Govemment Fund 257.05 0.00 0.00 257.05 Student Insurance 19,418,79 19,465,00 5,983,00 32,900.79 Student Transportation Fees 9,167.00 27,326.73 19,275.23 17,218.50 Supplemental Educational Opportunity Grants 422.42 41,990.58 42,413.00 0.00 $ 175.829.19 $ 2.173.423.46 $ 2,131.908.53 $ 217,344.12 See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information, - 33- AUGUSTA TECHNICAL INSTITUTE CASH AND CASH EQUIVALENTS JUNE 30, 1996 NONINTEREST BEARING ACCOUNTS Sun Trust Bank, Augusta, Georgia INTEREST BEARING ACCOUNTS Sun Trust Bank, Augusta, Georgia Checking with Interest Account OTHER Cash on Hand Petty Cash SCHEDULE "1" $ 1,122,298.11 104,664.22 1,010,01 $ 1,227,972.34 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 34- BUDGET FUND Sun Trust Bank, Augusta, Georgia Certificates of Deposit No. 530015486 No. 530034750 AUGUSTA TECHNICAL INSTITUTE INVESTMENTS JUNE 30, 1996 SCHEDULE ''2'' PURCHASE DATE INTEREST RATE MATURITY DATE AMOUNT March 24, 1996 May 2,1996 4.28% 4.28% September 22, 1996 $ October 31, 1996 10,000.00 10,000.00 $ 20,000.00 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 35- AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30, 1996 SCHEDULE "3" $ 1,975,956.25 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 36 - AUGUSTA TECHNICAL INSTITUTE RECONCILIATION OF SALARIES AND WAGES, AND TRAVEL YEAR ENDED JUNE 30, 1996 SCHEDULE "4" Totals per Annual Supplement Accruals June 30,1995 June 30,1996 July 1, 1995 Accrual Adjustments Totals per Report SUMMARY BY OBJECT CLASS BUDGET FUND Personal Services-Institutions Quick Start Program Adult Literacy Grants Job Training Partnership Act SALARIES AND WAGES $ 8,632,358,22 $ TRAVEL 126,994.67 -18,627.97 35,535.48 475.77 $ 8,649,741.50 $ 126,994.67 $ 8,009,096.82 $ 44,285.94 423,693.97 172,664.77 102,163.61 5,223.78 9,138.05 10,469.23 $ 8,649,741.50 $ 126,994.67 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 37- SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED CQST YEAR ENDED JUNE 3D. 1996 STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR QUESTIONED COSTS The status of the findings disclosed in the review report for the year ended June 30, 1995, is summarized below: Audit Control Number Status ofFinding 824-95-01 824-95-02 See Audit Control Number 824-96-01 See Audit Control Number 824-96-02 PRIOR YEAR/CURRENT YEAR GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequate Equipment Inventory Records Financial Statements Audit Control Number 824-96-01 The review report for the year ended June 30, 1995, disclosed that the equipment inventory records for the Institute's general fixed assets were inadequate. For the year under review, a test of ten items selected for physical examination revealed that one ofthe items on the inventory could not be located and a second item was on the inventory with an incorrect acquisition cost. The Institute should follow established procedures to ensure that equipment inventory records are maintained in accordance with the State Property System Manual. REVENUESIRECEIVABLESIRECEIPTS Inadequate Accounting Control Procedures Financial Statements Audit Control Number 824-96-02 The review reports for prior years disclosed numerous accounting control deficiencies with the "Other" accounts receivable category shown on the Combined Balance Sheet (Statutory Basis). For the year under review, the accounts receivable procedures were again deficient as indicated below: (1) As ofJune 30, 1996, the "Other" accounts receivable category shown on the Combined Balance Sheet (Statutory Basis) included $140.45 in student receivables outstanding from fiscal year 1995, $1,446.65 in student receivables outstanding from fiscal year 1992, $2,873.46 in student receivables outstanding from fiscal year 1991, and $22,663.41 in student receivables outstanding from fiscal year 1990. - 1- AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COST YEAR ENDED JUNE 30. 1996 PRIOR YEAR/CURRENT YEAR REVENUES/RECEIVABLES/RECEIPTS Inadequate Accounting Control Procedures Financial Statements Audit Control Number 824-96-02 In numerous instances, these receivables were not supported by adequate documentation to determine ifthe amounts recorded were actually earned by the Institute. (2) As ofJune 30, 1996, the "Other" accounts receivable category shown on the Combined Balance Sheet (Statutory Basis) included $9,256.36 in checks returned for insufficient funds. Included in this amount were $8,686.51 from fiscal year 1995 or earlier. (3) As ofJune 30, 1996, the "Other" accounts receivable category shown on the Combined Balance Sheet (Statutory Basis) included $589.89 in accounts receivable for tuiti9n and fees from fiscal year 1993 for which payment was deferred by the Institute under a "Tuition Work Assistance Agreement. " Under this agreement, students were allowed to enroll and attend classes in exchange for work for the Institute. The "Tuition Work Assistance" policy was discontinued as ofJune 30, 1993. (4) As ofJune 30, 1996, the "Other" accounts receivable category shown on the Combined Balance Sheet (Statutory Basis) included $2,993.57 in accounts receivable for tuition and fees for which payment was deferred by the Institute. These deferments were a result ofthe Institute's approving a number of students for Pell Grants only later to find the students were ineligible. Deferring payment of tuition and fees without approved financial aid is beyond the authority granted to the Institute by the Administrative Central Office of the Georgia Department of Technical and Adult Education. This practice by the Institute should be discontinued. The Institute should initiate collection procedures in an effort to collect all amounts due to the Institute. Furthermore, the Institute should review all delinquent student accounts receivable to determine ifthe amounts accurately reflect amounts owed to the Institute. -2-