\ \ 0 '' ' -' ' ' '' ', STATE ~f GEPRG'iA' DEPARTME~T OF AUDITS ANO ACCOUNTS GA. -, , I ABrx> .'. RI '{J(o' A'J. , ~l/.;)OOd-' '.' '- V '' C '' ) ' , ' . \ ) ' . I' /, I Au~usrA-TECl:INICAL' COLLEGE ,AUGUSTA,' GEORGIA REPORT' O' N REVIE'W _; ; ' , OF' THE FINANCIAL,STATEMENTS. 1 FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Russell W: Hinton l '' ,State Auditor .r ; - t ' ' ' '/ ; J - AUGUS1A TECHNICAL COLLEGE -TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATJON REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 2 BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS 11 B STATEMENT OF REVEl\'UES, EXPENSES AND CHANGES IN NET ASSETS 12 C STATEMENT OF CASH FLOWS 13 D NOTES TO THE FINANCIAL STATEMENTS 14 SUPPLEMENTARY INFORMATION SCHEDULES SCH[DULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET- (NON-GAAP BASIS) BUDGET FUND "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 29 2 RECONCILIATION OF SALARIES AND TRAVEL 30 SECTION II AUDITEE'S RESPONSE TO PRJOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YE<\R FINDINGS AND QUESTIONED COSTS Rt""' I W. ""TO' STATE AUDITOR AOA,;654;2'7A DEPARTMENT OF AUDITS AND ACCOUNTS 25 WJ..,hmgton Strcct S \V Suuc ~ 14 AIIJnta, Georgia 30314-M00 September 25, 2002 Honorable Roy E Barnes, Governor Members of the General Assembly of Georgia Members of the State Board ofTechrucal and Adult Education Members of the Local Board of Directors and Honorable Terry Elam, President Augusta Techmcal College INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen We have reviewed the accompanymg basic financial statements (Exlub!ls A through D) of Augusta Techmcal College, an organ1zat1onal urut of the State of Georgia, as of and for the year ended June 30, 2002, m accordance with Statements on Standards for Accountmg and Review Services issued by the Amencan Institute of Certified Pubhc Accountants All mformat1on mcluded m these financial statements 1s the representation of the management of Augusta Techmcal College A review consists pnnc1pally ofmqumes ofTechrucal College personnel and analytical procedures apphed to financial data It 1s substanually less m scope than an audit m accordance with audllmg standards generally accepted m the Umted States of Amenca. the obJectlve of which 1s the expression of an op1mon regardmg the financial statements taken as a whole Accordmgly, we do not express such an opm1on Based on our review, we are not aware of any matenal mod1ficatlons that should be made to the accompanymg financial statements m order for them to be m conforrmty with accountmg pnnc1ples generally accepted m the Umted States of Amenca As descnbed m Note I, Augusta Techmcal College adopted the prov1s10ns of Governmental Accounting Standards Board (GASB) Statement No 35. Basic Financial Statements - and .Management's D1scusswn and Analysis - for Public Colleges and Umversl/les, as amended by GASB Statement No 37. Basic Financial Statements-and Management's D1scusswn and Ana(n1s for State and Local Governments, and GASB Statement No 38, Certain Financial Statements Note Disclosures, as ofJuly 1. 2001, to implement a new financial reportmg model 02ARL-6T Management's D1scuss1on and Analysis 1s not a reqmred part ofthe basic financial statements but 1s supplementary mformat1on reqmred by the GASB We have apphed certam hm1ted procedures, which consisted pnnc1pally ofmqumes ofmanagement regardmg the methods ofmeasurement and presentation oftlus supplementary mformauon, and we are not aware ofany matenal mod!ficauons that should be made thereto. Our review was made for the purpose of expressmg hm1ted assurance that there are no matenal mod1fica1Ions that should be made to the financial statements m order for them to be m conformity with accounting pnnc1ples generally accepted m the Uruted States of Amenca The accompanymg supplementary mformatlon (Schedules I and 2) 1s presented for add11Ional analysis purposes Such mformauon has been subjected to the mqumes and analytical procedures apphed m the reV1ew of the financial statements, and we are not aware of any matenal mod1ficat1ons that should be made to such data. Respectfully submitted, w~ Hmton State Auditor RWHas 02ARL-6T REQUIRED SUPPLEMENTARY INFORMATJON - I- Augusta Technical College Management's Discussion and Analysis The followmg 1s a d1scuss1on and analysis of Augusta Techrucal College's financial performance for the fiscal year endmg June 30, 2002 Please read 1t m conJunctlon with the College's financial statements, which follow this section Due to the fact that the State of Georgia, mcludmg Augusta Techrucal College, implemented the proV1s1ons of Governmental Accountmg Standards Board (GASB) Statements No 34 and 35 for the fiscal year 2002 only hmited fiscal year 2001 data will be presented for comparative purposes This comparative mformatlon will be reqmred m future reports Overview ofthe Financial Statements and Financial Analysis This annual report consists of a senes of financial statements prepared m accordance with the rules and regulations estabhshed by the Governmental Accountmg Standards Board These financial statements differ, m both form and the accountmg pnnc1ple used, from the presentation of pnor financial statements The Statement of Net Assets used m con1uncllon with the Statement of Revenues, Expenses and Changes m Net Assets contams mformallon concemmg the College's finances and act1v111es as a whole and assists with proVJdmg an answer to the question "Is the College as a whole better or worse off as a result of the year's acllv1t1es9 " These statements mclude all assets and hab1ht1es usmg the accrual basis of accountmg, wluch 1s s1m1lar to the accountmg method used by corporations and other pnvate sector comparues All revenues and assets are recogiuzed when the service 1s proVJded and expenses and hab1ht1es are recognized when others provide the goods or service, regardless of when cash 1s exchanged The Statement of Cash Flows 1s a valuable tool when evaluatmg the ab1hty of the College to meet financial obhgatlons as they mature This statement presents mformat10n related to cash inflows and outflows sumrnanzed by operating, non-cap1taJ financmg, capital and related financing and mvestmg ac11v11les This d1scuss1on and analysis of the College's financial statements provides an overview of Its financial ac11v1t1es for the year Statement ofNet Assets The purpose of the Statement of Net Assets 1s to present to the users of the financial statements a fiscal snapshot of the Techrucal College at a specific point m lime The statement presents the assets, hab1ht1es and net assets of the College as of the end of the fiscal year Assets and hab1ht1es are reported as current and non-current and the difference between assets and hab1ht1es 1s reported as net assets Over a penod of time the increases and decreases reflected m the -2 - Statement of Net Assets, when considered with other non-financial facts such as enrollment levels and the cond1t1on of the fac1ht1es, can provide a measure to aid m determmmg whether the Techrucal College's financial position 1s 1mprovmg or detenoral!ng Net assets are d1v1ded mto three maJor categones. The first category, mvested m capital assets, net of debt, provides mforma!Ion concermng the College's equity m property, plant and equipment owned by the College The next asset category 1s restncted net assets, which 1s d1v1ded mto two categones, nonexpendable and expendable The maJonty of nonexpendable restncted net assets are only available for mvestment purposes Expendable restncted net assets are available for expenditure by the College but must be spent for purposes as determmed by donors and/or external ent1t1es that have placed time or purpose restnctions on the use of the assets The final category 1s unrestncted net assets, which are available for expenditure by the College for any lawful purpose deemed necessary to operate the College Statement of Net Assets (thousands of dollars) Assets Current Assets Capital Assets, Net S 4,100 24.419 Total Assets $ 28,519 Liabilities Current Liab1ht1es Non-Current L1ab1ht1es $ 1.123 280 Total Liabilities $ I 403 Net Assets Invested m Capital Assets, N.::t of Debt Restncted - Expendable Unrestncted Total Net Assets $ 24,419 4 2,693 $ 27,) )6 Statement ofRevenues, Expenses and Changes in Net Assets The purpose of the Statement of Revenues, Expenses and Changes m Net Assets 1s to present the revenues received by the College, both operatmg and nonoperatmg, and the expenses mcurred by the College, operatmg and nonoperating, and any other revenues, expenses, gams and losses received or spent by the College dunng the fiscal year Changes m total net assets as presented on the Statement of Net Assets are based on the mformal!on presented m the Statement of Revenues, Expenses and Changes m Net Assets Operatmg revenues are received for prov1dmg goods and/or services to vanous customers and constituencies of the College Operatmg expenses are those expenses paid to acquire or produce the goods and/or services provided m return for the operatmg revenues, and to carry out the -3 - m1ss10n of the College Therefore, nonoperat1Dg revenue 1s received when no goods or services are proVJded ID exchange for the revenue State appropnallons and gifts were classified as operat1Dg revenues ID previous reports With the ISsuance of Statement No 35, new gmdel1Des have been estabhshed by the Governmental Account1Dg Standards Board (GASB) chang1Dg the class1ficat1ons of state appropnatlons and gifts from operat1Dg to nonopcrat1Dg revenue This change may result ID an operating deficit that 1s offset by a nonoperat1Dg surplus Statement of Revenues, Expenses and Changes ID Net Assets (thousands of dollars) Operating Revenues Operatmg Expenses $ 6,645 22,744 Operat1Dg Garn/Loss $ -16,099 Nonoperat1Dg Revenues and Expenses 15,988 Income (Loss) Before Other Revenues, Expenses, Garns or Losses $ -111 Other Revenues, Expenses, Ga1Ds or Losses 350 Increase ID Net Assets 239 Net Assets at Beginmng of Year, as Ong1Dal1y Reported $ 12,093 Cumulative Effect of Changes ID Accountmg Pnnc1ple 14 784 Net Assets at Beg1Dmng of Year Restated Net Assets at End of Year $ 26,877 s 27,l 16 The Statement of Revenues, Expenses, and Changes ID Net Assets reflects a pos1t1ve year with an rncrease ID the net assets at the end of the year Some lughhghts of the mformat1on presented on the Statement of Revenues, Expenses, and Changes m Net Assets are as follows -4- Revenue by Source (thousands of dollars) Operatmg Revenue Tuition and Fees Grants and Contracts Rents and Royalties Sales and Services of Educat10nal Departments Other $ 3,790 2,752 8 87 8 Total Operatmg Revenue $ 6,645 Nonoperatmg Revenue State Appropnattons Federal Grants and Contracts - Nonoperatmg State Grants and Contracts - Nonoperatmg Local Grants and Contracts - Nonoperatmg Gifts Investment Income Total Nonoperatmg Revenue s 13,324 2,321 43 182 114 4 s 15,988 Total Revenues Operatmg Expenses (thousands of dollars) S ,~.6JJ Operatmg Expenses Instruction S 22,744 Total Operatmg Expenses S,744 The sources of operatmg revenue for the College are tuition and fees, grants and contracts, aux1hary services, and educational act1v1ttes The operatmg loss 1s directly related to the exclusion of the State of Georgia appropnatlon m the amount of $13,323,522 from operatmg revenues per GASB 35 Tmtlon mcreased by $653,064 Tins 1s directly related to the mcreased enrollment of 13% from fiscal year 2001 Repairs and Mamtenance mcreased by approximately $274,770 dunng the past year The mcrease was partially generated by the renovations completed on the weldmg shop and the replacement of a roof on the 300 bmldmg. Personal ServJces expenses mcreased by approximately $1,143,929 Tots mcreasc reflects an annual pay raise for College employees of approximately 4 5% with the associated frmge benefits It also reflects an increased cost to the College for additional adJunct faculty pos1t1ons reqmred due to the mcreased enrollment m fiscal year 2002 -5- The cumulallve effects of changes m accountmg pnnc1ple are the result of the College adoptmg deprec1allon on capital assets and changmg from the budgetary basis to the GAAP basis of accountmg Under nonoperatmg revenues (expenses) state appropnallons decreased by approximately $9,274 The College, as well as all other state agencies, mcurred a 2 5% budget reduc11on m fiscal year 2002 due to a national economic slowdown followmg the tragedy of September I I, 2001 Statement of Cash Flows The purpose of the Statement of Cash Flows 1s to provide relevant mformauon concemmg the cash receipts and payments of the College dunng the year It also provides mformat1on concerning the College's ab1hty to generate future cash flows and to meet its obhgat10ns as they come due. The statement 1s d1vtded mto three secuons The first secllon reports on the operatmg cash flows and shows the net cash used by the operatmg acllv1t1es of the College The second section shows the cash flows from the nonoperallng act:Jv1t1es of the College The final section reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses, and Changes m Net Assets Statement of Cash Flows (thousands of dollars) Cash Provided (Used) By Operating Acllv111es Non-Capital Fmancmg Acllv1t:Jes Investmg Act1v1t:Jes Capital and Related Fmancmg Acllv111es $-14,802 16,012 4 -446 Net Change m Cash Cash, Begmnmg of Year $ 768 2,177 Cash, End of Year S 2 945 Capital Assets The College did not complete any s1gruficant capital asset add111ons for fac1hlles m the fiscal year 2002 The Georgia State Fmancmg and Investment Comm1ss1on (GSFIC) funded $485,088 to be used for the purchase of equipment ProJected fundmg by the GSFIC for fiscal year 2003 will be approximately the same Economic Outlook The College 1s unaware of any currently known fact, dec1s1on, or cond1t1on that 1s expected to have a s1gmficant effect on the financial posmon or change how the College operates for the ne}..t fiscal year As m pnor years, the College's overall financial position 1s strong Enrollment has -6- increased by approximately 27% annually for the past 5 years and this trend 1s expected to continue into the next fiscal year As a result, the College anticipates the next fiscal year will be much like the last and the College will maintam a close watch over resources to maintain the ab1hty to react to unknown internal and external issues Terry Elam, President Augusta Technical College - 7- BASIC FINANCIAL STATEMENTS -9- AUGUSTA TECHNICAL COLLEGE STATEMENT OF NET ASSETS JUNE 30. 2002 ASSETS Current Assets Cash end Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other lnventones Total Current Assets Non-Current Assets Capital Assets, Net Total Assets LIABILITIES Current L1ab1lrtJes Salanes Payable Accounts Payable Deferred Revenue Funds Held for Others Compensated Absences Total Current L1ablhues Non-Current L1ab1lItIes Compensated Absences Total L1ab1hbes NET ASSETS Invested in Capital Assets, Net of Related Debt Restnc:ted Unrestncted Total Net Assets EXHIBIT "A" $ 2,944,590 95 20,000 00 66,901 97 437,557 10 630 687 47 $ 4,099,737 49 24,419.461 79 $ 28,519,199 28 $ 24,16079 10,624 46 342,275 49 331,924 47 413 537 85 $ 1, 122,523 06 $ 280 498 62 $ 1403021 68 s 24,419,461 79 4,248 41 2 692,467 40 $ 2711617760 See Independent Accountant's Combined Report on Review of Basic F1nanc,al Statements and Supplementary Information The notes to the financial statements are an integral part of this statement - 11 - AUGUSTA TECHNICAL COLLEGE STATEMENT Of REVENUES EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED JUNE 30 2002 EXHIBIT"B" OPERATING REVENUES Student Turt1on and Fees Less Scholarsh,p Allowances Grants and Contracts Federal Rento and Royalties Salos end Services Other Operating Revenues Total Operatrng Revenues 9PERATING EXPENSES Salanes Benefits Travel Scholarsh,ps end Fellowships Ut1llhes Supphes and Other 5eMces Depreaat.Jon Total Operabn9 Expenses Operating Income (Loss) NONOPERATING REVENUES !EXPENSESl State Appropnabons Grants and Contracts Federal State Local Gifts Interest and Other Investment Income Net Nonoperatmg Revenues Income Before Other Revenues, Expenses Gains or Loss Cap,tel Grants and Gifts State Nongovernmental Toter Other Revenues Increase m Net Assets Net Assets Net Assets Begmnmg of Year as Onginally Reported CumulatJve Effect of Changes 1n Acc.ountmg Pnnople Net Assets - Begmmng of Year Restated Net Assets - End of Year See Independent Accountant's Combined Report on Review of BaSlc F1nanoal Statements and Supplementary lnformaUOn The notes to the finanoal statements ere en mtegral pert of this statement - 12 - s 4,103 776 37 -314,152 71 2,752,018 86 7 752 95 87,169 33 8 504 99 $ 6,645 069 79 s 12,253 749 92 2 794,954 81 147 821 01 2,068 069 60 718,801 67 3 569,543 50 1 191 353 67 s 22 744,294 18 s -16,099,224 39 $ 13 323,522 26 2,320 541 31 43,626 92 18187631 114,231 80 3 687 84 $ 15 987 486 44 s -11173795 s 299,634 40 51 048 00 s 350 682 40 $ 238.944 45 s 12 092,962 52 14 784 270 63 s 26 877 233 15 $ 27 116 177 60 AUGUSTA TECHNICAL COLLEGE STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30 2002 CASH FLOWS FROM OPERATING ACTIVITIES Tuman end Fees Grants and Contracts Sales and SeMces Payments for Scholarships and Fellowships Payments to Suppliers Payments to Employees Other Receipts (Payments) Net Cesh Prov,ded (Used) by Operallng Ad1111bes CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES State Appropnabons Agency Funds Transadlons Gifts end Grants Received for Other than Capital Purposes Net Cesh Flows Provided by Noncapital F,nancmg Ac:tivmes CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVmES Cepital Grants and Gifts R&c:eived Purchases of Capital Assets Not Cash Used by Capital end Related Fmanc,ng Acllvmes CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Net lnaeese m Cash Cash and Cash Equivalents - Beginning of Year Cash and Cash Equivalents - End of Year RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Oporabng Income (Loss) Adjustments to Reconale Operating Income to Net Cash Prov,ded (Used) by Operalmg Aclnnbes Depreaabon Expense Change mAssets and L1ab1lrues ReceNabk!s. Net lnventones Salanes Payable Payroll W1lhholdmgs and Employer Benefits Accounts Payable Deferred Revenue Compensated Absences Net Cash ProVJdod (Used) by Oporabng Acbvlbes See Independent Accountant's Combined Report on Review of Basic Flnanoal Statements and Supplementary Information The notes to the finencal statements are an integral part of this statement -13- EXHIBIT "C" s 3 638,940 14 2 895 591 07 117 088 32 -2 068 069 60 -7,308,898 60 -12118,49585 42 068 20 $ -14 801 776 32 s 13 323,522 26 28,304 16 2 660,276 34 $ 16 012 102 76 s 350,849 68 -797 304 26 $ -446 454 58 $ 3,687 84 s 767,559 70 2 177 031 25 $ 2 944 590 95 S -16,099,224 39 1,191,35367 106,428 83 -66 854 30 -1576934 -8 960 72 3 423 87 -57,810 89 145 636 95 $ -14 801 776 32 AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Augusta Techmcal College 1s one of thirty-three (33) State supported member colleges of postsecondary education in Georgia which compnse the Georgia Department ofTechrucal and Adult Education, an organ1zat1onal urut of the State of Georgia The accompanying financial statements reflect the operations of Augusta Technical College as a separate reporting entity The Techrucal College's Local Board of Directors 1s composed of eleven ( 11) members serving staggered three-year terms who are appointed by the State Board ofTechrucal and Adult Education Appropnatlon of State funds 1s 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 appropnauons to be received by Augusta Techmcal College The Techmcal College does not have authonty to retain unexpended State appropnatlons (surplus) for any given fiscal year Accordingly, Augusta Techmcal College is considered an orgamzat10nal umt of the Georgia Department ofTechmcal and Adult Education for financial reporting purposes because of the s1gmficance of its legal, operational, and financial relationships as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Cod1ficat1on ofGovemmental Accountmg and Financial Reporting Standards FINANCIAL STATEME!','T PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Financial Srarements and Managemenr Discusswn and Analysisfor Srare and Local Governmenrs Tlus was followed m November 1999 by GASB Statement No 35, Basic Financial Statements and Management's D1scusswn and Analysis for Public Colleges and Umverst11es The State of Georgia is required to implement GASB No 34 as of and for the year ended June 30, 2002 As an organ1zat1onal unit of the State of Georgia, the Techmcal College is also required to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 The financial statement presentation required by these standards provide a comprehensive, entity-wide perspective of the Techmcal College's assets, hab1ht1es, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required The Techmcal College has elected to not restate its 2001 financrnl statements to conform with the new financial statement presentation. therefore comparative financial information will not be presented for fiscal year 2002 Significant accountmg changes made m order to comply with the new requirements mclude (I) adoption of depreciation on capital assets, and (2) recogmt10n of compensated absences Also, generally accepted accounting pnnc1ples (GAAP) requires thal the reporting of summer school revenues and expenses be spin between fiscal years rather than in one fiscal year However, because the effecl ofth1s change 1s not matcnal, the Technical Colleges ofthe Georgia Department ofTechmcal and Adult Education will continue to report summer revenues and expenses m the year m which the predommate activity takes place - 14 - AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING For financial reportmg pwposes, the Techmcal College 1s considered a special-purpose government engaged only m busmess-type activities Accordmgly, the Techmcal College's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accountmg, except as noted m the precedmg paragraph Under the accrual basis, revenues are recogmzed when earned, and expenses are recorded when an obligation has been mcurred All s1gmficant mtra-college transactions have been ehmmated The Techmcal College has the option to apply all Fmanc1al Accountmg Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The Techmcal College has elected to not apply FASB pronouncements issued after the apphcable date RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption ofGASB Statement No 34, the Techmcal College was also reqmred to make certam changes m accountmg pnnc1ples, spec1fically (I) adoption of deprec1auon on capital assets. and (2) recordmg of compensated absences GASB Statement No 34 reqmres certam summer semester revenues be recogmzed between fiscal years rather than the fiscal year m which the semester was predommantly conducted The Techmcal College has chosen to contmue to record summer revenue m the year m which the semester was predommantly conducted Effective July 1. 2001, the Techmcal College's cap1tahzat1on pohcy for eqmpment was mcreased from $1,000 00 to S5,000 00. Net assets at July I, 2001 were mcreased by S14,784,270 63 for the cumulative effect of these changes CASH AND CASH EQUIVALENTS Cash and Cash Eqmvalents mclude currency on hand and demand deposits with banks and other authonzed financial mstltutlons INVESTMENTS Investments are defined as those financial mstruments with terms m excess ofthree months from the date of purchase and certam other secunlics held for the production ofrcvenue Investments are stated at fau value ACCOUNTS RECEIVABLE Accounts receivable consist of allotments due from the Georgia Department ofTechmcal and Adult Education - Adm1mstrat1ve Central Office, reimbursements due from Federal, State, local, and pnvate grants and contracts, and other receivables disclosed from mformatlon available Accounts receivable (Other) ansmg from operations are reported at gross value Based on management's evaluation that amounts uncollectlble are not matenal, no prov1s10n has been made for such amounts - 15 - AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVENTORlES Inventones of goods for resale are recorded as assets at cost at the lime of purchase The Techmcal College uses the first-m, first-out (FIFO) method m costmg-out mventones based on sales CAPITAL ASSETS Capital assets are recorded at cost at date of acqu1s1t1on, or fair market value at the date of capital contnbut10n The Techmcal College cap1tahzes all land and land improvements For eqwpment, the Techrucal College's cap1tahzat1on pohcy mcludes all items with a urut cost of$5,000 00 or more, and an estimated useful hfe of greater than one year Bu1ldmgs and Bu1ldmg Improvements, Improvements Other Than Bu1ldmgs and Library Collecttons that exceed $100,000 00 or s1gmficantly mcrease the value or extend the useful hfe of the asset are cap1tal1zed For mfrastructure, the Techrucal College's cap1tal1zatlon threshold 1s S1,000,000 00 Routme repairs and mamtenance are charged to operatmg expense m the year m which the expense was mcurred Depreciation 1s computed usmg the strrught-lme method over the estimated useful hves ofthe assets, generally 10 to 40 years for bu1ldmgs, 15 to 25 years for mfrastructure, 15 years for improvements other than buildmgs, 10 years for hbrary books, and 3 to 10 years for eqmpment To obtain full disclosure of capital assets acqurred by the Techmcal Colleges of the Georgia Department ofTechrucal and Adult Educauon, 1t 1s necessary to look at the acttv1ttes of the Georgia State Fmancmg and Investment Comm1ss1on (GSFIC) - an organ1zat1on that 1s external to both the Techmcal College and the Georgia Department of Techrucal and Adult Education The GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to 11 m the Constitution of the State of Georgia and the Act creatmg the GSFIC The bonds are issued for the purpose ofacqumng capital assets ano this debt constitutes direct and general obhgattons ofthe State of Georgia, to the payment ofwh1ch the full faith, credit and taxmg power of the State are pledged GSFIC records construction m progress on its books throughout the construction penod and at completion transfers the entire project cost to Augusta Techmcal College to be recorded as an asset on the Techrucal College's books. DEFERRED REVENUES Deferred revenues mclude amounts received for tmt10n and foes and other acttv1t1es pnor to the end of the fiscal year but related to the subsequent accountmg penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned COMPENSATED ABSENCES Employee vacation pay 1s accrued for financial statement purposes when vested The hab1hty and expense mcurred arc recorded at year-end as accrued vacat10n payable m the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Augusta Techmcal College had an accrued hab1hty for - 16 - AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPENSATED ABSENCES compensated absences m the amount of S548,399 52 as of July I, 2001 For fiscal year 2002, $788,064 53 was earned m compensated absences and employees were paid S642,427.58, for a net mcrease of $145,636 95 The endmg balance as of June 30, 2002 m accrued hab1lity for compensated absences 1s $694,036 47 NON-CURRENT LIABILITIES Non-current hab1lit1es mclude (I) liab1lit1es that will not be paid wllhm the next fiscal year, (2) capital lease obhgat1ons with contractual matunt1es greater than one year, and (3) other liab1lmes that, although payable w1thm one year, are to be paid from funds that are classified as non-current assets NET ASSETS The Technical College's net assets are classified as follows Invested m capital assets, net ofrelated debt This amount represents the Technical College's total mvestment m capital assets, net of outstandmg debt obligations related to those capital assets To the ell.tent debt has been mcurred but not yet expended for cap11al assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgallons" as used m this defimt1on does not mclude debt of the GSFIC as discussed above ) Restricted net assets Restncted expendable net assets mclude resources m which the Technical College 1s legally or contractually obligated to spend resources m accordance with restncuons imposed by external thud parties, except for unexpended grant funds of$4,144 83 due to grantor agencies Unresmcted net assets Unrestncted net assets represent available resources denved from student tu1t1on and fees. state appropnat1ons, and sales and services of educat10nal departments These resources will be used for transactmns relating to the educational and general operat10ns of the Technical College, and may be used at the d1scret1on of the governmg board to meet subsequent fiscal year expenses for those purposes. except for unexpended state appropnauons (surplus) of $0 24 Unexpended state appropnatlons must be refunded to the Department ofTechmcal and Adult Education for remittance to the Office of Treasury and Fiscal Services These resources also mclude auxiliary enterpnses, which are substantially self-supportmg act1v1t1es that provide services for students, faculty and staff When an expense 1s mcurred that can be paid usmg either restncted or unrestncted resources. the Technical College's policy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources - I7 - AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT"D" NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INCOME TAXES Augusta Techrucal College, as a pohl!cal subd1v1s10n of the State of Georgia, 1s excluded from Federal mcome taices under Sect10n 115(1) of the Internal Revenue Code, as amended CLASSIFICATION OF REVENUES The Techrucal College has classified its revenues as either operatmg ornonoperatmg revenues m the Statement of Revenues, Expenses, and Changes m Net Assets accordmg to the followmg cntena Operating revenues Operatmg revenues mclude acl1VJl!es that have the charactenst1cs ofexchange transacnons, such as (I) student tu1t1on and fees, net ofscholarship allowances, (2) Federal, state and local grants and contracts. and (3) sales and services Nonoperating revenues Nonoperatmg revenues mclude acllv111es that have the charactensucs of non-exchange transact1ons, such as gifts and contnbullons, and other revenue sources that are defined as nonoperatmg revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental En/Illes That Use Proprietary' Fund Accounting, and GASB No 34, such as state appropnallons and mvestrnent mcome Scholarship Allowances Student tu11Ion and fee revenues, and certam other revenues from students, are reported at gross with a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses. and Changes m Net Assets Certam governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatmg revenues m the Techmcal College's financial statements To the extent that revenues from such programs are used to satisfy tw.t1on and fees and other student charges, the Techmcal College has recorded contra revenue for scholarslup allowances NOTE 2 CASH AND CASH EQUIVALENTS AND OTHER DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to Augusta Techmcal College (and thus the State of Georgia) cannot be placed ma depository paymg mterest longer than ten days without the depository prov1dmg a surety bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more of the followmg secunlles as enumerated m the Official Code of Georgia Annotated Section 50-17-59 1 Bonds. bill, certificates of mdebtedness, notes, or other chrect obhgauons ofthe Umted States or of the State of Georgia 2 Bonds, b1lls, certificates of mdebtedness, notes. or other obhgat10ns of the counlles or mumc1pah11es of the State of Georgia 3 Bonds of any pub he authonty created by the laws ofthe State of Georgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for this purpose - 18 - AUGUSTA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 2 CASH AND CASH EOUNALENTS AND OTHER DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 4 Industnal revenue bonds and bonds of development authontles created by the laws of the State of Georgia 5. Bonds, bills, certificates of indebtedness, notes, or other obhgatlons of a subs1d1ary corporation ofthe Umted States government, which are fully guaranteed by the Umted States government both as to pnnc1pal and interest, or debt obhgat1ons issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intennediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Assoc1at1on, and the Federal National Mortgage Associat10n 6 Guarantee or insurance ofaccounts provided by the Federal Deposit Insurance Corporation As authonzed in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es, wluch allow agencies of the State of Georgia (and thus Augusta Techmcal College), the opuon of exempting demand deposits from the collateral reqmrements CATEGORIZATION OF DEPOSITS The Techmcal College's cash deposits are categonzed by nsk as follows Category I - Amounts covered by depository insurance or collaterahzed with secuntles (at fair value) held by the Techrucal College or by its agent m the Technical College's name Category 2 - Amounts collaterahze