STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS I AUGUSTA TECHNICAL COLLEGE AUGUSTA, GEORGIA INDEPENDENT ACCOUNTANTS REPORT ON APPLYING AGREED-UPON PROCEDURES FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Russell W. Hinton State Auditor AUGUSTA TECHNICAL COLLEGE - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXHIBIT A BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT RuSSELL W+-JIINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 25, 2006 Members of the State Board Technical and Adult Education Members of the Local Board of Directors and Honorable Terry Elam, President Augusta Technical College Independent Accountant's Report on Applying Agreed-Upon Procedures Ladies and Gentlemen: We have performed the procedures enumerated below, which were agreed to by the College and the Administrative Central Office (Oversight Unit) ofthe Department ofTechnical and Adult Education, solely to assist you in assessing the accuracy ofthe annual financial statement information reported to the Administrative Central Office by the College for inclusion in the State's Comprehensive Annual Financial Report (CAFR) and Single Audit Report; and to assist you in assessing the accuracy of budget basis information provided in the Budget Comparison and Surplus Analysis Report, which is attached as Exhibit A. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency ofthese procedures is solely the responsibility ofthe parties specified in this report. Consequently, we make no representation regarding the sufficiency ofthe procedures described below either for the purpose for which this report has been requested or for any other purpose. 1. Review selected balance sheet items reported on the annual financial statement worksheets (cash, accounts receivable, accounts payable, deferred revenues, net assets). Confirm that these items have adequate supporting documentation and are properly reconciled to the College's general ledger. Accounts Receivable and Accounts Payable were not properly reported on the financial statements. Variances of $2,202.14 and $3,132.94, respectively, were noted between the subsidiary listings and amounts reported on the annual financial statements for these accounts. 2. Obtain the College's GAAP basis worksheets for Statement ofNet Assets and Statement of Revenues Expenses and Changes in Net Assets (SRECNA) information that was submitted for inclusion in the State's CAFR and Single Audit. Utilizing test scripts, confirm that financial information presented in these worksheets properly support activity reported in the College's accounting records. Revenue activity was incorrectly reported on the SRECNA information submitted. State appropriations revenue was not adjusted for prior year surplus of $6,377.74, Capital Grants and Gifts - State was overstated by $438,117.00, Nonoperating Grants and Contracts - Federal were overstated by $184,898.94, Nonoperating Grants and Contracts - State were overstated by $81,431.73, Gifts Revenue was understated by $81,431.73, Other Nonoperating revenue was understated by $90,000.00, Operating Grants and Contracts Federal were understated by $931,599.74 and Student Tuition and Fees Sponsored Scholarships was overstated by $1,863,199.48. Expense activity was incorrectly reported on the SRECNA information submitted. Operating Expenses - Scholarships and Fellowships was overstated by $931,599.74 and Supplies and Other Services were overstated by $54,074.22. All of the above misstatements for revenue and expenses were corrected by the College on the GAAP basis worksheets resubmitted to the Department of Technical and Adult Education. 3. Obtain the College's worksheets for financial statement note disclosure information submitted for inclusion in the State's CAFR and Single Audit. Utilizing notes worksheets and other supporting documentation confirm that note disclosures related to Cash, Investments, Accounts Receivable, Capital Assets, Long-Term Debt, Lease Obligations and Retirement Plans have been properly reported. The Capital Asset note disclosure information was not properly reported. The additions to accumulated depreciation were reported as negative reductions and the deletions were reported as negative additions. The Categorization of Deposits note was not properly reported. The carrying value of the bank deposits was reported as $3,669,418.60, the actual carrying value of cash deposits is $3,690,708.61. The Accounts Receivable note was not properly reported. The total accounts receivable reported in the note was $224,604.92. The actual amount of accounts receivable on the Statement of Net Assets is $226,807.06. The Long-Term Liability note did not properly report the current amount of the compensated absences liability. The amount included in the note was $633,595.85. The current portion of compensated absences reported on the Statement of Net Assets is $412,538.34. All note disclosure exceptions noted above were corrected by the College and resubmitted to the Department of Technical and Adult Education. 4. Review the College's year end GAAP basis journal entries. Obtain documentation for GAAP journal entries and confirm that the entries were posted to the College's annual financial statement worksheets. Year end GAAP entries related to uncollectible reserves were not made correctly. Uncollectible receivables of$2,202.14 were recorded as Allowance for Doubtful Accounts contra revenue on the SRECNA worksheet instead of Allowance for Doubtful Accounts, contra receivable amount on the Statement of Net Assets. The year end GAAP entry related to prior year surplus was not made correctly. Prior year surplus of$6,377.74 was recorded as Grants and Contracts- State on the SRECNA worksheet instead of State Appropriations as required for correct presentation. This entry was corrected and resubmitted to the Department of Technical and Adult Education. The year end GAAP entry related to Pell and SEOG activity was not made correctly. Sponsored scholarship contra revenue of$931,599.74 was shown as a credit revenue balance. The amount recorded in Operating Grants and Contracts - Federal, $2,077,066.65, should have been recorded as Operating Expenses - Scholarships and Fellowships and the amount recorded for Operating Expenses - Scholarships and Fellowships, $3,008,666.39, should have been recorded as Operating Grants and Contracts - Federal. This entry was corrected and resubmitted to the Department of Technical and Adult Education. The year end GAAP entry related to deferring revenue associated with encumbrances was not made correctly. The deferred revenue amount of $81,431.73 was incorrectly debited to Nonoperating Gifts revenue. Of this amount, Federal revenues to be deferred of $40,824.72 were credited to nonoperating grants and contracts - Federal revenue and state revenues to be deferred of$40,607.0l were credited to Capital Grants and Gifts - State. This entry was corrected and resubmitted to the Department of Technical and Adult Education. 5. Confirm that State Appropriation revenues, receivables and remittances ofprior year surplus balances have been properly recorded in the College's financial records. Prior year surplus balances should be netted against State Appropriation revenues in the GAAP basis financial statements; however, prior year surplus balances should be reflected as fund balance adjustments on the Budget basis financial statements. State appropriations revenues and receivables were not properly recorded in the College's GAAP basic financial statements. Prior year surplus of$6,377.74 was netted against Nonoperating State Grants and Contracts instead of State Appropriations. State appropriations receivable was $65,287.30 on the Statement of Net Assets. However, the College should not have been reporting any State Appropriations receivable. The above exceptions were corrected by the College when GAAP basic financial statements were resubmitted to the Dep~artment uf Technkat and Adult Education. 6. Obtain listing ofwrite-offrequests for accounts receivable less than $3,000.00 for fiscal year 2006. Confirm that these write-off requests have been approved by the State Accounting Officer and have been posted to the College's financial statements. We did not note any exceptions as a result of our procedures. 7. Verify that the listing of salaries, travel, and per diem and fees reported to the Department of Audits is in accordance with O.C.G.A. 50-6-27 reconciles to amounts recorded in the College's financial statements. Travel reported to the Department of Audits was not reconciled with amounts recorded in the financial statements. A variance of $980.00 was noted. 8. Review the year end Budget Comparison and Surplus Analysis Report (Exhibit A). Confirm that budget information presented in this Report supports activity reported in the College's accounting records and determine if any budget overexpenditures exist. We did not note any exceptions as a result of our procedures. 9. Obtain documentation for Budget basis reserves reported by the College on the Budget Comparison and Surplus Analysis Report (Exhibit A). Confirm that the reserves are properly documented, valid and appropriate. The College reported a Technology Reserve of $120,989.98. The reserve should have been reported as $143,677.20 which resulted in a misstatement of $22,687.22. Sales and services reserve was reported as $1,004,468.57. The reserve should have been reported as $1,023,991.13 which resulted in a misstatement of $19,522.56. The College reported no reserve for Business and Industry. However, a deficit of $42,209.78 should have been reported. The College did not report the Uncollectible Reserve of $2,202.14. The College reported Surplus of$9,552.63. Surplus should have been reported as $9,619.30 which resulted in a misstatement of $66.67. 10. Review the H.O.P.E. Scholarship Program reconciliation between the College and the Georgia Student Finance Commission. Confirm that information reported to the Georgia Student Finance Commission has been reconciled with H.O.P.E. Scholarship activity reported on the College's financial records. We did not note any exceptions as a result of our procedures. These agreed-upon procedures do not constitute an audit of the financial statements or any part thereof, the objective ofwhich is to express an opinion on the financial statements or a part thereof. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. Thisxeport is intended solely for the information and use.~ Spcified users listed above and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~ ~~~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as EXHIBIT AUGUSTA TECHNICAL COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT YEAR ENDED JUNE 30, 2006 EXHIBIT"A" REVENUES State Appropriation State General Funds Federal Funds Other Funds Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Total Funds Available EXPENDITURES Adult Literacy Economic Development Technical Education Total Expenditures Excess of Funds Available over Expenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prior Year Payable/Expenditures Prior Year Receivables/Revenue Unreserved Fund Balance (Surplus) Returned to Department of Technical and Adult Education Year Ended June 30, 2005 Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCE JUNE 30 SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance Live Works Projects Sales and Services Technology Fees Inventories Total Reserved Unreserved Surplus Total Fund Balance BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 15,360,451.13 $ 15,360,451.13 $ 2,484,486.32 2,286,201.41 6,703,977.84 6,429,386.62 $ 24,548,915.29 $ 24,076,039.16 $ 0.00 -198,284.91 -274 591.22 -472,876.13 0.00 969,384.06 $ 24,548,915.29 $ 25,045,423.22 $ 969,384.06 496 507.93 $ 1,154,359.38 $ 1,056,170.69 $ 318,575.00 278,508.64 23,075,980.91 22,474,867.24 $ 24,548,915.29 $ 23,809,546.57 $ $ 0.00 $ 1,235,876.65 $ 98,188.69 40,066.36 601 113.67 739 368.72 1,235,876.65 1,556,770.93 6,377.74 9,564.30 -21,375.80 -6,377.74 -969,384.06 $ 1,811,452.02 $ 14,065.39 28,653.81 1,004,468.57 120,989.98 633,721.64 $ 1,801,899.39 9 552.63 $ 1,811,452.02