West Georgia Technical College, Waco, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2011

WEST GEORGLA TECHNICAL COLLEGE WACO,GEORGIA
REPORT ON AUDIT O F THE FINANCLAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE30,2011
Georgia Departma Audits and AccaMts
Russell W.Hinton

WEST GEORGIA TECHNICAL COLLEGE - TABLE OF CONTENTS -

SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FlNANClAL STATEMENTS
EXHIBITS
A STATEMENT OF NET ASSETS
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
C STATEMENT OF CASH FLOWS
D NOTES TO THE FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO
BUDGET BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
5 RECONCILIATION OF SALARIES AND TRAVEL

Page

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

WEST GEORGIA TECHNICAL COLLEGE
- TABLE OF CONTENTS -
SECTION Ill FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 666-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
December 1 2 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of the Technical College System of Georgia Members of the Local Board of Directors
and Honorable Skip Sullivan, President West Georgia Technical College
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of West Georgia Technical College, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2011. These financial statements are the responsibility of the Technical College's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1,the financial statements of West Georgia Technical College are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of West Georgia Technical College. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows of the State of Georgia, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of West Georgia Technical College as of June 30, 2011, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Management's Discussion and Analysis is not a part of the basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this supplementary information. However, we did not audit this information and express no opinion on it.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements of

West Georgia Technical College taken as a whole. The accompanying supplementary information

(Schedules 1through 5) is presented for purposes of additional analysis and is not a required part of

the basic financial statements. Such information has been subjected to the auditing procedures

applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all

material respects in relation to the basic financial statements taken as a whole. Res~ectfullvsubmitted.

. -

Russell W. Hinton, CPA, CGFM State Auditor

REQUIRED SUPPLEMENTARY INFORMATION

West Georgia Technical College
Management's Discussion and Analysis
The following is management's discussion and analysis of West Georgia Technical College's financial performance for the fiscal year ending June 30, 2011 with comparative data from fiscal year ending June 30, 2010. This discussion has been prepared by and is the responsibility of management.
Overview of the Financial Statemenk and Financial Analysis
This annual report consists of a series of financial statements prepared in accordance with the rules and regulations established by the GovernmentalAccounting Standards Board.
There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. The Statement of Net Assets used in conjunction with the Statement of Revenues, Expenses and Changes in Net Assets contains information concerning the Technical College's finances and activities as a whole and assists with providing an answer to the question "Is the Technical College as a whole better or worse off as a result of the year's activities?" These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting method used by corporations and other private sector companies. All revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the goods or service, regardless of when cash is exchanged.
The Statement of Cash Flows is a valuable tool when evaluating the ability of the Technical College to meet financial obligations as they mature. This statement presents information related to cash inflows and outflows summarized by operating, noncapital financing, capital and related financing and investing activities.
This discussion and analysis of the Technical College's financial statements provides an overview of its financial activities for the year.
Statement of Net Assets
The purpose of the Statement of Net Assets is to present to the users of the financial statements a fiscal snapshot of the Technical College at a specific point in time. The statement presents the assets, liabilities and net assets of the Technical College as of the end of the fiscal year. Assets and liabilities are reported as current and noncurrent and the difference between assets and liabilities is reported as net assets. Over a period of time the increases and decreases reflected in the Statement of Net Assets, when considered with other nonfinancial facts such as enrollment levels and the condition of the facilities, can provide a measure to aid in determining whether the Technical College's financial position is improving or deteriorating.
Net assets are divided into two major categories. The first category, invested in capital assets, net of debt, provides information concerning the Technical College's equity in property, plant and equipment owned by the Technical College. The second category is unrestricted net assets, which are available for expenditure by the Technical College for any lawful purpose deemed necessary to operate the Technical College.

Statement of Net Assets (thousands of dollars)

June 30,2011

Assets Current Assets Capital Assets, Net

Total Assets

Liabilities Current Liabilities Noncurrent Liabilities

Total Liabilities

Net Assets

Invested in Capital Assets, Net of Debt

$

Unrestricted

54,467 6 12

Total Net Assets

June 30,2010

$

54,623

70

The total assets of the Technical College increased by approximately $1,425,000 from the prior year. This can be mainly attributed to a decrease of approximately $154,000 in Capital Assets, Net and an increase in Current Assets of approximately $1,579,000. This increase in assets follows the institutional philosophy to use available resources to acquire and improve all areas of the Technical College to better serve the instruction and public service missions of the Technical College.
Total liabilities for the fiscal year increased by approximately $1,039,000. This increase can be attributed to an approximate increase in Noncurrent Liabilities of $90,000 and an increase in Current Liabilities of $949,000. The combination of the increase in total assets of approximately $1,425,000 and the increase in total liabilities of approximately $1,039,000 yields an increase in total Net Assets of approximately $386,000.
Statementof Revenues, Expenses and Changesin NetAssets
The purpose of the Statement of Revenues, Expenses and Changes in Net Assets is to present the revenues received by the Technical College, both operating and nonoperating, and the expenses incurred by the Technical College, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the Technical College during the fiscal year. Changes in total net assets as presented on the Statement of Net Assets are based on the information presented in the Statement of Revenues, Expenses and Changes in Net Assets.
Operating revenues are received for providing goods and/or services to various customers and constituencies of the Technical College. Operating expenses are those expenses paid to acquire or produce the goods and/or services provided in return for the operating revenues, and to carry out the mission of the Technical College. Therefore, nonoperating revenue is received when no goods or

services are provided in exchange for the revenue. With the issuance of Statement No. 35, new guidelines were established by the Governmental Accounting Standards Board (GASB), which changed the classifications of state appropriations and gifts from operating to nonoperating revenue. This change may result in an operating deficit that is offset by a nonoperatingsurplus.

Statement of Revenues, Expenses and Changes in Net Assets (Thousand of Dollars)

June 30,2011

June 30,2010

Operating Revenues Operating Expenses

Operating Loss

$

-32,224

$

-30,584

NonoperatingRevenues and Expenses

31,615

28,632

Income (Loss) Before Other Revenues,

Expenses, Gains or Losses

$

-609

$

-1,952

Other Revenues, Expenses, Gains or Losses

995

8,428

Increase in Net Assets

$

386

$

6.476

Net Assets at Beginning of Year

Net Assets at End of Year

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expensesand Changes in Net Assets are as follows:

Revenue by Source (Thousands of Dollars) For the Years Ended June 30,2011, and June 30,2010

June 30,2011

Operating Revenue

Tuition and Fees

$

Grants and Contracts

Sales and Services of Educational Departments

Rents and Royalties

Other

11,673 197
2,471 219

Total Operating Revenue

June 30,2010

$

10,591

180

1.550

264

3

Nonoperating Revenue State Appropriations Federal Grants and Contracts Nonoperating State Grants and Contracts Nonoperating Gifts Other

Total NonoperatingRevenue

Capital Grants and Gifts State Other

Total Capital Grants and Gifts Total Revenues

$

995

$

8,428

Expenses (Thousands of Dollars) For the Years Ended June 30,2011, and June 30,2010

Operating Expenses Instruction

June 30,2011

June 30,2010

Nonoperating Expenses Nonoperating Expenses
Total Expenses

The sources of Operating Revenue for the Technical College are Tuition and Fees, Grants and Contracts, Rents, and Sales and Services activities. The increase in Operating Revenue of approximately $1,972,000 is related to increases in Student Tuition and Fees of $1,082,000, Sales and Services of $921,000 and Grants and Contracts of $17,000 and a decrease in Rents of $45,000 and Other Revenue of $3,000 for fiscal year 2011.

Tuition and Fees increased by $1,082,000. This is directly related to an increase in the tuition rate along with an establishment for an Allowance for Doubtful Accounts.
Nongovernmental grants and contracts increased by $17,000.
Utilities costs in general remained constant during the past year while technology costs associated with it decreased $710,000.
Personal Services expenses increased by approximately $2,378,000. This increase was due to an increase in enrollment for the Technical College and an increase in the benefit costs.
Under nonoperating revenues (expenses) state appropriations increased by approximately $2,139,000. This is due to the discontinuance of Federal Stimulus Funds which were supplementing the budget in the previous fiscal year.
Statement of Cash Flows
The purpose of the Statement of Cash Flows is to provide relevant information concerning the cash receipts and payments of the Technical College during the year. It also provides information concerning the Technical College's ability to generate future cash flows and to meet its obligations as they come due. The statement is divided into five sections. The first section reports on the operating cash flows and shows the net cash used by the operating activities of the Technical College. The second section reflects cash flows from noncapital financing activities. The third section deals with cash flows from capital and related financing activities, which reflects the cash used for the acquisition and construction of capital related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The final section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.

June 3 0 , 2 0 1 1

June 30,2010

Cash Provided (Used) By:
Operating Activities Noncapital FinancingActivities Capital and Related FinancingActivities Investing Activities

$

-28,451

31,400

-1,702

19

$

-28,082

28,598

-1,204

2 3

Net Change in Cash Cash, Beginningof Year

Cash, End of Year
Capita/ Assets
The Technical College had additions to Capital Assets of approximately $3,363,000 with approximately $957,000 being a new Building addition on the Douglasville Campus (CCI). Some of the other additions were purchased with Bond Funds. Bond funded additions provided by the GSFlC totaled just over $232,000.

Long- Term Liabilities
West Georgia Technical College had a total Long-Term Liabilities of $1,765,389.82 of which $984,695.55 was reflected as a current liability at June 30, 2010.
For additional information on Long-Term Liabilities see Notes 1and 7 in the Notes to the Financial Statements.
Economic Ou~ook
The Technical College is unaware of any currently known fact, decision, or condition that is expected to have a significant effect on the financial position or change how the Technical College operates for the next fiscal year. West Georgia Technical College reserved funds over the last few years which proved helpful in alleviating the effects of budget cuts and any potential decrease in enrollment due to the Quarter to Semester conversion. As in prior years, the Technical College's overall financial position is strong. As a result, the Technical College anticipates the next fiscal year will be much like the last and the Technical College will maintain a close watch over resources to maintain the ability to react to unknown internal and external issues.
Dr. Skip Sullivan, President West Georgia Technical College

BASIC FINANCIAL STATEMENTS

WEST GEORGIA TECHNICAL COLLEGE STATEMENT OF NET ASSETS JUNE 30,2011
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Cap~taAl ssets, Net
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deferred Revenue Funds Held for Others Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Unrestricted
Total Net Assets

EXHIBIT "A"

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

WEST GEORGIA TECHNICAL COLLEGE STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDEDJUNE 30.2011
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal
Rents and Royalties Sales and Services
Total Operating Revenues
OPERATING EXPENSES
Salaries Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES1
State Appropriations Grants and Contracts
Federal State Gifts Interest and Other Investment Income Other Nonoperating Expenses
Net Nonoperating Revenues
Income (Loss) Before Other Revenues. Expenses. Gains, or Losses
Capital Grants and Gifts State Nongovernmental Loss on Disposal of Capital Assets Special Items
Total Other Revenues. Expenses. Gains, or Losses
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
The notes t o the financial statements are an integral part of this statement. -3-

EXHIBIT "BN

(This page left intentionally blank)

WEST GEORGIA TECHNICAL COLLEGE STATEMENT OF CASH FLOWS YEAR ENDEDJUNE 3 0 , 2 0 1 1
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Other Rece~pts(Payments)
Net Cash Provlded (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts
Net Cash Flows Provided (Used) by Noncapitai FinancingActivities
CASH FLOWS FROM CAPITAL AN0 RELATED FINANCINGACTIVITIES Capital Grants and Gifts Received Proceeds from Sale of Capital Assets Purchases of Capital Assets
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginningof Yea1
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments t o Reconc~leOperating Income to Net Cash
Provided (Used) by OperatingActivities Depreciation Expense Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Salaries Payable Accounts Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts
The notes t o the financial statements are an integral part of this statement.
- 5 -

EXHIBIT "C"

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORllNG ENTITY
West Georgia Technical College is one of twenty-six (26) State supported member colleges of postsecondary education in Georgia which comprise the Technical College System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of West Georgia Technical College as a separate reporting entity.
The Technical College's Local Board of Directors is composed of eleven (11)members serving staggered three-year terms who are appointed by the State Board of the Technical College System of Georgia. Appropriation of State funds is made to the Technical College System of Georgia by the General Assembly of Georgia. The System Office of the Technical College System of Georgia determines the amount of State appropriations to be received by West Georgia Technical College. The Technical College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, West Georgia Technical College is considered an organizational unit of the Technical College System of Georgia for financial reporting purposes because of the significance of its legal, operational, and financial relationships as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Re~ortingStandards.
Legally separate, tax exempt organizations whose activities primarily support member colleges of postsecondary education in Georgia which comprise the Technical College System of Georgia (an organizational unit of the State of Georgia), are considered potential component units of the State. See Note 17 for additional information.
FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Technical College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.
GAAP requires that the reporting of summer school revenues and expenses be split between fiscal years rather than in one fiscal year. Due to lack of materiality, the Technical Colleges of the Technical College System of Georgia will continue to report summer revenues and expenses in the year in which the predominate activity takes place.
BASIS OF ACCOUNTING
For financial reporting purposes, the Technical College is considered a special-purpose government engaged only in business-type activities. Accordingly, the Technical College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-college transactions have been eliminated.
The Technical College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The Technical College has elected to not apply FASB pronouncements issued after the applicable date.
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents include petty cash and demand deposits in authorized financial institutions.

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

ACCOUNTS RECEIVABLE
Accounts receivable consist of tuition and fee charges to students, reimbursements due from Federal, State, local and private grants and contracts, and other receivables disclosed from information available. Accounts receivable are recorded net of estimated uncollectible amounts.
INVENTORIES
Resale inventories are recorded on the consumption method and are valued at cost using first-in, first-out (FIFO) method.
CAPITAL ASSETS
Capital assets are recorded at cost at date of acquisition, or fair market value at the date of capital contribution. The Technical College capitalizes all land and land improvements. For equipment, the Technical College's capitalization policy includes all items with a unit cost of $5,000.00 or more, and an estimated useful life of greater than one year. Buildings and Building Improvements, Improvements Other Than Buildings, Easements, Rights, Patents, Trademarks, Copyrights and Library Collections that exceed $100,000.00 or significantly increase the value or extend the useful life of the asset are capitalized. For infrastructure and software, the Technical College's capitalization threshold is $1,000,000.00. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 1 0 to 4 0 years for buildings, 1 5 to 25 years for infrastructure, 15 years for improvements other than buildings, 1 0 years for library books, 3 to 1 0 years for equipment and software, and 1 0 to 20 years for intangibles.
To fully portray capital assets acquired by the Technical Colleges of the Technical College System of Georgia, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to both the Technical College and the Technical College System of Georgia. The GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating GSFIC. The bonds are issued for the purpose of acquiring capital assets and this debt constitutes direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For major construction projects, GSFIC records construction in progress on its books throughout the construction period and at project completion transfers the entire project costs to West Georgia Technical College to be recorded as an asset on the Technical College's books. For the year ended June 30, 2011, GSFIC transferred capital additions valued at $956,948.47 to West Georgia Technical College.
DEFERRED REVENUES
Deferred revenues include amounts received for tuition and fees and other activities prior to the end of the fiscal year but related to the subsequent accounting period.
COMPENSATED ABSENCES
Employee vacation pay is accrued for financial statement purposes when vested. The liability and expense incurred are recorded at year-end as accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. West Georgia Technical College had an accrued liability for compensated absences in the amount of $1,562,928.25 as of July 1,2010. For fiscal year 2011, $1,211,653.00 was earned in compensated absences and employees were paid $1,009,191.43, for a net increase of $202,461.57. The ending balance as of June 30, 2 0 1 1 in accrued liability for compensated absences was $1,765,389.82.

WEST GEORGIA TECHNICAL COLLEGE NOTESTO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

NONCURRENT LIABILrnES
Noncurrent liabilities include liabilities that will not be paid within the next fiscal year
NET ASSETS
The Technical College's net assets are classified as follows:
Invested in capital assets, net of related debt This amount represents the Technical College's total investment in capital assets, net of outstanding debt obligations related to those capital assets, To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Unrestricted net assets: Unrestricted net assets represent available resources derived from student
tuition and fees, state appropriations, and sales and services of educational departments. These resources will be used for transactions relating to the educational and general operations of the Technical College, and may be used at the discretion of the governing board to meet subsequent fiscal year expenses for those purposes, except for unexpended state appropriations (surplus) of $29,771.60. Unexpended state appropriations must be refunded to the Technical College System of Georgia for remittance to the Office of the State Treasurer.
When an expense is incurred that can be paid using either restricted or unrestricted resources, the Technical College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
INCOME TAXES
West Georgia Technical College, as a political subdivision of the State of Georgia, is excluded from
Federal income taxes under Section 115(1)of the Internal Revenue Code, as amended.
CLASSIFICATION OF REVENUES AND EXPENSES
The Statement of Revenues, Expenses and Changes in Net Assets classifies the Technical College's fiscal year activity as operating and nonoperating according to the following criteria:
Operating Revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1)student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3) sales and services.
Nonoperating Revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, RepoHng a s h Flows of Proprietaty and Nonexpendable Trust Funds and Governmental Entities That Use Pmprietaty Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
Operating Expenses: Operating expenses include activities that have the characteristics of exchange transactions.
Nonoperating Expenses: Nonoperating expenses include activities that have the characteristics of nonexchangetransactions, such as capital financing costs related to investment activity.
SCHOLARSHIP ALLOWANCES
Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the Technical College, and the amount that is paid by students

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBll "D"

and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the Technical College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Technical College has recorded contra revenue for scholarship allowances.
NOTE 2: DEPOSITS

The custodial credit risk for deposits is the risk that in the event of a bank failure, the Technical College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Technical College) 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 any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or
municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the 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.
At June 30, 2011, the carrying value of deposits was $2,333,845.47 and the bank balance was $3,338,222.18. Of the Technical College's deposits, $3,088,222.18 were uninsured. Of these uninsured deposits, $3,088,222.18 were collateralized with securities held by the financial institution's trust department or agency, but not in the Technical College's name.

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable at June 30, 2011, consists of the following:
Student Tuition and Fees Federal,State and Private Funds Georgia State Financingand Investment Commission Other

EXHIBIT "D"

Less: Allowance for Doubtful Accounts
Net Accounts Receivable
NOTE 4: INVENTORIES Inventories at June 30, 2011, consist of the following:
Bookstore

NOTE 5: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2011:

Capital Assets, Not Belng Deprec~ated: Land Construction Work In Progress

Beginning Balance Julv 1.2010

Special Item Transfer

Additions

Reductions

Ending Balance June 30.2011

Total Capital Assets. Not Being Depreciated $ 3,112,762.00 $

0.00 $ 485,413.10 $

0.00 $ 3,598,175.10

Capital Assets, Being Depreciated: Buildingand Build~ngImprovements Improvements Other Than Buildings Equipment Library Collections

$ 60.048.309.80 2.571.364.58

40.333.40

2.611.697.98

Total Capital Assets, Belng Depreciated

$ 74,327,126.23 $ 165.316.65 $ 2.71L918.27 $ 560.993.16 $ 76.643.367.99

Less: Accumulated Depreciation: Buildingand Building Improvements ImprovementsOther Than Buildings Equipment Library Collections

$ 11.821.899.18

$ 1,542,697.45

2,436.627.84

22.520.21

7,075,110.68 $ 152,628.40 1,218,211.44 $

l.483.956.38

68.271.01

$
36,620.75 11.163.78

13.364.596.63 2,459,148.05 8,409,329.77 1.541.063.61

Total Accumulated Depreciation

Total Capital Assets, Being Depreciated. Net $ 5%509,532.15 $ 12.688.25 $ -139.78184 $ 513.208.63 $ 50,869,229.93 Capital Assets. Net

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

NOTE 6: DEFERRED REVENUE
Deferred revenue at June 30, 2011, consists of the following:
Prepaid Tuition and Fees

NOTE 7: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2 0 1 1was as follows:

Beginning Balance July 1.2010

Additions

Reductions

Ending Balance June 30,2011

Compensated Absences

Current Portion

NOTE 8: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2 0 1 1 was as follows:

Invested in Capital Assets Net of Related Debt

Bednning Balance July 1,2010

Additions

Reductions

Ending Balance June 30, 2011

$ 54,622,294.15 $ 358,319.51 $ 513,208.63 $ 54.467.405.03

Restricted Net Assets

0.00 15,789,542.08 15,789.542.08

0.00

Unrestricted Net Assets

70.265.00 33,069,497.49 32,527,957.86

611804.63

Total Net Assets

NOTE 9: LEASE OBLIGATIONS
OPERATING LEASES
West Georgia Technical College has entered into certain agreements to lease administrative offices, copiers, modular classrooms and postage meters which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the Technical College has the option of renewing the lease on a year-to-year basis. Amounts are included only for multi-year leases and for cancelable leases for which an option to renew for the subsequent fiscal year has been exercised.
Expensesfor rental of administrative offices, copiers, modular classrooms and postage meters under operating leases for the year ended June 30, 2011, totaled $304,653.59.
NOTE 10: RETIREMENT PLANS
West Georgia Technical College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "DM

supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that West Georgia Technical College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1,1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects 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. Members hired on or after July 1,1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1,2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1,2009 also have the option to change their membership to the GSEPS plan.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 1 0 years of creditable service and attainment of age 6 0 or 3 0 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 2 5 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 2 4 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1,2009. 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.
Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, West Georgia Technical College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these West Georgia Technical College contributions are included in the members' accounts for refund purposes and are used in the computation of the

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBrr "D"

members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. West Georgia Technical College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These West Georgia Technical College contributions are not at any time refundable to the member or his/her beneficiary.
Employer contributions required for fiscal year 2 0 1 1 were based on the June 30, 2008 actuarial valuation for the old and new plans and were set by the Board of Trustees on September 18, 2008 for GSEPS as follows:
Old Plan* New Plan GSEPS
* 5.66%exclusive of contributions paid by the employer on behalf of old plan
members
Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
TEACHERS RETIREMENT SYSTEM OF GEORGIA
The Teachers Retirement System of Georgia (TRS) is a cost-sharing multipleemployer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.
On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% 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 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBlT "D"

TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2 0 1 1 were 5.53% of annual salary. Employer contributions required for fiscal year 2 0 1 1 were 10.28% of annual salary as required by the June 30, 2007 actuarial valuation.
The following table summarizes West Georgia Technical College contributions by defined benefit plan for the years ending June 30,2011, June 30,2010, and June 30, 2009:

ERS Required Contribution

Percent Contributed

TRS

Required

Percent

Contribution

Contributed

GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description West Georgia Technical College participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment 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 sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia issues a financial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The Technical College's payroll for the year ended June 30, 2011, for employees covered by GDCP was $3,348,565.45. The Technical College's total payroll for all employees was $21,014,923.66.
Total contributions made by employees during fiscal year 2 0 1 1 amounted to $251,145.39 which
represents 7.5% of covered payroll. These contributions met the requirements of the plan.

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "D"

NOTE 11: RISK MANAGEMENT
PUBLIC E N l T W RISK POOL
The Department of Community Health administers for the State of Georgia a program of health benefits for the employees of units of government of the 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 Department of Community Health contracted with United Healthcare to process medical claims and Medco to process prescription drug claims in accordance with the State Employees' Health Benefit Plan as established by the Department of Community Health.
OTHER RISK MANAGEMENT
The Department of Administrative 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 Technical College, as an organizational unit of the Technical College System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 12: POST-EMPLOYMENT BENEFITS
West Georgia Technical College participates in the following State of Georgia post-employment benefit plans: the Georgia State Employees Post-employment Health Benefit Fund (administered by the Department of Community Health) and the State Employees' Assurance Department - OPEB (administered by the ERS System). Separate financial reports that include the applicable financial statements and required supplementary information for these plans are publicly available and may be obtained from the respective system offices.
Retiree health benefits were previously funded through the Georgia Retiree Health Benefit Fund (GRHBF). In 2009, the General Assembly revisited the GRHBF and enacted legislation that, effective August 31, 2009, separated the GRHBF into two new funds: the Georgia School Personnel Postemployment Health Benefit Fund and the Georgia State Employees Post-employment Health Benefit Fund. The purpose of this change was to assure employers responsible for planning and funding future retiree health costs that their contributions will be dedicated to their respective retiree populations. Funds in the GRHBF were transferred to the Georgia State Employees Post-employment Health Benefit Fund or the Georgia School Personnel Post-employment Health Benefit Fund as described in the plan financial statements. The statute that created the GRHBF is repealed effective September 1,2010.
GEORGIA STATE EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
The Georgia State Employees Post-employment Health Benefit Fund (State OPEB Fund) is a costsharing multipleemployer defined benefit post-employment healthcare plan that covers eligible former employees of State organizations (including technical colleges) and other entities authorized by law to contract with the Department of Community Health for inclusion in the plan. The State

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the health insurance plan for State employees. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).

The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the State OPEB Fund were as follows for the fiscal year ended June 30, 2011:

June 2010 July 2010 -April 2 0 1 1 May 2011-June 2 0 1 1

22.165% of covered payroll for July coverage 25.586% of covered payroll for August - May coverage 22.667% of covered payroll for June -July coverage

No additional contribution was required by the Board for fiscal year 2 0 1 1 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.
The following table summarizes West Georgia Technical College combined active and retiree contributions to the health insurance plans for the years ending June 30, 2011, June 30, 2010 and June 30,2009:

Fiscal Year

Percentage Contributed

Required Contribution

- STATE EMPLOYEES' ASSURANCE DEPARTMENT OPEB
State Employees' Assurance Department - OPEB (SEAD-OPEB) is a cost-sharing multiple-employer defined benefit post-employment plan that was created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to retired and vested inactive members of Employees', Judicial (JRS), and Legislative (LRS) Retirement Systems, amended to exclude members of JRS and LRS hired on or after July 1,2009. Pursuant to Title 47 of the OCGA, the authority to establish and amend the benefit provisions of the plan is assigned to the Boards of Trustees of the Employees' and Judicial Retirement Systems.

WEST GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2011

EXHIBIT "D"

Contributions by plan members are established by the Boards of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Boards of Trustees of the Employees' and Judicial Retirement Systems establish employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% of earnable compensation. For the fiscal year ended June 30, 2011, contributions of ERS "old plan" members were 0.45% of earnable compensation, 0.22% of which was paid by the employer. Contributions of ERS "new plan" members and of members of the Judicial and Legislative Retirement Systems were 0.23% of earnable compensation. There were no employer annual required contributions (ARC) for the fiscal years ended June 30,2011, June 30,2010 and June 30,2009.
NOTE 13: 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 expenses which are disallowed under grant terms. The amount of expenses which may be disallowed by the grantor cannot be determined at this time although West Georgia Technical College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against West Georgia Technical College (an organizational unit of the Technical College System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30,2011.
NOTE 14: SUBSEOUENT EVENTS
The Technical College entered into a rental agreement with West Georgia Technical College Foundation Inc. on July l s t , 2011. The rental agreement is for classroom and administrative office space located at Adamson Square in Carrollton, Georgia. The rental agreement amount is $400,000.00 per annum for the 12 month term from July 2, 2 0 1 1 through June 30, 2012. If renewed, the rental rate would by $132,666.66 per annum for the next three years.
NOTE 15: SPECIAL ITEM
Capital Assets were transferred from another technical college to West Georgia Technical College. The amount reported for Special Item on the "Statement of Revenues, Expenses and Changes in Net Assets" is the difference in the cost of items transferred $165,316.65 and the accumulated depreciation $152,628.40 for a total of $12,688.25.
NOTE 16: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS
The Technical College's operating expenses shown at the natural classification on the "Statement of Revenues, Expenses and Changes in Net Assets" are all classified as Instruction at the functional classification.
NOTE 17: AFFILIATED ORGANIZATIONS
The West Georgia Technical College Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support West Georgia Technical College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GAS6 Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from West Georgia Technical College.

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SUPPLEMENTARY INFORMATION

WEST GEORGIA TECHNICAL COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30,2011
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Payroll Withholdings Accounts Payable Encumbrance Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Refundsto Grantors Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable lnventories Bookstore Tuition Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetarystatutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

WEST GEORGIA TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NONGAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30.2011

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS
CARRYOVER 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
Prlor Year Payables/Expenditures Prlor Year Receivables/Revenues Unreserved Fund Balance (Surplus)Returned
Fromthe Technical Colleges Year Ended June 30.2010
Refunds to Grantors Federal FlnanclalAssrstance Returned to Technical College System of Georgia Year Ended June 30.2010
Prior Year Reserved Fund Balance Includedin FundsAvailable
FUND BALANCEJUNE 3Q
SUMMARY OF FUND BALANCE
Reserved Refunds to Grantors Sales and Services L~veWork Projects Contlnulng Education Technology Fees UncollectibleAccounts Receivable Inventories Bookstore Tuition
Total Reserved
Unreserved Surplus
Total Fund Balance
Actual amounts were preparedon a prescribed basisof accountingthat demonstrates compliance wlth budgetary statutes and regulationsof the State of Georgia. which is a comprehensive basisof accauntlngother than generally acceptedaccountingprinciples.

BUDGEl

ACTUAL

SCHEDULE 2"
VARIANCE FAVORABLE (UNFAVORABLE)

WEST GEORGIA TECHNICAL COLLEGE STATEMENT OF FUNDSAVAllABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NONGMP BASIS) BUDGET FUND YEAR ENDED JUNE 30,2011

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically ldent~fied Other Funds
Total Adult Llteracy
Economic Development Other Funds
Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Technical Education
Totals By Program

Or~ginal Appropr~ation

Amended Appropr~ation

Final Budget

Current Year Revenues

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetarystatutes and regulations of the State of Georgia, which is a comprehensivebasis of accounting other than generally accepted accounting principles.
- 22 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Actual

Variance Pos~t~v(Neegative)

Excess (Deficiency) of Funds Ava~lable
Over/(Under) Expend~tures

WEST GEORGIA TECHNICAL COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30.2011

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically ldentlfled Other Funds
Total Adult Literacy
Economic Development Other Funds
Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Specifically ldentlfied Other Funds
Total Technical Education
Total Operating Activity
Prior Year R ~ s ~ N ~ s Not Avallable for Expenditure lnventor~es Refunds to Grantors Uncollectible Accounts Receivable
Budget Unit Totals

Beginning Fund Balance/(Deficit)
July 1

Fund Balance Carr~edOver from
Prior Period as FundsAva~lable

Return of Fiscal Year 2010
Surplus

Prior Period Adjustments

Actual amounts were prepared on a prescribed basis of accountingthat demonstrates compliance wlth budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting pnnc~ples.

SCHEDULE V"

Other Adjustments

Early Return of Fiscal Year 2 0 1 1
Surplus

Excess (Deficiency) of Funds Available
Over/(Under) Expenditures

Ending Fund Balance/(Deficit)
June 3 0

Analysis of Endlng Fund Balance

Resewed

Surplus/(Deficit)

Total

Summary of Endlng Fund Balance Reserved
Refunds to Grantors Sales and Sew~ces Llve Work Projects Contlnulng Educat~on Technology Fees Uncollect~bleAccounts Recervable lnventor~es Bookstore Tultlon Unreserved Surplus
Total Ending Fund Balance -June 3 0

(This page left intentionally blank)

WEST GEORGIA TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 3 0 , 2 0 1 1

Totals per Annual Supplement

Accruals June 30,2011 June 30,2010

Compensated Absences June 30,2011 June 30,2010

Agency Funds

Reimbursement from West Georgia Technical College Foundation

Bell,

Ricky

Hines,

Harry

Taylor,

Jarred

Williams.

Wade

Reimbursement from Douglas County Board of Education

Crews,

Judy

Wilson,

Jonathon

Unidentified Variance

SALARIES

SCHEDULE "5" TRAVEL

SECTION I1 AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONEDCOSTS

WEST GEORGIA TECHNICAL COLLEGE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2011
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
Previously Reported Corrective Action lmplemented Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action lmplemented Previously Reported Corrective Action lmplemented Unresolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
REVENUES/RECEIVABLES/RECEIPTS lnadequate Internal Controls over Bookstore Sales Finding Control Number: FS-826-10-02
The Technical College acknowledges that proper review was not done in tracking and monitoring bookstore sales in relation to mark-up percentages. It will be established that the bookstore manager for the Technical College can recommend mark-ups for the bookstore and then must have final approval from the VPA to implement those changes. Documentation will be maintained if percentages change within the fiscal year. Also, we recognizethat inventory balancing was not performed on a regular basis which can lead to potential errors in financial statement reporting. These inventories will be done on a monthly basis by each bookstore assistant on the respective campuses; the subsequent adjustment to inventory will be entered by the textbook manager of the Technical College. All adjustments will be reviewed by the bookstore manager to make sure to account for any discrepancies. A report of those discrepancies will be reported to the VPA on a monthly basis for review. The bookstore manager of the Technical College will review sales, percentages and inventory on a scheduled basis. Any monthly reconciliation showing sales not reflecting established markups shall be reported to the VPA and documented to reflect all adjustments that caused the discrepancy. This will allow the bookstore to better monitor activity of this department and ensure more accurate reporting.
REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER lnadequate Segregation of Duties Finding Control Number: FS-826-10-03
The department is evaluating all job duties in relation to cash disbursements. Steps will be taken with the security of Peoplesoft Financials to ensure that an employee creating an accounts payable voucher will not be allowed to initiate check runs.

WEST GEORGIA TECHNICAL COLLEGE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2011
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
INVENTORIES Inadequate Internal Controls over Bookstore Inventories Finding Control Number: FS-826-10-06
Procedures are being implemented to ensure that monthly reconciliations between the bookstore inventory subsidiary system and Peoplesoft Financials are being performed.
PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
No matters were reported.

SECTION Ill FINDINGS AND QUESTIONED COSTS

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2011

FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statements audit that, in the auditor's judgment, constitute significant deficiencies of material weakness.

A deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, t o prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the West Georgia Technical College's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weakness have been communicated to management and those charged with governance within a separate management letter dated December 12, 2011. lnternal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

REVENUES/RECEIVABLES/RECEIPTS Inadequate lnternal Controls over Accounts Receivables Significant Deficiency Finding Control Number: FS-826-11-01

Condition:

The accounting procedures of the Technical College are insufficient to ensure that uncollectible receivables are being properly reflected in the financial statements.

Criteria:

The Technical College's management is responsible for designing and maintaining internal controls that provide reasonable assurance that receivable activity is properly documented, processed and reported.

Questioned Cost:

N/A

Information:

The Technical College did not have procedures in place to properly identify and record an allowance for doubtful accounts receivable. A review of old receivable balances revealed uncollectible receivables in the amount of $670,038.20. An adjustment was made to properly reflect this balance within the financial statements.

Cause:

The Technical College's management failed to implement accounts receivable aging procedures and review these balances for uncollectible receivables.

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 3 0 , 2 0 1 1

FINANCIAL STATEMENT FINDINGSAND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS lnadequate Internal Controls over Accounts Receivables Significant Deficiency Finding Control Number: FS-826-11-01

Effect:

Failure to have procedures in place over the aging of receivables could result in the Technical College placing itself in a position where misrepresentation of its financial position and results of operations could occur.

Recommendation:

The Technical College should design and implement accounts receivable aging procedures and review these balances for uncollectible receivables.

REVENUES/RECEIVABLES/RECEIPTS lnadequate Internal Controls over Bookstore Sales Significant Deficiency Finding Control Number: FS-826-11-02

Condition:

This is a repeat finding (FS-826-10-02) from the year ended June 30, 2010. The accounting procedures of the Technical College are insufficient to ensure that bookstore sales are properly reflected in the financial statements.

Criteria:

The Technical College's management is responsible for designing and maintaining internal controls that provide reasonable assurance that revenue activity is properly documented, processed and reported.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integratd Framework states that separate and ongoing evaluations through methods such as the identification and monitoring of key control indicators enable management to determine whether the other components of internal control over financial reporting continue to function over time.

Questioned Cost:

N/A

Information:

Testing revealed significant unexplained differences between expected bookstore mark-up percentages and calculated mark-up percentages using financial data reported in the financial statements. The Technical College did not adequately monitor bookstore sales revenue.

Cause:

The Technical College has not implemented adequate monitoring procedures over bookstore sales. In addition, other control deficiencies exist such as not reconciling bookstore inventory balances, which increases the importance of strong monitoring controls.

Effect:

Without satisfactory accounting controls and procedures in place, the Technical College could place itself in a position where the potential misappropriation of assets could occur. In addition, the lack of controls could impact reporting of its financial position and result of operations.

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2011

FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS lnadequate Internal Controls over Bookstore Sales Significant Deficiency Finding Control Number: FS-826-11-02

Recommendation:

The Technical College should design and implement monitoring procedures over bookstore sales. These monitoring procedures should include but not be limited to the identification and ongoing monitoring of key control indicators such as inventory mark-up percentages.

EXPENDlTURES/LIABILITIES/DISBURSEMENTS Inadequate Segregation of Duties Significant Deficiency Finding Control Number: FS-826-11-03

Condition:

This is a repeat finding (FS-826-10-03) from the year ended June 30, 2010. The accounting procedures of the Technical College were insufficient to provide adequate separation of duties.

Criteria:

AlCPA Professional Standards, AU 319.04, state that internal control is a process - affected by an entity's board of directors, management and other personnel - designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations.

Separation of duties involving key accounting functions, both manual and automated, is the basis for achieving an adequate system of internal control.

Questioned Cost:

N/A

Information:

Accounting procedures were designed to allow certain employees the ability to create and post express vouchers within Peoplesoft and process check runs. Potential compensating controls could not be tested due to a lack of documentation.

Cause:

The Technical College has not adequately designed procedures to ensure different employees were responsible for initiating transactions, authorizing transactions, recording transactions, reconciling information, and maintaining custody of assets. In addition, potential compensating controls were either not adequately designed or not formally documented.

Effect:

Misstatements due to errors or fraud may occur and not be detected in a timely manner.

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 3 0 , 2 0 1 1

FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

EXPENDlTURES/LIABILITIES/DISBURSEMENTS Inadequate Segregation of Duties Significant Deficiency Finding Control Number: FS-826-11-03

Recommendation:

The Technical College should revise and implement internal controls to ensure that proper separation of duties is established. In the case when management determines segregation of duties is not cost beneficial, management should implement compensating controls that utilize system generated reports and data.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inappropriate Cash Disbursements Significant Deficiency Finding Control Number: FS-826-11-04

Condition:

The Technical College expended funds renovating a building that is owned by West Georgia Technical College Foundation.

Criteria:

O.C.G.A. 50-16-7 states, in part, as follows: "Any real estate held by the State
of Georgia in f e simple... may be improved with funds appropriated for a
State department..."

This provision has been interpreted as the State must have title to land before permanent improvements may be made thereon. 1954-56 Op. Att'y Gen. pp. 574.

Questioned Cost:

N/A

Information:

The Technical College entered into an agreement with the West Georgia Technical College Foundation, whereas, the Foundation would lease a building to the Technical College. The Technical College expended funds assisting in the renovation of this building. While the Technical College has received some reimbursement from the Foundation, management has not been able to determine if all expenses were reimbursed because a separate cost identifier was not used to track these disbursements.

Cause:

The Technical College did not have policies and procedures in place to ensure that disbursements were in compliance with state law.

Effect:

These expenditures were a violation of state law. Additionally, failure to separate projects within the Technical College's general ledger could cause the Technical College to not be fully reimbursed for disbursements that do not provide a direct benefit to the Technical College.

Recommendation:

Management should determine the entire amount of disbursements for this renovation project and request reimbursement from West Georgia Technical College Foundation. In addition, the Technical College should implement policies to ensure that all construction projects expenditures are in accordance with the state law.

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2011

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION lnadequate Internal Controls over Compensated Absences Significant Deficiency Finding Control Number: FS-826-11-05

Condition:

The accounting procedures of the Technical College were insufficient to provide adequate controls over compensated absences.

Criteria:

AlCPA Professional Standards provide that internal controls is a process placed into operations to achieve management's objectives related "(a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations."

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Contol - Integrated Framework states that management should design policies and procedures to reduce the risk that financial reporting objectives are not being met. A key element to the objective of reliable financial statement reporting is ensuring the completeness of financial data and that transactions are reported in the proper period.

Questioned Cost:

N/A

Information:

The Technical College did not reconcile the compensated absences subsidiary system to PeopleSoft.

Cause:

The Technical College did not have procedures in place to perform a reconciliation between the subsidiary system and PeopleSoft.

Effect:

Misstatements may occur and not be detected in a timely manner.

Recommendation:

The Technical College should establish policies and procedures to reconcile compensated absences reported in the subsystem to PeopleSoft to ensure that all activity is properly reflected in the financial statements.

INVENTORIES lnadequate Internal Controls over Bookstore Inventories Significant Deficiency Finding Control Number: FS-826-11-06

Condition:

This is a repeat finding (FS-826-10-06) from the year ended June 30, 2010. The accounting procedures of the Technical College are insufficient to provide adequate controls over resale inventories.

Criteria:

AlCPA Professional Standards provide that internal controls is a process placed into operations to achieve management's objectives related "(a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations."

WEST GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2011

FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

INVENTORIES Inadequate Internal Controls over Bookstore Inventories Significant Deficiency Finding Control Number: FS-826-11-06

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework states that management should design policies and procedures to reduce the risk that financial reporting objectives are not being met. A key element to the objective of reliable financial statement reporting is ensuring the completeness of financial data and that transactions are reported in the proper period.

Questioned Cost:

N/A

Information:

The Technical College did not reconcile the bookstore inventory subsidiary system to the financial statements. Unexplained variances exist between the inventory list and the inventory balance reported on the financial statements. In addition, a review of subsequent period inventory purchases revealed several transactions reported in the wrong period.

Cause:

The Technical College did not have procedures in place to perform a reconciliation between the bookstore inventory list and the bookstore inventory balance reported in the general ledger. In addition, the Technical College did not properly design procedures to ensure that inventory transactions are reported in the proper period.

Effect:

Without satisfactory accounting controls and procedures in place, the Technical College could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls could impact the reporting of its financial position and results of operations.

Recommendation:

The Technical College should establish policies and procedures to reconcile bookstore inventory listings to the general ledger to ensure that all activity is properly reflected in the financial statements. In addition, the Technical College should evaluate and modify existing procedures to ensure that all transactions are reported in the proper accounting period.

FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

No matters were reported.