Dekalb Technical College, Clarkston, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
I
DEKALB TECHNICAL COLLEGE CLARKSTON, GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Russell W. Hinton State Auditor

DEKALB TECHNICAL COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENTOFCASHFLOWS

4

D NOTES TO THE FINANCIAL STATEMENTS

5

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND

20

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

21

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(NON-GAAP BASIS) BUDGET FUND

22

4 RECONCILIATION OF SALARIES AND TRAVEL

25

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

DEKALB TECHNICAL COLLEGE - TABLE OF CONTENTS -
SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 13, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Technical and Adult Education Members ofthe Local Board of Directors
and Honorable Robin Hoffman, President DeKalb 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 DeKalb Technical College, an organizational unit of the State of Georgia as of and for the year ended June 30, 2008. These financial statements are the responsibility ofthe DeKalb Technical College's management. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon.
The Technical College did not provide sufficient documentary evidence to support the amounts reported as beginning Net Assets for fiscal year 2008 in the basic financial statements, nor did the Technical College's records provide sufficient information for the application of other auditing procedures to reasonably determine whether beginning net assets were fairly stated.

08ARL-4TC

As discussed in Note I, the financial statements ofDeKalb 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 DeKalb Technical College. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine documentation supporting beginning Net Assets, the basic financial statements referred to above present fairly, in all material respects, the financial position of DeKalb Technical College as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America.
DeKalb Technical College has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of DeKalb Technical College taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes ofadditional 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.
Respectfully submitted,
I
~~~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 08ARL-4TC

BASIC FINANCIAL STATEMENTS - 1-

DEKALB TECHNICAL COLLEGE STATEMENT OF NET ASSETS
JUNE 30, 2008
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Capital Assets, 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 (Deficit)
Total Net Assets

EXHIBIT"A"
$ 574,343.88 555,003.13 290,242.79 192,754.31 545,136.74
$ 2,157,480.85
30,601,062.29 $ 32,758,543.14
$ 229,419.09 128,358.47 177,685.50 160,398.59 883,052.20
$ 1,578,913.85
668,192.36 $ 2,247,106.21
$ 30,601,062.29 -89,625.36
$ 30,511,436.93

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

DEKALB TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2008

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal
Rents and Royalties Sales and Services Other Operating Revenues
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 (EXPENSES)
State Appropriations Grants and Contracts
Federal Local 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 Gain/Loss on Disposal of Capital Assets
Total Other Revenues, Expenses, Gains, or Losses
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year
The notes to the financial statements are an integral part of this statement. -3-

$

8,829,511.62

-432,315.49

2,397,562.00 28,607.60
329,958.78 133,665.03

$ 11,286,989.54

$

17,778,417.73

5,094,512.80

216,689.43

1,835,811.51

1,040,969.18

6,966,475.75

1,361,845.50

$ 34,294,721.90

$ -23,007, 732.36

$ 19,280,605.00

2,702,893.21 73,463.58
2,343,211.37 54,267.47
-2,242,364.38

$ 22,212,076.25

$

-795,656.11

$ 22,154,662.17
20,294.87 -3,002.55
$ 22,171,954.49
$ 21,376,298.38
9,135,138.55

$ 30,511,436.93

DEKALB TECHNICAL COLLEGE STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2008
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 Receipts
Net Cash Provided {Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided {Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets
CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments
Net Increase {Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED {USED) BY OPERATING ACTIVITIES:
Operating Income {Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided {Used) by Operating Activities 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 Gift Reducing Proceeds of Gifts and Grants for Other than Capital Purposes
The notes to the financial statements are an integral part of this statement.
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EXHIBIT"C"

$ 8,907,313.57 2, 195,530.12 267,294.82
-13,883,295.72 -17,634,876.84
-1,835,811.51 80,004.95
$ -21,903,840.61

$ 19,280,605.00 -456,869.58 3,009,103.50
$ 21,832,838.92

$

-866,312.66

$

54,267.47

$

-883,046.88

1,457,390.76

$ ====5=7.4.,=.34=3=.8===8

$ -23,007,732.36
1,361,845.50 -2,112.58
-88,600.05 -88.37
-26,001.51 -475,960.14 165,266.50 169,542.40
$ -21,903,840.61
$ -22, 174,957.04 $ -2,242,364.38

DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY DeKalb Technical College is one of thirty-three (33) State supported member colleges of postsecondary education in Georgia which comprise the Georgia Department ofTechnical and Adult Education, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of DeKalb 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 ofTechnical and Adult Education. Appropriation of State funds is made to the Georgia Department ofTechnical and Adult Education by the General Assembly ofGeorgia. The Department's Administrative Central Office determines the amount of State appropriations to be received by DeKalb Technical College. The Technical College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, DeKalb Technical College is considered an organizational unit of the Georgia Department ofTechnical and Adult Education for financial reporting purposes because of the significance ofits legal, operational, and financial relationships as defined in Section 2100 ofthe Governmental Accounting Standards Board (GASB) Codification ofGovernmental Accounting and Financial Reporting Standards.
Legally separate, tax exempt organizations whose activities primarily support member colleges of postsecondary education in Georgia which comprise the Georgia Department ofTechnical and Adult Education (an organizational unit ofthe State ofGeorgia), are considered potential component units of the State. See Note 15 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 ofthe 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 Georgia Department ofTechnical and Adult Education 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, except as noted in the preceding paragraph. 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.
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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING 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, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.
ACCOUNTS RECEIVABLE Accounts receivable consist oftuition and fee charges to students, allotments due from the Georgia Department ofTechnical and Adult Education - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. Accounts receivable are recorded net of estimated uncollectible amounts.
INVENTORIES Resale inventories are valued at cost using the consumption 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 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, 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 ofthe assets, generally 10 to 40 years for buildings, 15 to 25 years for infrastructure, 15 years for improvements other than buildings, 10 years for library books, and 3 to 10 years for equipment.
To fully portray capital assets acquired by the Technical Colleges of the Georgia Department of Technical and Adult Education, 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 Georgia Department of Technical and Adult Education. 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 the 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.

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS 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 DeKalb Technical College to be recorded as an asset on the Technical College's books. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $22,154,662.17 to DeKalb 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. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
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. DeKalb Technical College had an accrued liability for compensated absences in the amount of $1,381,702.16 as of July 1, 2007. For fiscal year 2008, $1,053,194.27 was earned in compensated absences and employees were paid $883,651.87, for a net increase of $169,542.40. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $1,551,244.56.
NONCURRENT LIABILITIES Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; and (2) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
NET ASSETS The Technical College's net assets are classified as follows:
Invested in capital assets, net ofrelated 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. (The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed above.)
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 $192,333.36. Unexpended state appropriations must be refunded to the Department of Technical and Adult Education for remittance to the Office of Treasury and Fiscal Services.
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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS 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 DeKalb 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 The Technical College has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics ofexchange 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, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary FundAccounting, and GASB No. 34, such as state appropriations and investment income.
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 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
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

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 2: DEPOSITS
DEPOSITS 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 ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation ofthe 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 ofaccounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies, which allows agencies of the State of Georgia (and thus DeKalb Technical College), the option of exempting demand deposits from the collateral requirements.
At June 30, 2008, the carrying value of the deposits was $567,589.88 and the bank balance was $1,824,846.34. Ofthe Technical College's deposits, $1,724,846.34 were uninsured. Ofthis balance $1,724,846.34 were collateralized with securities held by the financial institution's trust department or agent, but not in the Technical College's name.
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable at June 30, 2008, consists of the following:

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 3: ACCOUNTS RECEIVABLE

Student Tuition and Fees Federal, State and Private Funds Other

$ 490,430.86 567,661.51 260,919.35

$ 1,319,011.72

Less: Allowance for Doubtful Accounts

473,765.80

Net Accounts Receivable

$ 845,245.92

NOTE 4: INVENTORIES

Inventories at June 30, 2008, consists of the following:

Bookstore

$ 545,136.74

NOTE 5: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2008:

Balance Jul)'. I, 2007

Additions

Reductions

Balance June 30, 2008

Capital Assets, Not Being Depreciated:

Land and Land Improvements

$ 1,205,855.00 $

Q.00 $

0.00 $ 1,205,855.00

Capital Assets, Being Depreciated:

Building and Building Improvements $ 9,424,670.00 $ 21,768,636.00

$ 31,193,306.00

Improvements Other Than Buildings

1,030,310.00

1,030,310.00

Equipment

5,896,952.49 1,159,424.70 $ 2,398,008.17 4,658,369.02

Library Collections

361,904.60

113,209.00

475,113.60

$ 16,713,837.09 $ 23,041,269.70 $ 2,398,008.17 $ 37,357,098.62

Less: Accumulated Depreciation:

Building and Building Improvements $ 2,751,562.76 $

Improvements Other Than Buildings

1,030,310.00

Equipment

5,030,481.24

Library Collections

182,697.45

579,797.65
734,536.49 $ 47,511.36

$ 2,395,005.62

3,331,360.41 1,030,310.00 3,370,012.11
230,208.81

$ 8,995,051.45 $ 1,361,845.50 $ 2,395,005.62 $ 7,961,891.33

Total Capital Assets, Being Depreciated,

Net

$ 7,718,785.64 $ 21,679,424.20 $

3,002.55 $ 29,395,207.29

Capital Assets, Net

$ 8,224,640.64 $ 21,672 424 20 $

3,002.55 $ 30 601,062.22

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 6: DEFERRED REVENUE

Deferred revenue at June 30, 2008, consists ofthe following:

Prepaid Tuition and Fees Other Deferred Revenue

$ 165,898.50 11,787.00

Totals

$ 177,685.50

NOTE 7: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2008, was as follows:

Other Liabilities Compensated Absences

Balance
July 1. 2007

Additions

Reductions

Balance June 30. 2008

Current Portion

$ 1,381 702.16 $ 1,053.194,27 $ 883.651.87 $ I 551 244.56 $ 883.052 20

NOTE 8: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2008 was as follows:

Invested in Capital Assets Net of Related Debt
Unrestricted Net Assets
Total Net Assets

Balance July 1. 2007

Additions

Reductions

Balance June 30, 2008

$ 8,924,640.64 $21,679,424.20 $ 3,002.55 $30,601,062.29

210.497.91 28.984.249.81 29.284,373.08

-89,625.36

$ 9.135 138,55 $ 50.663.674,0) $ 29 287 375 63 $ 30 5] ] .436,93

NOTE 9: LEASE OBLIGATIONS

OPERATING LEASES DeKalb Technical College has entered into certain agreements to lease office space and equipment which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the 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 cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Expenses for rental ofoffice space and equipment under operating leases for the year ended June 30, 2008, totaled $1,183,210.75.

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 9: LEASE OBLIGATIONS

SUMMARY OF LEASE OBLIGATIONS Future commitments for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Operating Leases

Year Ending June 30: 2009 2010 2011 2012 2013 2014 through 2015

$ 1,205,020.76 1,157,628.40 1,149,291.60 654,520.92 655,528.76 589,647.12

Total Minimum Lease Payments

$ 5,411,637.56

NOTE 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description
DeKalb Technical College participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or from the Georgia Department ofAudits and Accounts.

Funding Policy
Employees of DeKalb Technical College who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. DeKalb Technical College makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 962,974.14 $ 958,416.17 $ 989,304.19

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description DeKalb Technical College participates in the Employees' Retirement System of Georgia (ERS), a single-employer defined benefit pension plan established by the General Assembly ofGeorgia for the purpose of providing retirement allowances for employees of the State of Georgia.

The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years ofcreditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average ofthe member's highest twenty-four consecutive calendar months ofsalary, the number ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution ofthe 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.

In addition, the ERS Board ofTrustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 ofthe Internal Revenue Code (IRC) as a portion ofERS. The purpose ofSRBP is to provide retirement benefits to employees covered by ERS whose-benefits are otherwise limited by IRC 415.

- 13 -

DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 10: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The ERS issues a financial report each fiscal year which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Technical College's payroll for the year ended June 30, 2008, for employees covered by ERS was $3,157,959.52. The Technical College's total payroll for all employees was $17,778,417.73.
Under the old plan, member contributions consist of 6.5% of annual compensation. Of these member contributions, the employee pays the first 1.5% and the Technical College pays the remainder on behalfofthe employee. Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The Technical College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 2008, the ERS employer contribution rate for the Technical College amounted to 10.41% ofcovered payroll and included the amounts contributed on behalfof the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 2008 amounted to $376,534.54, of which $328,896.38 was made by the Technical College and $47,638.16 was made by employees. These contributions met the requirements of the plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008, financial report which may be obtained through ERS.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description DeKalb Technical College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly ofGeorgia 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.

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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System ofGeorgia issues a financial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross 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, 2008, for employees covered by GDCP was $3,083,955.92. The Technical College's total payroll for all employees was $17,778,417.73.
Total contributions made by employees during fiscal year 2008 amounted to $231,299.50 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 11: RISK MANAGEMENT
Public Entity 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 ofGeorgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units ofgovernment participating in the plan, and appropriations made by the General Assembly of Georgia. DCH contracted with United Healthcare to process medical claims. For prescription drug claims, DCH contracted with Express Scripts, Incorporated through December 31, 2007 and contracted with Medco, Incorporated beginning January 1, 2008. All claims are to be processed in accordance with the State Employees' Health Benefit Plan as established by the Department of Community Health.
Other Risk Management The Department ofAdministrative Services (DOAS) has the responsibility for the State ofGeorgia ofmaking and carrying out decisions that will minimize the adverse effects ofaccidental losses that involve State government assets. The State believes it is more economical to manage its risks
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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RISK MANAGEMENT
Other Risk Management 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 Georgia Department of Technical and Adult Education, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 12: POSTEMPLOYMENT BENEFITS
The Technical College participates in the Georgia Retiree Health Benefit Fund ("GRHBF") which is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers retired employees ofthe State of Georgia. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries.
Pursuant to Title 45, Chapter 18 of O.C.G.A., the authority to establish and amend the benefit provisions of the plan is assigned to the Board of Community Health ("Board"). Financial statements and required supplementary information for GRHBF are included in the publicly available financial report of the Department of Community Health.
The Technical College contributes to the fund based upon amounts recommended by the Board and set forth in the Appropriations Act. This contribution rate is established to fund both the active and retired employee components of the health insurance plan based on projected pay-as-you-go financing requirements. The combined rate for the active and retiree components ofthe plan (payas-you-go basis) for the fiscal year ended June 30, 2008, was 18.534% of covered payroll. An additional contribution of4.309% ofcovered payroll was required by the Board for fiscal year 2008; eleven months ofthis additional contribution will be deposited into the OPEB fund to prefund retiree benefits (such additional contribution amounts are determined annually). The Technical College's contribution to the health insurance plan for the fiscal year ended June 30, 2008, was $3,161,802.40, which equaled the required contribution.
The Technical College also participates in a program of group term life insurance for retired and vested inactive eligible members of various retirement systems. The State Employees' Assurance Department ("SEAD-OPEB") is a single-employer defined benefit postemployment plan.
Pursuant to Title 47 ofthe Official Code ofGeorgia Annotated, 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. Financial statements and required supplementary information for SEAD-OPEB are included in the publicly available financial report of the Employees' Retirement System.
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DEKALB TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 12: POSTEMPLOYMENT BENEFITS
The Technical College is required to contribute the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters ofGASB Statement 45. The ARC for the year ended June 30, 2008, was zero (0).
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 DeKalb Technical College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against DeKalb Technical College (an organizational unit of the Department of Technical and Adult Education), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008.
NOTE 14: 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 15: AFFILIATED ORGANIZATIONS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment ofGASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, DeKalb Technical Foundation, Inc. has been determined to be a legally separate, tax exempt organization whose activities primarily support DeKalb Technical College, a member college ofpostsecondary education in Georgia whose units comprise the Department ofTechnical and Adult Education (an organizational unit ofthe State ofGeorgia). The State Accounting Office has determined Component Units ofthe State ofGeorgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, DeKalb Technical College has not included financial activity for DeKalb Technical Foundation, Inc. in these financial statements.

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SUPPLEMENTARY INFORMATION - 19 -

DEKALB TECHNICAL COLLEGE BALANCE SHEET (NON-GAAP) BASIS
BUDGET FUND JUNE 30, 2008

SCHEDULE "1"

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Encumbrances Payable Deferred Revenue Funds Held for Others
Total Liabilities
Fund Balances Reserved Federal Financial Assistance Live Works Projects Prior Year Local Funds Continuing Education Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$

429,869.75

600,852.28 751,178.23 192,754.31 545,136.74

$ =====2,=51=9=7,=9=1.=31=

$

128,358.47

229,419.09

427,583.05

171,556.50

16,000.31

$

972,917.42

$

2,382.05

18,502.51

11,591.58

157,514.63

150,818.03

164,600.68

461,368.55

387,762.50

192,333.36

$

1,546,873.89

$ ====2=,=51=9=,=79=1=.=3=1=

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 20 -

DEKALB TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GMP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

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
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30
SUMMARY OF FUND BALANCE
Reserved Federal Financial Assistance Live Works Projects Prior Year Local Funds Continuing Education Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories
Total Reserved
Unreserved Surplus
Total Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$

19,280,605.00 $

19,280,605.00 $

0.00

2,917,590.92

2,764,643.85

-152,947.07

11,928,792.83

9,449,838.99

-2,478,953.84

$

34,126,988.75 $

31,495,087.84 $

-2,631,900.91

0.00

612113.12

612113.12

$

34,126,988.75 $

32,107,200.96 $

-2,019,787.79

$

2,452,654.18 $

2,492,808.47 $

963,002.00

566,714.24

30,711,332.57

28, 152,464.45

$

34,126,988.75 $

31,211,987.16 $

$

0.00 $

895,213.80 $

-40,154.29 396,287.76 2,558,868.12
2,915,001.59
895,213.80

1,283,825.34

-86,503.16 66,451.03 -612,113.12

$

1,546,873.89

$

2,382.05

18,502.51

11,591.58

157,514.63

150,818.03

164,600.68

461,368.55

387,762.50

$

1,354,540.53

192,333.36

$

1,546,873.89

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 21 -

DEKALB TECHNICAL COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Adult Literacy State Appropriation State General Funds Federal Funds Other Funds
Total Adult Literacy

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comeared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

$

520,132.00 $

615,968.00 $

615,968.00 $

1,556,105.00

1,586,686.18

1,582,618.31

155 000.00

250,000.00

245 536.27

$

2,231,237.00 $

2.452,654.18 $

2,444 122.58 $

66.77 $ 4,707.88 6 379.00
11,153.65 $

616,034.77 $ 1,587,326.19
251 915.27
2,455,276.23 $

66.77 640.01 1915.27
2,622.05

Economic Development Other Funds

$

1047902.00 $

963 002.00 $

667 864.59 $

77 885.22 $

745 749.81 $ -217 252.19

Technical EducaUon State Appropriation State General Funds Federal Funds Other Funds
Total Technical Education

$

18,637,513.00 $

18,664,637.00 $

18,664,637.00 $

889,453.00

1,330,904.74

1,182,025.54

7 967 865.00

10,715,790.83

8,536,438.13

$

27,494,831.00 $

30. 711,332.57 $

28 383 100.67 $

0.00 $ 214,129.15 308 945.10
523 074.25 $

18,664,637.00 $ 1,396,154.69 8 845 383.23

0.00 65,249.95 -1,870 407 .60

28.906 174.92 $ -1.805,157.65

Grand Totals - All Programs

$

30,773,970.00 $

34,126,988.75 $

31,495,087.84 $

612,113.12 $

32,107,200.96 $ -2,019,787.79

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

-22-

SCHEDULE "3"

~ndltures Comeared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total Fund Balance

$

615,816.87 $

151.13 $

1,631,462.33

-44,776.15

245,529.27

4 470.73

$

2,492,808.47 $ -40,154.29 $

217.90 $ -44,136.14
6 386.00
-37,532.24 $

0.00 $ 51,970.76
-7.00
51,963.76 $

0.00 $ -4,707.58
0.00
-4,707.58 $

217.90 $ 3,127.04 6 379.00
9,723.94 $

0.00 $ 0.00 0.00
0.00 $

0.00 $ 3,127.04 6 379.00
9,506.04 $

217.90 $ 0.00 0.00
217.90 $

217.90 3,127.04 6 379.00
9 723.94

$

566,714.24 $ 396,287.76 $

179,035.57 $

0.00 $

0.00 $ 179,035.57 $

0.00 $ 179,035.57 $

0.00 $ 179,035.57

$ 18,664,637.00 $

0.00 $

1,172,101.86

158,802.88

8,315,725.59

2,400,065.24

$ 28.152 464.45 $ 2,558 868.12 $

0.00 $ 224,052.83 529,657.64
753 710.47 $

0.00 $

2.82 $

-86,496.16

-138,301.66

14 480.27

-34 412.41

-72 015.89 $ -172 711.25 $

2.82 $ -744.99 509 725.50
508 983.33 $

0.00 $

0.00 $

2.82 $

0.00

-744.99

0.00

0.00

317 612.86

192112.64

0.00 $ 316,867.87 $ 192115.46 $

2.82 -744.99 509,725.50
508,983.33

$ 31,211,987.16 $ 2,915,001.59 $

895,213.80 $ -20,052.13 $ -177 418.83 $ 697,742.84 $

0.00 $ 505,409.48 $ 192,333.36 $ 697,742.84

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

461,368.55 387 762.50
$ 1.546 873.89

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DEKALB TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

Totals per Annual Supplement
Accruals June 30, 2008 June 30, 2007
Compensated Absences June 30, 2008 June 30, 2007
Lag Salaries June 30, 2008 June 30, 2007
Agency Funds

SALARIES $ 17,702,699.87 $

TRAVEL 226,032.41

128,358.47 -154,359.98

1,248,054.65 -1,169,318.79

-121,116.97 144,100.48

-91342.98

$ 17,778,417.73 $====2..1.6.=16=8=9=.4=3

- 25 -

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

DEKALB TECHNICAL COLLEGE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-830-05-01 FS-830-05-02 FS-830-05-03 FS-830-07-01 FS-830-07-02 FS-830-07-03 FS-830-07-04 FS-830-07-05

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

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS Inadequate Internal Controls Finding Control Number: FS-830-07-02

All prior year bank reconciliation items noted in fiscal year 2007 were cleared and corrected in fiscal year 2008. A detailed Outstanding Check listing with the required information ofcheck number, check amount and check date was prepared for all accounts. Payroll and General Operating outstanding checks that met the criteria were either moved to Funds Held for Others or returned to the Georgia Department ofRevenue's Unclaimed Property Division. The outstanding check listing for the HOPE, Federal, and Refund accounts have been identified and properly listed as noted above. However, these checks have not been moved to Funds Held for Others. These listings are being analyzed so the proper unclaimed property procedures can be followed in fiscal year 2009. All accounts will be in compliance at the end of fiscal year 2009.

CAPITAL ASSETS Inadequate Control over Capital Assets Finding Control Number: FS-830-07-05

A complete physical inventory was performed in fiscal year 2008 by the Property and Supply Supervisor. DeKalb Technical College is working to make appropriate corrections resulting from the findings of the physical inventory. Monthly reconciliations are being performed between the General Ledger and Asset Management Module. A Year-End reconciliation will be performed between the General Ledger, Asset Management Module, and Physical Inventory Listing in fiscal year 2009.

SECTION III FINDINGS AND QUESTIONED COSTS

DEKALB TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-830-08-01

Condition:

The accounting procedures of the Technical College were insufficient to provide for adequate controls over accounts payable and expense.

Criteria:

The Technical College's management is responsible for designing and maintaining internal controls that provide reasonable assurance that all financial activity is properly approved, documented, processed, and reported within the accounting records in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

A review of subsequent period activity on the College's accounting records, revealed expenses for goods and/or services that were expensed during fiscal year 2009 when the goods and/or services were actually rendered during fiscal year 2008. It appears that the College did not have proper cutoff procedures in place to ensure that expenses and the associated accounts payable were reported within the appropriate fiscal year.

Cause:

Technical College management failed to implement adequate internal controls to ensure that all of its expense and accounts payable were accurately reported in the correct fiscal year.

Effect:

Without satisfactory accounting policies and procedures in place, the Technical College's reporting of its financial position and results of operations could be adversely affected.

Recommendation:

The Technical College should establish appropriate procedures and controls to ensure that all expense and accounts payable activity is recorded in the proper period for reporting purposes.

- 1-

DEKALB TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-830-08-02

Condition:

The accounting procedures of the Technical College were insufficient to provide for adequate internal controls over Capital Assets.

Criteria:

The State Accounting Office's Accounting Procedures Manual for the State ofGeorgia states that, "assets purchased, constructed or donated that meet or exceed the State's established capitalization thresholds or minimum reporting requirements must be uniformly classified in conformity with the Accounting Procedures Manual".

Questioned Cost: NIA

Information:

The following weaknesses/deficiencies were noted relating to Capital Assets:

1) The Technical College did not fully conduct a physical inventory of capital assets. a) The College did not provide adequate supporting documentation of the results of its physical inventory. b) The capital asset listing used by the Technical College to perform the physical inventory did not agree with the records found in the Technical College's asset management module or its general ledger. c) The following deficiencies noted in a sample of thirty-six (36) equipment items tested: 1) Three items could not be located by the entity. 2) One asset appeared on the listing twice and was assigned two different tag numbers. 3) Two items had inaccurate locations noted in the asset management module. 4) Four items had no location noted in the asset management module. 5) Asset tags were not visible for seven of the items selected for testing.

2) The College did not perform a year-end reconciliation between the financial statements, general ledger, asset management module, the listing used to perform its physical inventory, or other related subsidiary records.

-2-

DEKALB TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-830-08-02

3) Other weaknesses/deficiencies noted during audit procedures included: a) The College overstated current year depreciation by $56,280 for assets that were added and deleted, during the current year. b) Donated Assets were not properly capitalized resulting in an understatement of equipment of $164,708 and depreciation expense of$4,854. c) A modular building with a cost under $100,000 was misclassified as buildings instead of equipment as required by the College's capital asset policy. This misclassification also resulted in a depreciation expense overstatement of$1 l,672 due to the difference in estimated useful life.

Cause:

The Technical College's management failed to implement appropriate internal controls and procedures necessary to properly record, maintain and track capital assets.

Effect:

Without proper 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 ofcontrols could impact reporting of its financial position and results of operations.

Recommendation:

The Technical College should establish appropriate procedures and controls to ensure that reconciliations are performed for the Capital Assets Module and the related subsidiary records. In addition, policies and procedures should be established to ensure that an accurate physical inventory of equipment is performed and that all capital assets listed on the capital assets inventory records can be identified by decal number, description and location.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

-3-