SAVANNAH TECHNICAL COLLEGE 1 SAVANNAH, GEORGIA I INDEPENDENT ACCOUNTKNT'S I REPORT ON APPLYING AGREED- UPON PROCEDURES FOR FISCAL YEAR ENDED JUNE 30,2011 w. Russell Hint021 State Auditor SAVANNAH TECHNICAL COLLEGE -TABLE OF CONTENTS - INDEPENDENTACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES EXH l BITS A SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT 1 B STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE 2 C STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE RUSSELLW.HINTON STATE AUDITOR (404) 666-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Sb-eet, S. W., Suite 1-156 Atlanta, Georgia 30334-8400 December 7, 2011 Members of the State Board of the Technical College System of Georgia Members of the Local Board of Directors and Honorable Kathy S. Love, President Savannah Technical College Independent Accountant's Report on A ~ ~ l v i nMer.eed-Upon Procedures Ladies and Gentlemen: We have performed the procedures enumerated below, which were agreed to by the College and the System Office (Oversight Unit) of the Technical College System of Georgia, solely to assist you in assessing the accuracy of the annual financial statement information reported to the System Office by the College for inclusion in the State of Georgia's Comprehensive Annual Financial Reprt(CAFR) and Single Audt Report; and to assist you in assessing the accuracy of budget basis information provided in the Summary Budget Compan'son and Surplus Anahsis Rep* Statement of Funds Available and Expenditures Compared to Budget By Program and Funding Source, and the Statement of Changes To Fund Balance By Program and Funding Source which are attached as Exhibits A, B and C, respectively. Savannah Technical College's management is responsible for the financial information reported to the System Office of the Technical College System of Georgia. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. 1. Review selected balance sheet items reported on the annual financial statement worksheets (cash, accounts receivable, accounts payable, deferred revenues, net assets). Confirm that these items have adequate supporting documentation and are properly reconciled to the College's general ledger. Cash and Accounts Payable were overstated by $1,047,354.56 on the financial statements as presented for audit This was due to an inter-fund payable that was not eliminated between the Operating and Payroll bank accounts on the general ledger. The auditor proposed a journal entry to eliminate the Accounts Payable and correct the Cash balance. 2. Obtain the College's GAAP basis worksheets for Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets (SRECNA) information that was submitted for inclusion in the State's CAFR and Single Audit. Utilizing test scripts, confirm that financial information presented in these worksheets properly support activity reported in the College's accounting records. We did not note any exceptions as a result of our procedures. 3. Obtain the College's Statement of Cash Flows submitted for inclusion in the State's CAFR and Single Audit. Utilizing cash flow worksheets, confirm information reported on Statement of Cash Flows. We did not note any exceptions as a result of our procedures. 4. Obtain the College's worksheets for financial statement note disclosure information submitted for inclusion in the State's CAFR and Single Audit. Utilizing notes worksheets and other supporting documentation confirm that note disclosures related to Cash, Investments, Accounts Receivable, Capital Assets, Long-Term Debt, Lease Obligations and Retirement Plans have been properly reported. We did not note any exceptions as a result of our procedures. 5. Review the College's year end GAAP basis journal entries. Obtain documentation for GAAP journal entries and confirm that the entries were posted to the College's annual financial statement worksheets. We did not note any exceptions as a result of our procedures. 6. Confirm that State Appropriation revenues, receivables and remittances of prior year surplus balances have been properly recorded in the College's financial records. Prior year surplus balances should be netted against State Appropriation revenues in the GAAP basis financial statements; however, prior year surplus balances should be reflected as fund balance adjustments on the Budget basis financial statements. We did not note any exceptions as a result of our procedures. 7. Obtain listing of write-off requests for accounts receivable less than $3,000.00 for fiscal year 2011. Confirm that these write-off requests have been approved by the State Accounting Officer and have been posted to the College's financial statements. We did not note any exceptions as a result of our procedures. 8. Verify that the listing of salaries and travel reported to the Department of Audits is in accordance with O.C.G.A. 50-6-27 reconciles to amounts recorded in the College's financial statements. We did not note any exceptions as a result of our procedures. 9. Review the year end Budgetary Statements including the Summaly Budget Comparison and Surplus Analysis Report (Exhibit A), Statement of Funds Available and Expenditures Compared to Budget By Program and Funding Source (Exhibit B) and the Statement of Changes To Fund Balance By Program and Funding Source (Exhibit C). Confirm that budget information presented in these statements supports activity reported in the College's accounting records, the legal level of budgetary control (funding source within program) was maintained, and determine if any budget overexpenditures exist. W e did not note any exceptions as a result of our procedures. 10. Obtain documentation for Budget basis reserves reported by the College on the Summay Budget Comparison and Surplus Analysis Repott (Exhibit A). Confirm that the reserves are properly documented, valid and appropriate. Current year Surplus, Fund Balance Reserved for Bookstore and Fund Balance Reservedfor Tuition were incorrectly reported on the budgetaryfinancial statements. The Technical College charged bookstore personal service expenditures to Vocational Education State rather than to the Bookstore funding source, causing current year Surplus to be understated by $5,712.61. The auditor proposed journal entries to reclassify these expenditures and properly record Surplus and Fund Balance Reservedfor Bookstore. Additionally, the Technical College moved bookstore operating expenditures to Tuition causing the two reserves to be misstated by $449,297.36. In the Tuition funding source, the excess of revenues over expenditures is only lapsable beyond 15%of its current revenue. The auditor proposed a journal entry to reclassifythese expenditures and properly record the Fund Balance Reserves for Tuition and Bookstore. 11. Review the H.O.P.E. Scholarship Program reconciliation between the College and the Georgia Student Finance Commission. Confirm that information reported to the Georgia Student Finance Commission has been reconciled with H.O.P.E. Scholarship activity reported on the College's financial records. We did not note any exceptions as a result of our procedures. 12. Review the Schedule of Expendituresof Federal Awards information submitted by the College for inclusion in the Statewide Single Audit. Confirm that the information is properly presented and supported by the College's accounting records. We did not note any exceptions as a result of our procedures. 13. Review capital asset records to ensure that (1)subsidiary ledgers are appropriately reconciled to the ledgers, (2) capitalization thresholds are being properly followed, and (3) a complete annual physical equipment inventory is being conducted and that issues noted during the physical inventory are being properly addressed by management. We did not note any exceptions as a resultof our procedures. 14. Review bank reconciliations during the year under review to ensure that management is preparing them timely and that reconciling items are being addressed by management timely and in an appropriate manner. There were numerous reconciling items/errors that were not corrected timely on several of the bank reconciliations. The net of these items caused a likely overstatementof cash at fiscal yearend in the amount of $152,023.79. These agreed-upon procedures do not constitute an audit of the financial statements or any part thereof, the objective of which is to express an opinion on the financial statements or a part thereof. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, n \ *\ ~ u & l l W. Hinton, CPA, CGFM State Auditor EXHIBITS SAVANNAH TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT YEAR ENDEDJUNE 30.2011 REVENUES State Appropr~at~on State General Funds Federal Funds Other Funds Total Revenues ADJUSTMENTS AND PROGRAM TRANSFERS CARRY-OVER FROM P W R YEARS Transfers from Reserved Fund Balance Total Funds Available EXPENDITURES ~ d u lLt~teracy Economic Development Technical Educat~on Total Excendltures Excess of Funds Available over Expend~tures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prlor Year Payables/Expenditures Prlor Year Receivables/Revenues Unreserved Fund Balance (Surplus)Returned From the TechnicalCollege Year EndedJune 30.2010 Refunds to Grantors Federal FinancialAssistance Returnedto Technical College System of Georg~a Year EndedJune 30.2010 Prior Year ReservedFund Balance Includedin Funds Available FUND BALANCEJUNE30 SUMMARY OF FUND BALANCE Reserved Inventories Federal Financ~aAl ssistance Sales and Services Lave Work Projects Prior Year Local Funds Technology Fees Bookstore Tuition Total Reserved unreserved Surplus Total Fund Balance BUDGET ACTUAL EXHIBIT "A" VARIANCE FAVORABLE (UNFAVORABLE) SAVANNAH TECHNICAL COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE YEAR ENDED JUNE 3 0 . 2 0 1 1 Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds Total Adult Literacy Economic Development Other Funds Technical Education State Approprlat~on State General Funds Federal Funds Federal Funds Not Specifically ldenttffed Arnerlcan Recovery and Reinvestment Act Federal Funds - Chlld Care Block Grant Federal Funds Not Speclflcally Identifled Other Funds Total Technical Education Total Operating Activity Origlnal Appropriation Amended Appropriation F~nal Budget Current Year Revenues Funds Available Compared to Budget Prior Year Carryaver Adjustments and Program Transfers Total Funds Available Variance Posltive (Negat~ve) Expend~turesCompared to Budget Actual Variance Posltlve (Negative) Excess (Deficiency) of Funds Available Over/(Under) Expend~tures SAVANNAH TECHNICAL COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE YEAR ENDEDJUNE 30,2011 M u l t Liiracy State Appropr~at~on State General Funds Federal Funds Federal Funds Not Specifically ldentified Other Funds Total Adult Literacy Economic Development Other Funds Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Specifically ldentified Amerlcan Recovery and Reinvestment Act Federal Funds -Child Care Block Grant Federal Funds Not Specifically ldent~f~ed Other Funds Total Techn~caEl ducation Total Operating Actlvlty Prior Year Reserves Not Available for Expenditure Inventories Refunds to Grantors Beginning Fund Balance/(Oeficit) July 1 Fund Balance Carr~edOver from Prior Period as FundsAvailable Return of Fiscal Year 2010 Surplus Prior Period Adjustments Budget Unit Totals Other Adjustments Early Return FiscalYear 2011 Surplus Excess (Defic~ency) of Funds Available Over/(Under) Expenditures End~ngFund Balance/(Def~cit) June 3 0 Analysis of Ending Fund Balance Resewed Surplus/(Deficit) Total Summary of End~ngFund Balance Resewed lnventor~es Federal Financial Ass~stance Sales and Services Live Work Projects Prior Year Local Funds Technology Fees Bookstore Tuition Unreserved Surplus Total EndlngFund Balance June 3 0 --- $ 4.033.144.80 $ 13,808.25 $ 4,046,953.05