WAYCROSSCOLLEGE - TABLE OF CONTENTS - FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET ALL FUND GROUPS 2 B COMBINED STATEMENT OF CHANGES IN FUND BALANCES ALL FUND GROUPS 4 C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES 6 D NOTES TO THE FINANCIAL STATEMENTS 7 SUPPLEMENTARY INFORMATION E COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED 20 F COMBINING STATEMENT OF CHANGES IN FUND BALANCES CURRENT FUNDS - UNRESTRICTED 22 G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES UNRESTRICTED 24 SCHEDULES SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET 1 RESIDENT INSTRUCTION 26 2 LOTTERY FOR EDUCATION 28 3 CHANGES IN INVESTMENT IN PLANT 30 4 SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS 32 5 RECONCILIATION OF SALARIES AND TRAVEL' 34 FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 August 24, 2000 Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia and Honorable Barbara Losty, President Waycross College INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have reviewed the accompanying financial statements (Exhibits A through D) of Waycross College as of and for the year ended June 30, 2000, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute ofCertified Public Accountants. All information included in these financial statements is the representation of the management of Waycross College. A review consists principally ofinquiries ofCollege personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial. statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, with the exception ofthe matters described in the fourth and fifth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. As disclosed in Note 1 to the financial statements, generally accepted accounting principles require encumbrances to be recorded as a reservation offund balance. However, in accordance with Georgia Law and State budgetary policy, management recorded encumbrances as expenditures and liabilities. The effects of this departure from generally accepted accounting principles on the financial statements were not reasonably determinable. 00ARL-67 As disclosed in Note 1 to the financial statements, the College did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $125,519.80 as of June 30, 2000, and the net change in fund balance for the year ended June 30, 2000, would be increased by $39,827.27. Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the fmancial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 5) are presented for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the financial statements, and except for the effects ofthe matters discussed in the fourth and fifth paragraphs, we are not aware of any material modifications which should be made thereto. Respectfully submitted, RWH:gp OOARL-67 Ru sell W. Hinton State Auditor FINANCIAL STATEMENTS - 1- WAYCROSS COLLEGE COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 2000 ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Investment in Plant Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Salaries Payable Deferred Revenue Tuition and Fees Other Deposits Held in Custody for Others Total Liabilities Fund Balances Institutional Loans - Restricted Endowment Net Investment in Plant Restricted Unrestricted Total Fund Balances Total Liabilities and Fund Balances CURRENT FUNDS UNRESTRICTED RESTRICTED LOAN FUNDS $ 449,174.97 $ 116,943.26 $ 261.16 25,937.80 1,627.03 1,948.38 88,460.42 $ 563,573.19 $ 118,570.29 $ ==,;;;2;;;;,2=09=.=54= $ 160,891.50 $ 14,067.90 47,042.80 680.00 219.94 $ 222,682.20 $ 219.94 $ 2,209.54 $ 118,350.35 $ 340,890.99 $ 340,890.99 $ 118,350.35 $ 2,209.54 $ 563,573.19 $ 118,570.29 $ =====2~,2=0~9';,;;;,54== See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -2- EXHIBIT "A" ENDOWMENT FUNDS UNEXPENDED PLANT FUNDS RENEWALS AND REPLACEMENTS INVESTMENT IN PLANT AGENCY FUNDS TOTAL (Memorandum Only) $ 119,665.03 $ 344,292.63 $ 157,922.53 $ 38,850.00 _ _ _ _ _ _ $ 16,592,068.11 19,161.63 $ 1,207,421.21 68,363.21 88,460.42 16,592,068.11 $ 119,665.03 $ 383,142.63 $ 157,922.53 $ 16,592,068.11 $ 19,161.63 $ 17,956,312.95 $ 383,139.21 $ $ 383,139.21 $ $ 119,665.03 $ $ 119,665.03 $ 3.42 $ 3.42 $ 5,277.75 5,277.75 $ 8,194.75 $ 557,723.15 14,067.90 10,966.88 47,042.80 680.00 10,966.88 $ 19,161.63 $ 630,480.73 $ 16,592,068.11 152,644.78 152,644.78 $ 16,592,068.11 $ 2,209.54 119,665.03 16,592,068.11 118,350.35 493,539.19 $ 17,325,832.22 $ 119,665.03 $ 383,142.63 $ 157,922.53 $ 16,592,068.11 $ 19,161.63 $ 17,956,312.95 -3- WAYCROSS COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES ALL FUND GROUPS YEAR ENDED JUNE 30, 2000 REVENUES AND OTHER ADDITIONS Unrestricted Current Fund Revenues State Appropriations Regular Lottery Proceeds Federal Grants and Contracts State Grants and Contracts Private Gifts, Grants, and Contracts Investment Income Endowment Other Net Increase/(Decrease) in the Fair Value of Investments Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds Unexpended Georgia State Financing and Investment Commission Total Revenues and Other Additions EXPENDITURES AND OTHER DEDUCTIONS Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) Administrative and Collection Costs Expended for Plant Facilities Capitalized Noncapitalized Disposals/Deletions/Adjustments Total Expenditures and Other Deductions TRANSFERS BETWEEN FUNDS Nonmandatory Renewals and Replacements General Operations Realized Gain for Object of Trust Total Transfers Between Funds Net Increase/(Decrease) for the Year FUND BALANCES JULY 1. 1999 CURRENT FUNDS UNRESTRICTED RESTRICTED LOAN FUNDS $ 4,833,054.78 $ 0.00 $ 658,202.83 320,610.73 124,504.97 22,987.27 842.29 616.00 $ 4,834,513.07 $ 1,126,305.80 $ $ 4,696,668.20 $ 1,082,588.76 87,610.71 7,022.88 3,303.84 $ 0.00 18.60 $ 4,787,582.75 $ 1,089,611.64 $ 18.60 $ -25,413.77 $ -5,000.00 19,788.34 $ -25,413.77 $ 14,788.34 $ 21,516.55 $ 51,482.50 $ 319,374.44 66,867.85 -18.60 2,228.14 FUND BALANCES JUNE 30, 2000 $ 340,890.99 $ 118,350.35 $ See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -4- 2,209.54 EXHIBIT "B" ENDOWMENT FUNDS UNEXPENDED PLANT FUNDS RENEWALS AND REPLACEMENTS INVESTMENT IN PLANT TOTAL (Memorandum Only) $ $ 1,050.00 -15,963.31 $ 373,000.00 72,201.00 53,469.42 $ -14,913.31 $ 498,670.42 $ 0.00 $ 4,833,054.78 $ 4,957.65 373,000.00 72,201.00 658,202.83 320,610.73 130,512.62 22,987.27 53,469.42 -15,963.31 842.29 616.00 275,496.67 275,496.67 481,130.37 1,950,237.62 481,130.37 1,950,237.62 0.00 $ 2,711,822.31 $ 9,156,398.29 $ 0.00 $ 5,779,256.96 87,610.71 7,022.88 $ 3,433.72 6,737.56 18.60 481,130.37 17,536.63 $ 17,051.04 $ 80,099.57 481,130.37 34,587.67 80,099.57 $ 0.00 $ 502,100.72 $ 17,051.04 $ 80,099.57 $ 6,476,464.32 $ 5,000.00 -19,788.34 $ -14,788.34 $ -29,701.65 $ 149,366.68 $ 119,665.03 $ $ $ -3,430.30 $ 3,433.72 25,413.77 $ 0.00 0.00 0.00 25,413.77 $ 0.00 8,362.73 $ 2,631,722.74 $ 2,679,933.97 144,282.05 13,960,345.37 14,645,898.25 3.42 $ 152,644.78 $ 16,592,068.11 $ 17,325,832.22 -5- WAYCROSS COLLEGE STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES. AND OTHER CHANGES YEAR ENDED JUNE 30, 2000 EXHIBIT"C" Net Increase/(Decrease) in Fund Balances $ 21,516,55 $ See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -6- 51,482,50 $ =====7=2.,9;,;;99=,=05= WAYCROSS COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Waycross College is one ofthirty-four (34) State supported member institutions ofhigher education in Georgia which comprise the University System of Georgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Waycross College as a separate reporting entity. The Board of Regents has constitutional authority to govern, control and manage the University System ofGeorgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Waycross College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Waycross College is considered an organizational unit ofthe Board ofRegents ofthe University System of Georgia reporting entity for financial reporting purposes because of the significance ofits legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the College, the accounts ofthe College are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group. Within each fund group, the College's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies. Fund groups and funds presented in the accompanying finanCial statements are as follows: CURRENT FUNDS UNRESTRICTED - The fund used to account for those economic resources over which the College retains full control to use for purposes of performing the primary functions of the College, e.g., instruction, research, public service, etc. RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes. -7- WAYCROSS COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHlBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING LOAN FUNDS The fund used to account for resources which have been made available for financial loans to students. ENDOWMENT FUNDS The fund used to account for gifts that are subject to the restrictions of the donors requiring that the principal be invested in perpetuity and income only be utilized. PLANT FUNDS UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes. RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties. INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the College. Net Investment in Plant is an equity account showing the total book value of physical properties belonging to the College less the amount of any indebtedness to others. AGENCY FUNDS The fund used to account for resources held by the College as custodian or fiscal agent for individual students, faculty, staff members, and organizations. BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period. Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the -8- WAYCROSS COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in confonnity with accounting practices prescribed or pennitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures detennined in accordance with generally accepted accounting principles. Compensated absences represent obligations of the College relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annua11eave in which payment is probable and can be reasonably estimated. The compensated absences liability of $125,519.80 and a related net reduction of current year expenditures of $39,827.27 have not been reported in the current funds as required by generally accepted accounting principles. Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed orpennitted by statutes and regulations ofthe State ofGeorgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements. To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalf ofthe College. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment. The Statement of Current Funds Revenues, Expenditures, ~d Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses. BUDGET The Board ofRegents ofthe University System ofGeorgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of 1999-2000. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the College by the Administrative Central Office. In - 9- WAYCROSS COLLEGE NOTES TO TlIE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET addition, the College receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office. A comparison of anticipated funds available and budgeted expenditures by budget unit obj ect class indicates that the following object class was overspent by the amount identified below: Resident Instruction Capital Outlay $ 70.517.04 This overexpenditure of budget constitutes a violation of Board of Regents policy, but does not constitute a statutory violation of budget authority. Statutory violations of budget authority are reported at the Board object class level. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. INVESTMENTS Investments are reported at fair value. (Investments are reported at cost, which is materially the same as fair value.) Funds received by the College as endowments or for restricted purposes are invested according to conditions stipulated by the donor, grantor, or in accordance with the Board ofRegents authorizing resolutions. Gains and losses on investment transactions are accounted for in the funds where such assets are recorded. ACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Board ofRegents ofthe University System of Georgia - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the 8;ccompanying financial statements. INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the first-in, first-out method. Inventories of goods for resale are valued at cost using the first-in, first-out method. MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do-not present information that reflects financial position or changes in - 10- WAYCROSS COLLEGE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES MEMORANDUM ONLY - TOTAL COLUMNS financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data. NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia 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 anyone or more ofthe 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 ofthe 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 ofdevelopment authorities created by the laws ofthe 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 M