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 STATE UNIVERSITY OF WEST GEORGIA . - TABLE OF CONTENTS - 
 
SECTION I 
 
FINANCIAL 
 
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
 
REQUIRED SUPPLEMENTARY INFORMATION 
 
MANAGEMENT'S DISCUSSION AND ANALYSIS 
 
2 
 
BASIC FINANCIAL STATEMENTS 
 
EXHIBITS 
 
A STATEMENT OF NET ASSETS 
 
11 
 
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 
 
12 
 
C STATEMENT OF CASH FLOWS 
 
13 
 
D NOTES TO TIIE FINANCIAL STATEMENTS 
 
15 
 
SUPPLEMENTARY INFORMATION 
 
SCHEDULES 
 
SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO 
 
BUDGET - (NON-GAAP BASIS) 
 
1 
 
RESIDENT INSTRUCTION 
 
33 
 
2 
 
LOTTERY FOR EDUCATION 
 
34 
 
3 RECONCILIATION OF SALARIES AND TRAVEL 
 
35 
 
4 RECONCILIATION OF PER DIEM AND FEES 
 
36 
 
SECTION II 
CURRENT YEAR FINDINGS AND QUESTIONED COSTS 
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
 
ll.,. 
II: 
ii 
 
 SECTION I 
FINANCIAL 
 
 RUSSELL W. HINTON 
STATE AUDITOR 
(404) 656-2174 
 
DEPARTMENT OF AUDITS AND ACCOUNTS 
254 Washington Street, S.w. Suite 214 Atlanta, Georgia 30334-8400 
February 5, 2003 
 
Honorable Sonny Perdue, Governor ,Members ofthe General Assembly of Georgia Members of the Board ofRegents ofthe University System ofGeorgia 
and Honorable Beheruz N. Sethna, President State University of West Georgia 
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
Ladies and Gentlemen: 
We have reviewed the accompanying basic financial statements (Exhibits A thro,ugh D) of State University of West Georgia, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2002, 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 State University of West Georgia. 
A review consists principally ofinquiries ofUniversity personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, 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 oplmon. 
Based on our review, with the exception ofthe matt~r discussed in the fourth paragraph, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. 
As described in Note 1 to the financial statements, ,the University did not recognize June 30, 2001, encumbrances as expenses in the June 30, 2002, basic financial statements. To conform to generally accepted accounting principles, encumbrances should be recognized as 'expenses and liabilities in the period that goods and services are received. The effects on the basic financial statements of this departure from generally accepted accounting principles were not reasonably determinable. 
02ARL-67 
\' 
 
 As described in Note I, State University ofWest Georgia adopted the provisions ofGovemmental Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements - and Management's Discussion and Analysis - for Public Colleges and Universities, as amended by GASB Statement No. 37, Basic Financial Statements - andManagements Discussion andAnalysisfor State and Local Governments, and GASB Statement No. 38, Certain Financial Statements Note Disclosures, as of July I, 2001, to implement a new financial reporting model. 
Management's Discussion and Analysis is not a required part ofthe basic financial statements but is supplementary information required by the GASB. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis supplementary information, and we are not aware ofany material modifications that should be made thereto. 
Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States ofAmerica. The accompanying supplementary information (Schedules I through 4) is presented for additional analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review ofthe financial statements, and we are not aware ofany material modifications that should be made to such data 
Respectfully submitted, 
'-'~Im.~-k Ru ell W. Hinton Sta e Auditor 
RWH:as 02ARL-67 
 
 REQUIRED SUPPLEMENTARY INFORMATION - 1- 
 
 STATE UNIVERSITY OF WEST GEORGIA 
Management's Discussion and Analysis 
 
Introduction 
The State University of West Georgia is one of the 34 institutions of the University System of Georgia. The State University of West Georgia, a charter member of the University System of Georgia, is a selectively-focused, public, comprehensive institution providing undergraduate and graduate education in arts and sciences, business and education. The University's primary recruiting area is central and Northwest Georgia. 
 
State University of West Georgia offers a range of disciplinary, interdisciplinary, and professional 
 
programs at the baccalaureate level. The State University of West Georgia offers 112 programs of 
 
study, including 59 at the Bachelors level, 52 at the Masters and Specialist level, and one Doctoral 
 
program. It is also a major provider ofgraduate education at the master's and educational specialist's 
 
levels; enhancing the graduate programs in Education, with an Ed.D. in School Improvement. State 
 
University of West Georgia is accredited by the Southern Association of Colleges and Schools 
 
(SACS). In addition, the University has earned national accreditation or recognition in most 
 
undergraduate and graduate fields of specialization. 
 
Faculty 
 
Students 
 
FY2002 FY2001 FY2000 
 
344 
 
9,030 
 
343 
 
.8,966 
 
322 
 
8,679 
 
Overview ofthe Financial Statements and Financial Analysis 
The State University ofWest Georgia is proud to present its financial statements for fiscal year 2002. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement ofNet Assets; the Statement ofRevenues, Expenses and Changes in Net Assets; and, the Statement of Cash Flows. This discussion and analysis ofthe University's financial statements provides an overview of its financial activities for the year. The State University of West Georgia has elected to not restate prior periods for purposes of providing the comparative data for this Management's Discussion and Analysis. However, in future years, when prior period information is available, a comparative analysis will be presented. 
 
Statement ofNet Assets 
The Statement ofNet Assets presents the assets, liabilities, and net assets ofthe University as ofthe end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose ofthe Statement ofNet Assets is to present to the readers ofthe financial statements a fiscal snapshot ofthe State University ofWest Georgia. The StatementofNet Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (assets minus liabilities). The difference between current and non-current assets will be discussed in the notes to the financial statements. 
 
-2- 
 
 From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations ofthe institution. They are also able to determine how much the institution owes vendors, investors and lending institutions. 
 
Finally, the Statement ofNet Assets provides a picture ofthe net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The fIrst category, invested in capital assets, net ofdebt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use ofthe assets. The fInal category is unrestricted net assets. Unrestricted assets are available to the institution for any lawful purpose of the institution. 
 
Statement of Net Assets, Condensed (thousands of dollars) 
 
Assets Current Assets Capital Assets, Net Other Assets 
 
$ 18,115 55,952 1.831 
 
Total Assets 
 
$ 75,898 
 
Liabilities Current Liabilities Non-Current Liabilities 
 
$ 7,169 1.059 
 
Total Liabilities 
 
.$ 8,228 
 
Net Assets Invested in Capital Assets, Net ofDebt Restricted - Expendable Unrestricted 
 
$ 55,840 2,050 9,780 
 
Total Net Assets 
 
$ 67,670 
 
Statement ofRevenues, Expenses and Changes in Net Assets 
 
Changes in total net assets as presented on the Statement of Net Assets m::e based on the activity presented in the Statement ofRevenues, Expenses and Changes in Net Assets. The purpose ofthe statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are rec.eived for providing goods and services to the various customers and. constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. 
 
-3- 
 
 Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. 
 
Statement of Revenues, Expenses and Changes in Net Assets, Condensed (thousands of dollars) 
 
Operating Revenues Operating Expenses 
 
$ 36,751 . 77,602 
 
Operating Loss 
 
$ -40,851 
 
Nonoperating Revenues and Expenses 
 
43.300 
 
Income (Loss) Before Other Revenues, Expenses, Gains or Losses 
 
$ 2,449 
 
Other Revenues, Expenses, Gains or Losses 
 
1,177 
 
Increase in Net Assets 
 
$ 3,626 
 
Net Assets at Beginning of Year, as Originally Reported 
 
$131,196 
 
Cumulative Effect of Changes in Accounting Principle 
 
-67.152 
 
Net Assets at Beginning of Year Restated 
 
$ 64,044 
 
Net Assets at End of Year 
 
$ 67,670 
 
The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end ofthe year. Some highlights ofthe information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows: 
 
-4- 
 
 Revenue By Source (thousands of dollars) 
For The Year Ended June 30, 2002 
Operating Revenue Tuition and Fees Grants and Contracts Sales and Services ofEducational Departments Auxiliary Other 
Total Operating Revenue 
Nonoperating Revenue State Appropriations Investment Income Other 
Total Nonoperating Revenue 
Total Revenues 
Expenses (thousands of dollars) For The Year Ended June 30, 2002 
Operating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Depreciation 
Total Operating Expenses 
Nonoperating Expenses , Interest Expense (Capital Assets) 
Total Expenses 
 
$ 15,430 8,087 466 
12,274, 494 
$ 36,751 
$ 42,659 562 90 
$ 43,311 
$ 80,062 
$ 32,033 877 174 
8,750 4,272 7,271 6,304 2,614 10,741 4,566 
$ 77,602 
11 
$ 77,613 
 
- 5- 
 
 Statement ofCash Flows 
 
The final statement presented by the State University ofWest Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities ofthe institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for nonoperating, non-investing, and non-capital financing pwposes. The third section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fourth section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction ofcapital and related items. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement ofRevenues, Expenses and Changes in Net Assets. 
 
Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars) 
 
Cash Provided (Used) By: Operating Activities Non-Capital Financing Activities Investing Activities Capital and Related Financing Activities 
 
$ -40,974 42,303 1,184 -2,952 
 
Net Change in Cash Cash, Beginning ofYear 
 
$ -439 3,083 
 
Cash, End of Year 
 
$ 2,644 
 
Capital Assets 
 
For additional information concerning Capital Assets, see Notes 1,6,8, and 9 in the notes to the financial statements. 
 
Economic Outlook' 
 
The University has weathered several years of tight budgets, followed by the severe cilts for fiscal year 2002,2.5% ($978,000) ofour state appropriation and 5% ($1,956,000) base budget cut in fiscal year 2003. Since the beginning of fiscal year 2003, the state has cut another 3.25% ($1,313,000) from our allocation. The cumulative impact of$3.3 million in base budget cuts hurts, but in spite of the cuts, the University's overall financial outlook is positive. Even with relatively flat funding from the state, the University has been able to maintain services and generate enrollment increases. This is done through good planning and conservative management. 
 
-6- 
 
 One of the phenomena associated with recessions is that more people go back to school. We have just experienced an enrollment growth of over 7 percent-the largest enrollment growth in 31 years. This comes at a time when budgets have been cut by over $4 Million. Further, as the Atlanta Journal and Constitution reported a few months ago, State University ofWest Georgia had the highest proportion ofclasses taught by full-time faculty and administrators. That is consistent with our theme of Educational Excellence in a Personal Environment. We believe that the future for this University is only limited by our internal growth plans and our ability to provide support services. The expansion westward of the Atlanta metro area, oUr strong academic programs, increased attractiveness as a regional University, and our conservative planning all combine to make our future enrollment picture attractive. These programs are supported by one of the most beautiful campuses in the system. To accommodate growth, we are in the process of planning for the following new facilities: 
 Adamson Hall, which will start construction in December,  Health Wellness, Lifelong Learning Center, which is in the fmal planning stages,  A privatized housing complex that will house 612 additional resident students,  Finally, the University is in the process ofrevising the master plan, which will allow us to 
address some land use and facility issues that will help provide a growth plan for our future. Anticipated new facilities to be addressed in the master plan include a new academic instructional facility, a student recreation facility, plus an additional 1,200 new privatized beds. 
Beheruz N. Sethna, President State University of West Georgia 
-7- 
 
  BASIC FINANCIAL STATEMENTS -9- 
 
  STATE UNIVERSITY OF WEST GEORGIA STATEMENT OF NET ASSETS JUNE 30. 200Z 
 
EXHIBIT "A" 
 
Total Net Assets 
See Independent Accountanfs Combined Report on Review of Basic Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. 
- 11 - 
 
$ 67,670.403.77 
 
 STATE UNIVERSITY OF WEST GEORGIA 
STATEMENT oF. REVENUES,-EXPENSESANp CHANGES IN NET ASSETS 
. YEAR ENpED JUNE 30 2002 
OPERATING REVENUES 
Student Tuition and Fees Less: Scholarship Allowances 
Grants and Contracts Federal State Nongovernmental 
Rents and Royalties Sales and Services of Educational Departments Auxiliary Enterprises 
Residence Halls Bookstore Food Services ParkingfTransportation Health Services Intercollegiate Athletics Other Organizations Oltler Operating Revenues 
Total Qperating Revenues 
OPERATING EXPENSES 
Salaries Faculty Staff 
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation 
Total Operating Expenses 
Operating Income (Loss) 
NONOPERATING REVENUES <EXPENSES} 
State Appropriations Interest and Other Investment Income Interest Expense (Capital Assets) Other Nonoperating Revenues 
Net Nonoperating Revenues 
Income Before Other Revenues, Expenses, Gains or Losses . 
Capital Grants and Gifts State Nongovernmental 
Total Capital Grants and Gifts 
Increase/(Decrease) in Net Assets 
Net Assets Net Assets - Beginning of Year, as Originally Reported Cumulative Effect of Changes in Accounting Principle 
Net Assets - Beginning of Year, Restated 
Net Assets - End of Year 
See Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary Information. . 
The notes to the financial statements are an integral part of this statement. 
- 12- 
 
EXHIBIT"B" 
 
$ 18,569,788.18 -3,139,810.40 
6,397,855.87 645,825.30 
1,043,737.61 12,320.50 
468,018.63 
5,149,748.23 770,122.63 
2,813,506.07 442,281.80 
1,139,270.37 1,901,716.29 
257,888.89 481,540.59 
$ 36,751,786.58 
 
$ 20,738,897.88 21,801,411.14 11,421,822.50 151,980.00 740,093.87 3,125,620.13 2,918,211.17 12,342,924.72 4,585,975.98 
$ 77,802j537.19 
$ -40,850,750.83 
 
$ 42,659,334.80 581,589.92 -11,124.73 90,202.44 
 
$ 43,300,002.23 
 
$ 
 
2,449,251.80 
 
$ 
 
1,120,050.60 
 
57,012.99 
 
$ 
 
1,177,063.59 
 
$ 
 
3,826,315.19 
 
$ 131,196,179.50 -87,152;090.92 
$ 84,044,088.58 
 
$ 67,670,403.77 
 
 STATE UNIVERSITY OF WEST GEORGIA STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2002 
 
CASH FLOWS FROM OPERATING ACTIVITIES Tunion and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees AuxI1lary Enterprise Charges: Resldenca Halls Bookstore Food Services PartdngfTransportatlon Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) 
Net Cash Provided (Used) by Operating Activities 
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Other Nonoperating Receipts 
Net Cesh Flows Provided (Used) by Noncapltal Financing Activitias 
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES capnal Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capnai Debt and Leese 
Interest Paid on Capital Debt Bnd Laese 
Net Cash Provided (Used) by Capital Bnd Related Financing AclivIlJes 
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturitias of Investments 
Intarest on Investments 
Net Cash Provided (Used) by Investing Activitias 
Net Incraesa/(Decraase) In Cash 
Cesh and Cash Equivalents - June 30, 2001 Less: Short-Tenm Investments 
Cash end Cosh Equivalents - Beginning of Year 
 
Cosh Bnd Cash Equivalents - End of Year 
 
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: 
Operating Income (Loss) Adjustmants to Raconcile Net Income (Loss) to Net Cesh 
Provided (Used) by Oparaling Activities Depreciation Change In Assets and liabilities: Accounts Receivables, Net Inventories Prepaid Items Notes Receivables, Net Accounts Payable Saleries Payable Payroll Wlthholdings Defenecl Revenue Other lIabirlties Compensated Absences 
 
Net Cash Provided (Used) by Operating Activities 
 
See Independent Accountant's Combined Raport on Review of Beslc Financial Statements and Supplemantary InformetJon, 
 
The notes to the financlal statements are an Integral part of this statement. 
 
-13- 
 
EXHIBITC 
 
$ 15,284,851,70 7,905.039,70 466,018,63 
-32,960.444,42 -42.048,563,55 
-3,125,620,13 -441,035,10 436,381,53 
5.848,930,37 nO.122,63 
2,613.506,07 442,261,80 
1.139,270,37 1,901,716,29 
257,666,89 535,156,37 
$ -40.974,520.85 
 
$ 42,859,334,60 -446,213,70 90,326,64 
$ 42,303,447,54 
 
$ 
 
57.012,99 
 
-2,869,859,44 
 
-128.430.88 
 
-11.124,73 
 
$ -2.952.202,06 
 
$ 
 
1,000,000,00 
 
164.836,79 
 
$ 
 
1.164,836.79 
 
$ 
 
-438,438,56 
 
$ 16,264.981,09 -13.181.626,01 
 
$ 
 
3.083,355,08 
 
$ 
 
2,644.916,50 
 
$ -40,850,750,83 
4,565,975.98 
-607,637.34 42,069.15 
-231,562,n -4,853,57 
-5,293,248,52 5,079,09 
87,928,33 1,044,033,98 
-23,422,38 291,687,83 
$ -40,974,520,85 
 
 " 
 
 STATE UNNERSITY OF WEST GEORGIA . NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 
NATURE OF OPERATIONS State University ofWest Georgia serves the state, and national communities by providing its students with academic instruction that advances fundamentallmowledge, and by disseminating lmowledge to the people of Georgia and throughout the country. 
 
REPORTING ENTITY State University ofWest Georgia is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit ofthe State ofGeorgia. The accompanying financial statements reflect the operations of State University of West Georgia 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. State University of West Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, State University ofWest Georgia is considered an organizational unit ofthe Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. 
 
FINANCIAL STATEMENT PRESENTATION 
 
In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management 
 
Discussion and Analysisfor State and Local Governments. This was followed in November 1999 by 
 
GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis 
 
for Public Colleges and Universities. The State of Georgia is required to implement GASB 
 
Statement No. 34 as ofand for the year ended June 30, 2002. As an organizational unit ofthe State 
 
ofGeorgia, the University is also required to adopt GASB Statements No. 34 and No. 35 as amended 
 
by GASB Statements No. 37 and No. 38. The financial statement presentation required by GASB 
 
Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38 provides a 
 
comprehensive, entity-wide perspective of the University's assets, liabilities, net assets, revenues, 
 
expenses, changes in net assets, cash flows, and replaces the fund group perspective previously 
 
required. 
 
., 
 
The University has elected to not restate its 2001 financial statements to confonn with the new financial statement presentation, therefore comparative financial infonnation will not be presented for fiscal year 2002. Significant accounting changes made in order to comply with the new requirements include (l) adoption of depreciation on capital assets; and (2) recognition of compensated absences. Generally Accepted Accounting Principles (GAAP) requires that the 
 
- 15 - 
 
 STATE UNNERSITY OF WEST GEORGIA 
to NOTES THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 
FINANCIAL STATEMENT PRESENTATION reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack ofmateriality, Institutions ofthe University System ofGeorgia will continue to report summer revenues and expenses in the year in which the predominate activity takes place. 
 
At June 30, 2001, encumbrances (contractual obligations for goods and services not received at fiscal year end) were recorded as expenditures by the UniverSity instead ofreservations offund balance as ' required by generally accepted accounting principles. For fiscal year 2002, the University changed its method ofrecording encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses. This change is in accordance with generally accepted accounting principles. 
 
No adjustments however,have been made on the financial statements to restate the fund balance,at July 1, 2001 for the June 30, 2001 encumbrances recorded as expenditures in fiscal year 2001. The net- effect of the above accounting treatment resulted in an understatement of expenses on the accompanying financial statements for prior year encumbrances which should have been reflected as ,expenses in the period when goods and services were received. . 
 
BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged . only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraphs. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intrauniversity transactions have been eliminated. 
 
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date. 
 
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR . '. 
 
. 
 
As a result of the adoption of GASB Statement No. 34, the University was also required to make 
 
certain changes in accounting principles, specifically (1) adoption ofdepreciation on capital assets, 
 
and (2) recording of compensated absences. GASB Statement No. 34 requires certain summer 
 
semester revenues be recognized between fiscal years rather than the fiscal year in which the 
 
semester was predominantly conducted. The University System ofGeorgia has chosen to continue to 
 
record summer revenue in the year in which the semester was predominantly conducted. Net assets at July'l, 2~01 were reduced by $67,152,090.92' for the cumulative effect of these changes. 
 
- 16- 
 
 STATE UNNERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Equivalents consist ofpetty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. 
INVESTMENTS The University accounts for its investments .at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reportingfor Certain Investments andfor External Investment Pools. Changes in unrealized gain (loss) on the carrying value ofinvestments are reported as a component of investment income in the statements of revenues, expenses, and changes in net assets. 
ACCOUNTS RECEIVABLE Accounts receivable consists oftuition and fee charges to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also include amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement ofallowable expenditures made pursuant to the University's grant and contracts. Accounts receivable are recorded net ofestimated uncollectible amounts. 
INVENTORIES Consumable supplies are recorded on the consumption method and are valued at cost using the weighted average method. 
Resale Inventories are valued at cost using the first-in, first-out ("FIFO") method. 
NON-CURRENT CASH AND INVESTMENTS Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as non-current assets in the statements of net assets. 
CAPITAL ASSETS Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case ofgifts. For equipment, the University'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. Renovations to buildings, infrastructure, and hmd improvements that exceed $100,000.00 and significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 7 years for equipment. 
 
- 17 - 
 
 " STATE UNNERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 
CAPITAL ASSETS To obtain the total picture ofplant additions in the University System, it is necessary to look at the activities ofthe Georgia StateFinancing and Investment Commission(GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalfofthe State ofGeorgia, pursuant to powers granted to it in the Constitution ofthe State ofGeorgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations ofthe State of Georgia, to the payment of whicp the full faith, credit and taxing power of the State are pledged. 
 
Effective July 1,2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to State University of West Georgia when complete. For the year ended June 30, 2002, GSFIC transferred capital additions valued at $1,120,050.60 to State University ofWest Georgia. The balance ofconstruction in progress retained by GSFIC totaled $458,183.67 at June 30, 2002. 
 
DEFERRED REVENUES . Deferred revenues include amounts received for tuition and fees 'and certain auxiliary aCtivities prior 
to the end ofthe 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 at year-end for financial statement purposes. 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 Statements of Revenues, 
 
Expenses, and Changes in Net Assets. State University of West Georgia had accrued liability for 
 
compensated absences in the amount of $1,854,643.00 as of July 1,2001. For Fiscal Year 2002, 
 
$1,498,703.37 was earned in compensated absences and employees were paid $1,207,015.54, for a 
 
net increase of$291,687.83. 
 
' 
 
NON-CURRENT LIABILITIES 
 
. 
 
Non-current liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) 
 
capital lease obligations with contractUal maturities greater than one year; and (3) other liabilities 
 
that, although payable within one year, are to be paid from funds that are classified as non-current 
 
assets. 
 
NET ASSETS The University's net assets are classified as follows: 
 
Invested in capital assets, net ofrelated debt: This represents the University's total investment in capital assets, net ofoutstanding 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 ofinvested in capital assets, net ofrelated debt. (The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed above.) 
 
- 18 - 
 
 STATE UNNERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHIBIT"D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
NET ASSETS Restricted net assets: Restricted net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. 
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University , and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) -of $39,775.64. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia - Administrative Central Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. 
When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources. 
INCOME TAXES State University ofWest Georgia, as a political subdivision ofthe State ofGeorgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. 
CLASSIFICATION OF REVENUES The University has classified its revenues as either operating or non-operating 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 ofscholarship allowances, (2) sales and services of auxiliary enterprises, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. 
Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenues by GASB No.9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. 
 
- 19- 
 
 STATEUNIVERSITY OF WEST GEORGIA NOTES TOTHEFINANCMLSTATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 
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 University, 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, 
 
andother Federal, state or nongovernmental programs, are recorded as either operating or non- 
 
operating revenues in the University's financial statements. To the extent that revenues from such 
 
programs are used to satisfy'tuition and fees and other student charges, the University has recorded 
 
contra revenue for scholarship allowances. 
 
.. 
 
NOTE 2: CASH AND CASH EOUNALENTS; OTHER DEPOSITS; AND INVESTMENTS 
 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 
 
Funds belonging to the State of Georgia (and thus State University of West Georgia) 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 ofGeorgia Annotated Section 50-17- 
 
59: 
 
. 
 
1. Bonds, bill, certificates ofindebtedness, 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 offue 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 ofthe bonds for this purpose. 
 
4. Industrial revenue bonds and bonds of devel<?pment 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 Intennediate Credit Bank, the Central Bank for Cooperatives, the Fann 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. 
 
-20- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 3~, 2002 
 
EXHffiIT"D" 
 
NOTE 2: CASH AND CASH EQUNALENTS; OTHER DEPOSITS; AND INVESTMENTS 
 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES As authorized in the Official Code ofGeorgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State ofGeorgia (and thus State University of West Georgia), the option of exempting demand deposits from the collateral requirements. 
 
The Treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. 
 
CATEGORIZATION OF DEPOSITS The University's cash deposits are categorized by risk as follows: 
 
Category 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name. 
 
Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name. 
 
Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized. 
 
Cash Deposits as of June 30, 2002 are as follows: 
 
Cash Deposits 
 
Carrying Amount 
 
Bank Balances 
 
Risk Categories 
 
2 
 
3 
 
$ 3233798.74 $ 594390550 $ 301 112.53 $ 5642792 97 $,===o~.o~o 
 
CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying amount of the University's total investments was $11,949,946.90. These investments consisted of $10,168,292.88 in the State Investment Pool administered by the . State ofGeorgia Office ofTreasury and Fiscal Services and $1,781,654.02 in the Board ofRegent's Short-Term Fund. Funds invested in an investment-pool managed by another governmental entity are not required to be categorized since the University did not own any specific identifiable investment securitiC?s of the pool. 
 
- 21 - 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
NOTE 3: ACCOUNTS' RECEIVABLE 
 
Accounts receivable consisted of the following at June 30, 2002: 
 
Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State, and Private Funds Other 
 
$ 862,374.13 66,141.04 
507,455.95 218,189.52 
 
$ 1,654,160.64 
 
Less Allowance for Doubtful Accounts 
 
55,671.27 
 
Net Accounts Receivable 
 
$ 1.598.489.37 
 
NOTE 4: INVENTORIES 
 
Inventories consisted ofthe following at June 30, 2002: 
 
Bookstore Centre Shoppe Central Warehouse 
 
$ 479,609.85 11,386.48 
126,021.19 
 
Total 
 
$ 617.017.52 
 
NOTE 5: NOTES/LOANS RECEIVABLE 
 
Notes/Loans receivable at June 30, 2002, primarily consist ofstudent loans made through the Federal Perkins Loan Program (the Program). The Program provides for cancellation of a 19an at rates of 10% to 30% per year up to a maximum of 100% ifthe participant complies with certain provisions. The Federal governmentreimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, theJoans are written off and assigned to the U. S. Department of Education. 
 
NOTE 6: CAPITAL ASSETS 
 
The balance at July 1,2001 was adjusted for accounting changes required in implementing GASB Statements 34 and 35 as disclosed in Note 1. Following are the changes in capital assets for the year ended June 30, 2002: 
 
- 22- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHffiIT"D" 
 
Deferred revenue consisted of the following at June 30, 2002: 
Prepaid Tuition and Fees Other Deferred Revenue 
Totals 
 
$ 3,535,211.28 1,008,124.17 
$ 4,543.335.45 
 
- 23- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30. 2002 
 
EXHmIT "D" 
 
NOTE 8: LONG-TERM LIABILITIES 
 
Long-tenn liability activity for the year ended June 30, 2002, was as follows: 
 
Balance July 1, 2001 
 
Additions 
 
Reductions 
 
Balance June 30, 2002 
 
Current Portion 
 
Leases Lease Obligations 
 
$ 168,643.07 
 
$ 128,430,88 $ 40,212.19 $ 10,085,21 
 
Other Liabilities Compensated Absences 
 
1.854,643.00 $ 1.498,703.37 
 
1.207,015.54 
 
2.146,330.83 
 
1.117.187.09 
 
Total Long-Term Obligations $ 2.023 286.07 $ 1.498,703.37 $ 133544642 $ 2,186543.02 $ 1 127272 30 
 
NOTE 9: LEASE OBLIGATIONS 
 
CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2003 and 2006. Expenses for fiscal year 2002 were $82,542.62 of which $11,124.73 represented interest. Total principal paid on capital leases was $71 ,417.89 for the fiscal year ended June 30, 2002, Interest rates range from 7.15 percent to 8.5 percent. The following is a summary ofthe carrying values of assets held under capital lease at June 30,2002: 
 
Equipment 
 
$ 218.335,28 
 
Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. 
 
State University of West Georgia also has various capital leases for equipment with an outstanding balance at June 30, 2002 in the amount of$40,212.19. 
 
SUMMARY OF LEASE OBLIGATION Future commitments for capital leases having remaining terms in excess of one year as of June 30, 
2002, were as follows: 
 
. ~ 24- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE 9: LEASE OBLIGATIONS 
 
SUMMARY OF LEASE OBLIGATION 
 
Capital Leases 
 
Year Ending JUne 30: 2003 2004 2005 2006 
 
$ 12,955.56 12,955.56 12,955.56 7,557.41 
 
Total Minimum Lease Payments 
 
$ 46,424.09 
 
Less: Interest 
 
6,211.90 
 
Principal Outstanding 
 
$ 40.212.19 
 
NOTE 10: RETIREMENT PLANS 
 
TEACHERS RETIREMENT SYSTEM OF GEORGIA 
 
Plan Description State University ofWest Georgia anticipates in the Teachers Retirement System ofGeorgia (TRS), a cost-sharing 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 fmancial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. 
 
Funding Policy Employees ofState University ofWest Georgia who are covered by TRS are required by State statute to contribute 5% of their. gross earnings to TRS. State University of West Georgia makes monthly' employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2002, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: 
 
- 25- 
 
 STATE UNNERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHillIT I D" 
 
NOTE 10: RETIREMENT PLANS 
 
TEACHERS RETIREMENT SYSTEM OF GEORGIA 
 
Funding Policy Fiscal Year 
 
Percentage Contributed 
 
Required Contribution 
 
2002 2001 2000 
 
100% 100% 100% 
 
$ 2,129,640.40 $ 2,813,817.96 . $ ~,863,932.04 
 
REGENTS RETIREMENT PLAN 
 
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and 'death benefits for eligible faculty and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. 
 
Funding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributi~ns are established by statute and may be amended only by , the General Assembly ofthe State ofGeorgia. The employer contributes 9.62% ofthe participating. employee's earnable compensation. pmployees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. 
 
State University of West Georgia and the covered employees made the required contributions of $1,484,863.68 (9.62%) and $798,672.95 (5%), respectively. 
 
GEORGIA DEFINED CONTRIBUTION PLAN 
 
Plan Description State University of West Georgia.participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. 
 
- 26- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30. 2002 
 
EXHIBIT"D" 
 
NOTE 10: RETffiEMENTPLANS 
GEORGIA DEFINED CONTRIBUTION PLAN 
Benefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. Ifa 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 ofa 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. 
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. 
Total contributions made by employees during fiscal year 2002 amounted to $61,560.38 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. 
NOTE 11: RISK MANAGEMENT 
State University ofWest Georgia is a participant in the Board ofRegents ofthe University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees ofthe University System ofGeorgia. State University ofWest Georgia and participating employees and retirees pay premiums to the Health Benefits Plan for this' health insurance coverage. The Health Benefits Plan is included in the financial statements ofthe Board of Regents of the University System of Georgia - Administrative Central Office. All units of the University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of$2,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield ofGeorgia to process claims in accordance with the Health Benefits Plan as established by the Board ofRegents. 
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia ofmakiI:J.g 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 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 
- 27- 
 
 STATE UNNERSITY OF WEST GEORGiA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE 11: RISK MANAGEMENT 
 
automobile liability, fidelity and certain other risks. State University of West Georgia, as an organizational unit ofthe Board ofRegents ofthe University System ofGeorgia, is part ofthe 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. 
 
, A self-insured program of professional liability for its employees was established by the Board of ' Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund. 
 
NOTE 12: 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 expenditures which are 
 
disallowed under grant terms. The amount ofexpenditures which may be disallowed by the grantor 
 
cannot be determined at this time although State University ofWest Georgia expects such amounts, 
 
if any, to be immaterial to its overall financial position. 
 
' 
 
Litigation, claims and assessments filed against State University ofWest Georgia (cui organizational 
unit ofthe Board ofRegents ofthe University System ofGeorgia), ifany, are generally considered to be actions against ~e State ofGeorgia. Accordingly, significant litigation, claims and assessments pending against the State ,of Georgia are disclosed in the State of Georgia Comprehensive Annual 
Financial Report for the fiscal year ended June 30, 2002. 
 
NOTE 13: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS 
 
Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board ofRegents of the University System ofGeorgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the University System of Georgia are eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. 
 
- 28- 
 
 STATE UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 2002 
 
EXHIBIT "D" 
 
NOTE 13: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS 
 
As ofJune 30, 2002, there were 376 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2002, State University of West Georgia recognized as incurred $780,872.09 of expenditures, which was net of $288,256.26 ofparticipant contributions. 
 
NOTE 14: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS 
 
The University's operating expenses by functional classification are shown below: 
 
Statement of Operating Expenses - Natural vs Functional Classifications For the Fiscal Year Ended June 30, 2002 
 
Functional Classification 
 
Natural Classification 
 
Instruction 
 
Research 
 
Public Service 
 
Academic Support 
 
Student Services 
 
Institutional Support 
 
Salaries Faculty Staff 
Employee Benefits . Other Personal Services 
Travel Scholarships and 
Fellowships Utilities Supplies and Other 
Services Depreciation 
 
$ 20,171,480.33 $ 180,605.16 
 
$ 361,018.79 $ 15,659.00 $ 
 
5,434.40 
 
3,764,343.79 
 
255,728.56 $ 130,578.60 
 
4,928,377.38 
 
2,657,245.95 
 
3,792,102.01 
 
5,450.590.41 
 
62,211.82 
 
35,577.24 
 
1,285,225.95 
 
644,653.64 
 
2,332,775.46 
 
151.980.00 
 
376.051.54 
 
67,880.02 
 
2,140.39 
 
144,591.57 
 
51,310.45 
 
45.467.94 
 
228.807.32 2,042.069.80 
 
1,210.24 309,281.94 
 
1,552.88 4,574.74 
 
70,238.94 1.960,157.26 
 
55.569.48 847,210.70 
 
70,119.06 873.348.60 
 
Total Operating Expenses 
 
$ 32 033 343.19 $ 876.91774 $ 174,42385 $ 8,749,609 89 $ 427164922 $ 727122747 
 
Natural Classification 
Salaries Faculty Staff 
Employee Benefits Other Personal Services . Travel Scholarships and 
Fellowships Utilities Supplies and Other 
Services Depreciation 
Total Operating Expenses 
 
Plant. Operations and Maintenance 
 
functional Classjfication 
 
Scholarships and FellowshiPs 
 
Auxiliary Enterprises 
 
Unallocated l>eDreciation 
 
Total Operating Expenses 
 
$ 3,813,948.73 -897,899.08 
12.662.82 
 
$ 
 
2,500.00 
 
2,259.086.12 
 
2,508,487.06 
 
39,989.14 
 
$ 20,736.697.68 21.601,411.14 11,421,622.50 151,980.00 740,093.87 
 
$ 2,552,094.89 2,046,117.34 
 
573,525.24 442,595.91 
 
3.125,620.13 2,916,211.17 
 
1,329,218.56 
 
62,275.06 
 
4,914,788.06 $ . 4.565,975.98 
 
12,342,924.72 4,565,975.98 
 
$ 630404837 $ 261436995 $ 10740971 53 $ 456597598 $ 77 602,537 19 
 
- 29- 
 
  SUPPLEMENTARY INFORMATION 
- 31 - 
 
  STATE UNIVERSITY OF WEST GEORGIA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO 
BUDGET - (NON-GAAP BASIS) RESIDENT INSTRUCTION 
YEAR ENDED JUNE 30, 2002 
 
SCHEDULE "1" 
 
REVENUES 
State Appropriations Other Revenues Retained 
 
BUDGET 
 
ACTUAL (1) 
 
VARIANCEFAVORABLE (UNFAVORABLE) 
 
$ 42.962.164.00 $ 42,462.164,00 $ 72.096.805.00 45.256,274.25 
 
".500,000.00 -26.840.530.75 
 
$ 115.058.969.00 $ 87.718.438.25 $_--:-2::.;.7l,,;:;.34....:.;0:;.:;.5~3;.;;,0;.;,.,7;:;..5 
 
EXPENDITURES 
Personal Services: Education, General and Departmental Services Sponsored Operations 
Operating Expenses: Education, General and Departmental Services Sponsored Operations 
Capital Outlay Special Funding Initiative 
 
$ 46.539,232.00 $ 46.602,491.12 $ 
 
2,085.801.00 
 
1.439.582.74 
 
12,171.262.00 46,712,829.00 
6,149.927.00 1.399.918.00 
 
11,830,250.28 22.344.599.22 4.598,525.47 
899.918.00 
 
-63.259.12 646.218.26 " 
341.011.72 24,368,229.78 
1,551,401.53 500,000.00 
 
$ 115,058.969.00 $ 87.715.366.83 $_--:2;.;.,7:.;,.34....:.;3""".6;.,;0.;;.,2...:.;17.;.. 
 
Excess of Revenues over Expenditures 
 
$ 
 
3,071.42 $ ..........-=""""'3,..0=7..:1=.4=.2 
 
(1) Actual am'ounts were prepared on a prescribed basis of accounting that demonstrates compliance with bUdgetary statutes and regulations of th~ State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. 
 
See accompanying notes and Independent Accountanfs Combined Report on Review of Basic Financial Statements and Supplementary Information. 
33- 
 
 STATE UNIVERSITY OF WEST GEORGIA SCHEDULE OF REVENUES AND EXPENDITlIJRES' COMPARED TO 
BUDGET (NGN:.GAAPBASIS) LOTIERY F0REDUCATION YEAR ENDEID JUNE 30. 2002 
 
SCHEDULE "2" 
 
REVENUES State Appropriations 
 
BUDGET 
 
ACTUAL (1) 
 
VARIANCEFAVORABLE (UNFAVORABLE) 
 
$ 415,080.00 $ 415,080.00 $ 
 
--=0:.:.:.0:;:..0 
 
EXPENDITURES Equipment, Technology and Construction 
Trust Fund Special Funding Initiatives 
Excess of Revenues over Expenditures 
 
$ 274,048.00 $ 334,064.21 $ 
 
141,032.00 
 
80,613.75 
 
-60,016.21 60,418.25 
 
$ 
 
415,080.00 $ 414,677.96 $ _...--_ _4.:.;0:.;:2:.:.:.04;.;. 
 
$ 
 
402.04 $====4~0=2~.04= 
 
(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. 
 
See accompanying notes and Independent Accountanrs Combined Report on Review of Basic Financial Statements and Supplementary Information. 
- 34- 
 
 STATE UNIVERSITY OF WEST GEORGIA RECONCILIATION OF SALARIES AND TRAVEL 
YEAR ENDED JUNE 30. 2002 
 
SCHEDULE "3" 
 
Totals per Annual Supplement 
Accruals June 30, 2002 June 30, 2001 
Compensated Absences June 30, 2002 .June 30, 2001 
Prepaid Salaries June 30, 2002 June 30, 2001 
Unreconciled Variance 
 
SALARIES 
 
TRAVEL 
 
$ 
 
42,053,449.29 $ 740,093.87 
 
127,365.93 -122,286.84 
 
1,993,804.77 -1,722,845.33 
 
-289,330.00 282,108.35 
15,842.65 
 
$ 
 
42,338,108.82 $ 740,093.87 
 
See accompanying notes and Independent AcCountant'sCombined Report on Review of Basic Financial Statements and Supplementary Information. 
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 STATE UNIVERSITY OF WEST GEORGIA RECONCILIATION OF PER DIEM AND FEES 
YEAR ENDE JUNE 30, 2002 
 
SCHEDULE "4" 
 
Totals per Annual Supplement 
 
AdjustrTlents Allen, Fuller, Horton, Norris, Onuegbu, Phovixay, Scott, Turner, Woodward, 
 
Keri Rachael AprilS. Erin C. Patricia C. Soukie Keri KristenL. AmyD. 
 
FEE AMOUNT 
 
EXPENSE AMOUNT 
 
$ 
 
502,924.82 $ 
 
67,426.28 $ 
 
TOTAL 570,351.10 
 
85.24 105.92 192.56 192.57 192.56 80.00 
56.00 192.56 
36.68 
 
85.24 105.92 192.56 192.57 192.56 
80.00 56.00 192.56 36.68 
 
$ 
 
502,924.82 $ 
 
68,560.37 $ ='==5=:7:::::1::!:::,4:=8:;;5'.,;,;19= 
 
See accompanying notes and Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary Information. 
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 SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS 
 
 STATE UNIVERSITY OF WEST GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
YEAR ENDED JUNE 30, 2002 
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS 
ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Finding Control Number: FS-554-02-01 
During fiscal year 2002, the Board ofRegents ofthe University System ofGeorgia converted units of the University System from the College University Financial Accounting (CUPA) legacy system to 
the new GeorgiaFIRST System (Financial, Information and Reporting Systems for Tomorrow). In 
January of2002, the State University ofWest Georgia placed this accounting system into production. 
The management of the State University of West Georgia is responsible for establishing and maintaining adequate controls over the operation, utilization, ~d integrity of their data processed with the GeorgiaFIRST System. We encountered problems with the financial data presented by the University. The University's failure to establish and adh~re to a final closing for the year ended June 30, 2002, created a situation where data presented for review was incomplete. Extensive review procedures were necessary to determine the validity ofthe information provided. 
To reduce the risk ofreporting incomplete information, the University should work with the Board of Regents Central Office to develop procedures that will result in complete reporting ofall financial data in a more efficient and timely manner. 
GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers Finding Control Number: FS-554-02-02 
Our examination included a review of the procedures utilized by the State University of West 
Georgia in recording transactions to the various modules comprising the GeorgiaFIRSTaccounting 
system. Our testing revealed that, at June 30, 2002, the University's generalledgei module did not balance with the subsidiary modules. This condition was primarily due to errors in posting subsidiary records during the conversion from the old College University Financial Accounting 
(CUPA) legacy accounting system to the new GeorgiaFIRST accounting system and due to 
transaCtions being posted to the general ledger module rather than the appropriate subsidiary modules. The University did not provide a reconciliation of the general ledger balances to the subsidiary records, which resulted in extensive work by the auditors to identify reconciling items at June 30, 2002. 
Management's failure to ensure that suhsidiary records are reconciled with the general ledger causes internal reports to management, generated from the subsidiary modules, to be inaccurate and misleading. This condition can lead to erroneous decisions by the University's management and result in inaccurate reporting of fmancial information. 
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 STATE UNNERSITY OF WEST GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
YEAR ENDED JUNE 30, 2002 
 
FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS 
 
GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers Finding Control Number: FS-554-02-02 
 
To ensure accurate and timely reporting of financial infonnation from subsidiary records, the 
 
University should post transactions correctly to the subsidiary ledgers rather than as journal entries in 
 
the general ledger. The University shpuld develop internal accounting controls and procedures to 
 
ensure that reconciliations o( subsidiary ledgers and the general ledger are perfonned on a regular 
 
basis. 
 
. 
 
REVENUESIRECENABLES/RECEIPTS Inadequate Accounting Procedures Finding Control Number: FS-554-02-03 
 
Our .review of the State University of' West' Georgia's accounting procedures for RevenueslReceivableslReceipts revealed the following significant deficiencies: 
 
.1) A review ofthe University's accoUnting records revealed that the Statement ofNet Assets contains approximately $702,000.00 ofaccounts receivable that pertain to Fall Semester (Fiscal Year 2003) tuition and fees. It appears that corresponding adjustments to deferred revenue accounts have been recorded; however, due to the condition ofthe University's financial records this could not be confinned. In accordance with generaliy accepted accounting principles, accounts receivable should only be recorded when revenue ~ecognition criteria has been met, therefore, the University should not have recorded accounts receivable related to Fall Semester 2003. 
 
2) The University was Ul)able to provide a reconciliation of student accounts receivable between the Banner Student Registration System aild the University's accounting system (GeorgiaFIRS1). This reconciling problem resulted in an unidentified variance of $51,831.71 on the accounts receivable reconciliation. 
 
3) The University did not have procedures in place to properly age accounts receivables as required by the Board of Regent's policy manual. 
 
These deficiencies occurred because management failed to ensure that adequate procedures were in place and operating effectively. Management should review its system ofcontrols, initiate necessary changes, and monitor the effectiveness of controls implemented. 
 
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 STATE UNIVERSITY OF WEST GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS 
YEAR ENDED JUNE 30, 2002 . FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Inadequacies in the Capital Asset System Finding Control Number: ,FS-554-02-04 Our review 'ofthe State University ofWest Georgia's accounting procedures for the Capital Assets Management System revealed that the University could not reconcile the capital asset balance at June 30, 2001 with the restated capital asset balance at July 1, 2001 related to equipment. An unidentifiable variance of $963,056.76 resulted. This deficiency occurred because management failed to ensure that controls were in place to properly record and reconcile capital asset activity. Management should review its system of controls, initiate necessary changes, and monitor the effectiveness ofcontrols implemented to ensure that capital assets records are accurately maintained. 
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