{"response":{"docs":[{"id":"dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2009-h2010","title":"Armstrong Atlantic State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2010","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, Chatham County, Savannah, 32.08354, -81.09983"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2009/2010"],"dcterms_description":["Began with: Fiscal year ended June 30, 2009, released in 2010?; ceased with: Fiscal year ended June 30, 2010, released in 2010?","Fiscal year ended June 30, 2009, released in 2010? (online surrogate); title from PDF title page (Georgia Government Publications database, viewed March 23, 2020).","Fiscal year ended June 30, 2010, released in 2010? (online surrrogate) (Georgia Government Publications database, viewed March 23, 2020)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, GA : Georgia. Dept. of Audits and Accounts, 2010"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Armstrong Atlantic State University--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Armstrong Atlantic State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2010"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2009-h2010"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2009-h2010"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"ARMSTRONG ATLANTIC \nSTATE UNIVERSITY \nSAVANNAH, GEORGIA \nREPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED \nJUNE 30,2010 \neorgia Departmemt of \nAudits andMoud* \nRussell W.Hinton \nState Auditor \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY - TABLE OF CONTENTS - \nSECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS C STATEMENT OF CASH FLOWS D NOTES TO THE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION SCHEDULES \n1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \n(NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING \nSOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND \n4 RECONCILIATION OF SALARIES AND TRAVEL \nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY \n- TABLE OF CONTENTS - \nSECTION Ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \n \n SECTION I FINANCIAL \n \n Russell W. Hinton \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENOTF AUDITSAND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \nDecember 27,2010 \n \nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \nand Honorable Linda M. Bleicken, President Armstrong Atlantic State University \nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \nLadies and Gentlemen: \nWe have audited the accompanying basic financial statements (Exhibits A through D) of Armstrong Atlantic State University, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30,2010. These financial statements are the responsibility of the Armstrong Atlantic State University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \nWe conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \nAs discussed in Note 1,the financial statements of Armstrong Atlantic State University are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of Armstrong Atlantic State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows of the State of Georgia, in conformity with accounting principles generally accepted in the United States of America. \nIn our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Armstrong Atlantic State University as of June 30, 2010, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. \n \n Management's Discussion and Analysis is not a part of the basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit this information and express no opinion on it. \nOur audit was conducted for the purpose of forming an opinion on the basic financial statements of Armstrong Atlantic State University taken as a whole. The accompanying supplementary information (Schedules 1through 4) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \nRespectfully submitted, \nCPA, CGFM \n \n REQUIRED SUPPLEMENTARY INFORMATION \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY Management's Discussion and Analysis \n \nIntroduction \n \nArmstrong Atlantic State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Savannah, Georgia, is within twenty-five miles of some of Georgia's most beautiful coastlines. Since its founding over 7 0 years ago by the city of Savannah, Armstrong Atlantic has become a vibrant 250-acre urban campus of 7,000 students serving a wider community of 340,000 residents. The University offers programs at two other centers in the coastal Georgia area. It is the lead institution at the Liberty Center in Hinesville, an education consortium with Waycross College and is a cooperative partner at the Brunswick Center, located at the College of Coastal Georgia. Founded in 1935 as Armstrong Junior College, the institution became a two year unit of the University System of Georgia in 1959 and a four-year college in 1966. It became Armstrong Atlantic State University in 1996. The University has become known for its state-of-the-art technology-related programs, health professions and education programs. The institution continues to grow as shown by the comparison numbers that follow. The student body is 34-66%male-female and a mix of 34-66% nontraditional/traditional students. The average student age is 26. \n \nFaculty \n \nStudents (Headcount) \n \nStudents (FTE) \n \nFiscal Year 2 0 1 0 Fiscal Year 2 0 0 9 Fiscal Year 2 0 0 8 \n \nOverview of theFinancialStatementsand Financial Analysis \nArmstrong Atlantic State University is proud to present its financial statements for fiscal year 2010. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2010 and fiscal year 2009. \n \nStatement of Net Asseu \nThe Statement of Net Assets presents the assets, liabilities, and net assets of the Universityas of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Armstrong Atlantic State University. The Statement of Net Assets presents end-ofyear data concerning Assets (current and noncurrent), Liabilities (current and noncurrent), and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will be discussed in the Notes to the FinancialStatements. \nFrom the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors. \n \n Finally, the Statement of Net Assets provides a picture of the 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 of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. 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 of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution. \n \nStatement of Net Assets, Condensed \n \nJune 30,2010 \n \nJune 30,2009 \n \nAssets Current Assets Capital Assets, Net Other Assets \n \nTotal Assets \n \nLiabilities Current Liabilities Noncurrent Liabilities \n \nTotal Liabilities \n \nNet Assets Invested in Capital Assets, Net of Debt Restricted- Nonexpendable Restricted- Expendable Unrestricted \n \n$ 55,182,014 2,051,849 315,387 8,093,291 \n \n$ 55,614,799 1,844,574 -160,983 3,449,256 \n \nTotal Net Assets \n \nThe total assets of the institution increased by $28,242,663. A review of the Statement of Net Assets will reveal that the increase was primarily due to a $22,509,330 increase in the category of Capital Assets, Net. The balance of the increase is principally in cash and cash equivalents of $8,440,115 offset by a decrease in accounts receivable of $1,590,297 and a decrease in prepaid expenses of $1,205,901. \nThe total liabilities for the year increased by $23,347,768 primarily due to the increase in lease purchase obligations related to the capital lease for the new Student Union building placed in service this fiscal year. The combination of the increase in total assets of $28,242,663 and the increase in total liabilities of $23,347,768 yields an increase in total net assets of $4,894,895. \n \n Statementof Revenues, Expensesand Changesin Net Assets \nChanges in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. \n \nStatement of Revenues, Expenses and Changes in Net Assets, Condensed \n \nJune 30,2010 \n \nJune 30,2009 \n \nOperating Revenues Operating Expenses \n \nOperating Loss \n \n$ -36,053,259 \n \n$ -36,508,540 \n \nNonoperatingRevenues and Expenses \n \n40,931,129 \n \n35,725,117 \n \nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \n \n$ 4,877,870 \n \n$ \n \n-783,423 \n \nOther Revenues, Expenses, Gains or Losses \n \n17,025 \n \n2,866,161 \n \nIncrease (Decrease) in Net Assets \n \n$ 4,894,895 \n \n$ 2,082,738 \n \nNet Assets at Beginningof Year, as Originally Reported \n \n$ 60,747,646 \n \n$ 59,303,912 \n \nPrior Year Adjustments \n \n-639,004 \n \nNet Assets at Beginningof Year, Restated \n \n$ 60,747,646 \n \n$ 58,664,908 \n \nNet Assets at End of Year \n \nThe Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows: \n \n Revenue by Source For the Years Ended June 30,2010 and June 30,2009 \n \nJune 30,2010 \n \nOperating Revenue \n \nTuition and Fees \n \n$ \n \nGrants and Contracts \n \nSales and Services of Educational Departments \n \nAuxiliary \n \nOther \n \n24,156,884 6,459,753 730,033 \n14,718,554 207,566 \n \nTotal Operating Revenue \n \nNonoperating Revenue State Appropriations Federal Stimulus - Stabilization Funds Grants and Contracts Gifts Investment Income Other \n \nTotal Nonoperating Revenue \n \n$ 43,037.579 \n \nCapital Grants and Gifts State Other \nTotal Capital Grants and Gifts \n \nTotal Revenues \n \nExpenses (By Functional Classification) For the Years Ended June 30,2010 and June 30,2009 \n \nJune 3 0 , 2 0 1 0 \n \nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises \n \nTotal Operating Expenses \n \nNonoperating Expenses Interest Expense \nTotal Expenses \n \nJune 30,2009 June 30.2009 \n \n Operating revenues increased by $5,461,831 in fiscal year 2010. Two factors resulted in the increase: First, Fall FTE increased 8.9% and headcount increased 6.7% resulting in a net increase in Tuition and Fees of $2,866,624. Second was a $1,630,175 increase in Federal grants and contracts. \n \nThe Auxiliary revenue increase of $1,066,782 was primarily made up of increases in Bookstore and Food service operations, both related to the increases in enrollment. \n \nNonoperating revenues increased by $4,480,760 for the year due to 3 major factors. First was a 20% decrease in State Appropriations of $6,434,712 related to budget reductions passed down by the State Legislature. Secondly, a portion of these reductions were offset by the awarding of Federal Stimulus Stabilization Funds in the amount of $5,108,581. Third was an increase in Federal grants of $4,586,986 primarily due to an increase in Pell grants. \n \nThe compensation and employee benefits category decreased by $811,698 which was a direct result of the state budget reductions and statewide furlough plans. University employees were furloughed 6 days in the fiscal year. \n \nStatement of Cash Flows \nThe final statement presented by the Armstrong Atlantic State University 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 of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \n \nCash Flows for the Years Ended June 30,2010, and June 30,2009, Condensed \n \nJune 30,2010 \n \nJune 30,2009 \n \nCash Provided (Used) By: Operating Activities Noncapital FinancingActivities Capital and Related FinancingActivities Investing Activities \n \nNet Change in Cash Cash, Beginning of Year \n \nCash, End of Year \n \n Capital Assets \nThe University had one significant capital asset additions for facilities in fiscal year 2010. The Student Union was completed in April of fiscal year. This project was completed by the AASU Educational Properties Foundation and a capital lease was entered into between the two related organizations. The cost of the building was $23,427,477 and the lease will be paid by a studentapproved mandatory fee. \nFor additional information concerning Capital Assets, see Notes 1,6, 8 and 1 0 in the Notes to the Financial Statements. \nLong- Term Liabilities \nArmstrong Atlantic State University had Long-Term Liabilities of $73,270,807 of which $2,782,512 was reflected as current liability at June 30, 2010. \nFor additional information concerning Long-Term Liabilities, see Notes 1and 8 in the Notes to the Financial Statements. \nEconomic Outlook \nThe University's overall financial position is positive. Even with reductions of state appropriations, the University was able to generate an increase in Net Assets. The economic outlook on both the national and state level continues to weaken with the current financial crisis which could affect state appropriations. Coupled with increased demand in the form of higher FTE and headcounts, and tuition increases, the University will continue to increase net assets. With the opening of a Student Union and a freshman resident hall in the coming fiscal year (2010-2011), the demand for Armstrong Atlantic State University is on the rise and revenue increases will parallel the increase in enrollment and FTE. \nDr. Linda M. Bleicken, President Armstrong Atlantic State University \n \n BASIC FINANCIAL STATEMENTS \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30,2010 \nASSETS \nCurrent Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable. Net (Note 3 ) Federal FinancialAssistance Other Inventories (Note 4) Prepaid Items \nTotal Current Assets \nNoncurrent Assets Noncurrent Cash Investments (Externally Restricted) l nvestrnents Notes Receivable, Net Capital Assets, Net (Note 6) \nTotal NoncurrentAssets \nTotal Assets \nCurrent Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue(Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences \nTotal Current Liabilities \nNoncurrent Liabilities Lease Purchase Obligations Compensated Absences \nTotal Noncurrent Liabilities \nTotal Liabilities \nNET ASSETS \nInvested in Capital Assets, Net of Related Debt Restricted for: \nNonexpendable Expendable Unrestricted \nTotal Net Assets \nThe notesto the financial statements are an integral part of this statement. \n- 2 - \n \nEXHIBIT \"A\" \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY STATEMENT OF REVENUES. EXPENSES AN0 CHANGES IN NET ASSETS \nYEAR ENDED JUNE 30,2010 \nOPERATING REVENUES \nStudent Tultlon and Fees Less: Scholarsh~pAllowances \nGrants and Contracts Federal Federal Stlmulus State Other \nSales and Sewlces of Educational Departments Rents and Royalt~es Auxll~aryEnterprises \nRes~denceHalls Bookstore Food Sewlces Parklng/Transportatlon Health S e ~ ~ c e s lntercolleglate Athletics Other Organlzatlons Other Operat~ngRevenues \nTotal Operating Revenues \nOPERATING EXPENSES \nSalarles Faculty Staff \nEmployee Benefits Other Personal Sewlces Travel Scholarships and Fellowships Utilities Suppl~esand Other Sewices Depreciation \nTotal Operating Expenses \nOperating Income (Loss) \nNONOPERATING REVENUES (EXPENSE$) \nState Approprlatlons Federal Stlmulus - Stabillzatlon Funds Grants and Contracts \nFederal G~fts lnterest and Other Investment Income lnterest Expense Other Nonoperating Revenues (Expenses) \nNet Nonoperat~ngRevenues \nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \nCapital Grants and Glfts \nSpec~aIltem - Cap~taAl ssets Transfe~ \nIncrease (Decrease) In Net Assets \nNet Assets - Beginning of Year \nNet Assets - End of Year \nThe notes to the financlal statements are an integral part of this statement. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDEDJUNE 30,2010 \nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of EducationalDepartments Paymentsto Suppliers Paymentsto Employees Payments for Scholarshipsand Fellowships Auxilialy EnterpriseCharges: Residence Halls Bookstore Food Services Parking/Transportation Health Services IntercollegiateAthletics Other Organizations Other Receipts (Payments) \nNet Cash Provided (Used) by Operating Activities \nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Federal Stimulus - Stabilization Funds Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes \nNet Cash Flows Provided (Used)by NoncapitalFinancingActivities \nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchasesof Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases \nNet Cash Provided (Used) by Capital and Related FinancingActivities \nCASH FLOWS FROM INVESTING ACTIVITIES Proceedsfrom Sales and Maturities of lnvestments Interest on lnvestments \nNet Cash Provided (Used)by InvestingActivities \nNet Increase (Decrease) in Cash \nCash and Cash Equivalents- Beginning of Year \nCash and Cash Equivalents - End of Year \n \nEXHIBIT \"C\" \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2010 \nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \nOperating lncome (Loss) Adjustmentsto Reconcile Operating lncome to Net Cash \nProvided (Used) by OperatingActivities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Other Assets Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Cornpensated Absences \nNet Cash Provided (Used) by OperatingActivities \nNONCASH ACTIVITY Fixed Assets Acquired by IncurringCapital Lease Obligations Change in Fair Value of InvestmentsRecognized as a Component of Interest Income Special Item -Capital Asset Transfer \n \nEXHIBIT \"C\" \n \nThe notes to the financial statements are an integral part of this statement. -5- \n \n ARMSTRONG ATLANTIC STATE UNIVERSrrY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nNote 1. Summary of SignificantAccounting Policies \nNature of Operations Armstrong Atlantic State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country. \nReporting Entity Armstrong Atlantic State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Armstrong Atlantic State University as a separate reporting entity. \nThe Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. 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. Armstrong Atlantic State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Armstrong Atlantic State University is considered an organizational unit of the 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 Reportine Standards. \nLegally separate, tax exempt organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential component units of the State. See Note 1 7 for additional information. \nFinancial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets and cash flows. \nGenerally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place. \nNew Accounting Pronouncements In fiscal year 2010, Armstrong Atlantic State University adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally required retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated. \nIn addition, Armstrong Atlantic State University adopted GASB Statement No. 53, Accounting and Financial Repotting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 2. \n \n ARMSTRONG ATLANTIC STATE UNIVERSIW NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"DM \n \nBasis 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 paragraph. 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. \nThe 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. \nCash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool. \nShort-Term lnvestments Short-Term lnvestments consist of investments of 9 0 days - 13 months. This would include certificates of deposits or other time restricted investments with original maturities of six months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal. \nlnvestments lnvestments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Assets. The Board of Regents Legal Fund and the Board of Regents Diversified Fund are included under Investments. \nAccounts Receivable Accounts receivable consists of tuition and fees charged 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 includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \nInventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\")basis. Resale lnventories are valued at cost using the average-cost basis. \nNoncurrent Cash and lnvestments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets. \n \n ARMSTRONG ATLANTIC STATE UNIVERSIlY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010 \n \nEXHIBrr \"D\" \n \nCapital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or 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, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software is computed using the straight-line method over the estimated useful lives of the assets, generally 4 0 to 6 0 years for buildings, 2 0 to 25 years for infrastructure and land improvements, 1 0 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financingand Investment Commission (GSFIC)- an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged. \nFor projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2010, GSFIC did not transfer any capital additions to Armstrong Atlantic State University. \nDeposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall. \nDeferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts receivedfrom grant and contract sponsors that have not yet been earned. \nCompensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. Armstrong Atlantic State University had accrued liability for compensated absences in the amount of $1,854,153 as of July 1,2009. For fiscal year 2010, $1,297,809 was earned in compensated absences and employees were paid $1,270,549, for a net increase of $27,260. The ending balance as of June 30, 2010, in accrued liability for compensated absences was $1,881,413. \nNoncurrent Liabilities Noncurrent 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 noncurrent assets. \n \n ARMSTRONG ATLANTIC STATE UNIVERSrrY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"DM \n \nNet Assets The University's net assets are classified as follows: \nInvested in capital assets, net of related debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. The term \"debt obligations\" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1- Capital Assets section. \nRestrided net assefs - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia. \nRestricted net assets - expendable: Restricted expendable 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. \nExpendable Restricted Net Assets include the following: \n \nRestricted- E\u0026G and Other OrganizedActivities $ \nFederal Loans Institutional Loans \n \n269,879 10,702 34,806 \n \nTotal Restricted Expendable \n \nUnrestrictednet 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 $438.00. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff. \nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \nR \u0026 R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted \nTotal UnrestrictedNet Assets \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \nWhen 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. \nIncome Taxes Armstrong Atlantic State University, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1)of the Internal Revenue Code, as amended. \nClassification of Revenues and Expenses The Statement of Revenues, Expenses and Changes in Net Assets classify fiscal year activity as operating and nonoperating according to the following criteria: \nOperatingRevenues Operating revenue includes activities that have the characteristics of exchange transactions, such as (1)student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3)sales and services. \nNonoperating Revenues. Nonoperating revenue includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and GovernmentalEntities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \nOperating Expenes Operating expense includes activities that have the characteristics of exchange transactions. \nNonoperating Expenses Nonoperating expense includes activities that have the characteristics of nonexchange transactions, such as capital financing costs and costs related to investment activity. \nScholarship 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, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating 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. \nNote 2. Deposits and Investments \nDeposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: \n \n ARMSTRONG ATLANTIC STATE UNIVERSrrY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"Dm \n \n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \n \n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \n \n3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. \n \n4. \n \nIndustrial revenue bonds and bonds of development authorities created by the laws of the \n \nState of Georgia. \n \n5. 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 and 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 MortgageAssociation. \n \n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \nThe Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. \n \nAt June 30, 2010, the carrying value of deposits was $13,644,300 and the bank balance was $14,529,348. Of the University's deposits, $14,079,348 were uninsured. Of these uninsured deposits, $14,079,348 were collateralized with securities held by the financial institution's trust department or agent but not in the University's name. \n \nInvestments At June 30, 2010, the carrying value of the University's investments was $2,240,152, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows: \n \nlnvestment Pools Board of Regents Short-Term Fund Legal Fund Diversified Fund \n \nTotal lnvestments \n \nThe Board of Regents lnvestment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents lnvestment Pool is voluntary. The Board of Regents lnvestment Pool is not rated. Additional information on the Board of Regents lnvestment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia - University System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits - Education Audit Division or on their web site at htt~://www.audits.ga.gov. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010 \n \nEXHIBIT \"D\" \n \nlnterest Rate Risk lnterest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk. \n \nThe Effective Duration of the Short-Term Fund is .77 years. Of the University's total investment of $27,418 in the Short-Term Fund, $27,418 is invested in debt securities. \nThe Effective Duration of the Legal Fund is 2.95 years. Of the University's total investment of $268,691 in the Legal Fund, $268,691 is invested in debt securities. \nThe Effective Duration of the Diversified Fund is 3.15 years. Of the University's total investment of $1,944,043 in the Diversified Fund, $750,497 is invested in debt securities. \n \nCredit Oualitv Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk. \n \nNote 3. Amunts Receivable Accounts receivable consisted of the following at June 30, 2010: \n \nStudent Tuition and Fees Auxiliary Enterprises and Other OperatingActivities Federal Financial Assistance Georgia State Financingand Investment Commission Other \n \n$ 882,601 816,560 \n2,170,558 32,750 \n2,496,776 \n \nLess Allowance for Doubtful Accounts Net Accounts Receivable \n \n$ 6,054,570 \n \nNote 4. Inventories Inventories consisted of the following at June 30, 2010: \n \nBookstore Other \nTotal \n \n$ 797.277 \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nNote 5. Notes/Loans Receivable \nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2010. The Program provides for cancellation of a loan at rates of 10%to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses 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, the loans are written off and assigned to the U. S. Department of Education. \nNote 6. CapitalAssets \nFollowingare the changes in capital assets for the year ended June 30, 2010: \n \nBeginning Balance July 1.2009 \n \nSpecial Item \nTransfer \n \nAdditions \n \nReductions \n \nEnding Balance June 30,2010 \n \nCapital Assets, Not Being Depreciated: Land Construction Work-In-Progress \n \n$ 4,678,254 $ 5,793,813 \n \n0 $ \n \n0 \n \n$ \n \n5,715,838 \n \n77,975 \n \nTotal Capital Assets, Not Being Depreciated $ 10,472,067 $ \n \n0 $ \n \n0 $ \n \n5,715,838 $ \n \n4,756.229 \n \nCapital Assets, Being Depreciated: lnfrastructure Building and Building lmprovements Facilities and Other lrnprovements Equipment Capital Leases Library Collections Capitalized Collections \n \nTotal Assets Being Depreciated \n \n$ 136,406,348 $ \n \n17,025 $ 33,041,057 $ \n \n118,614 $ 169,345,816 \n \nLess: Accumulated Depreciation: Infrastructure Buildingand Building lmprovements Facilities and Other lrnprovements Equipment Capital Leases Library Collections Capitalized Collections \n \nTotal Accumulated Depreciation \n \n$ 42,816,337 $ \n \n0 $ 4,826,195 $ \n \n111,895 $ \n \n47,530,637 \n \nTotal Capital Assets, Being Depreciated, Net \n \n$ 93,590,011 $ \n \n17,025 $ 28,214,862 $ \n \n6,719 $ 121,815,179 \n \nCapital Assets, Net \n \n  ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nCertain 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. \nIn fiscal year 2005, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $18,589,562 for Armstrong Center. The lease term expires in fiscal year 2035. The outstanding principal balance at June 30,2010, was $17,506,253. \nIn fiscal year 2006, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $21,377,827 for Compass Pointe Apartments. The lease term expires in fiscal year 2030. The outstanding principal balance at June 30, 2010, was $18,964,514. \nAlso, in fiscal year 2006, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $5,653,178 for the University Crossing Apartments. The lease term expires in fiscal year 2030. The outstanding principal balance at June 30, 2010, was $5,015,007. \nIn fiscal year 2007, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $5,259,448 for a Student Recreation Center. The lease term expires in fiscal year 2033. The outstanding principal balance at June 30,2010, was $4,807,902. \nAlso, in fiscal year 2007, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $856,238 for a Women's Fieldhouse. The lease term expires in fiscal year 2021. The outstanding principal balance at June 30, 2010, was $764,310. \nIn fiscal year 2010, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $23,427,477 for Student Union Center. The lease term expires in fiscal year 2039. The outstanding principal balance at June 30,2010, was $23,427,477. \nArmstrong Atlantic State University has various capital leases with third party vendors for equipment with an outstanding balance at June 30, 2010, in the amount of $903,931. \nOPERATING LEASES Armstrong Atlantic State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2 0 1 1through 2026. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment. \nFor fiscal year 2010, Armstrong Atlantic State University had four operating leases. The first is with Michael Porten, Inc. to rent offices and classroom space in Hinesville, Georgia, for the Liberty Center. The monthly rental amount is $10,500 and the rental term may be extended on an annual basis until June 30,2016. \nA second lease is with SSF Savannah Properties, LLC to rent space for a dental clinic operated by our Department of Dental Hygiene. The monthly rent is $25,581. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL nATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nThe third lease is with University Terrace, LLC to rent the University Terrace Apartments at a monthly fixed base rental of $50,987. The rental term may be extended on an annual basis until June 30, 2022. \nThe fourth lease is with Cedar Grove, LLC for the lease of land at a monthly fixed base rental of $1,000. This lease is projected to expire June 30, 2011. \nFUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30,2010, were as follows: \n \nReal Property and Equipment \n \nCapital \n \nOperating \n \nLeases \n \nLeases \n \nYear EndingJune 30: 2011 2012 2013 2014 20 15 \n2016 - 2020 2021- 2025 \n2026 - 2030 \n2031- 2035 2036 - 2039 \n \nTotal Minimum Lease Payments \n \n$ 123,257,297 $ 12,427,592 \n \nLess: Interest \n \n51,867,903 \n \nPrincipal Outstanding \n \nArmstrong Atlantic State University's fiscal year 2010 expense for rental of real property and equipment under operating leases was $1,062,809. \nNote 11. Retirement Plans \nTeachers Retirement System of Georgia \nPlan Description Armstrong Atlantic State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multipleemployer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or from the Georgia Department of Audits and Accounts. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010 \n \nEXHIBIT \"D\" \n \nFunding Policy Employees of Armstrong Atlantic State University who are covered by TRS are required by State statute to contribute 5%of their gross earnings to TRS. Armstrong Atlantic State University 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 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \n \nFiscal Year \n \nPercentage Contributed \n \nRequired Contribution \n \nEmployees' Retirement System of Georgia \nPlan Description Armstrong Atlantic State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. \nThe benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an \"old plan\" member subject to the plan provisions in effect prior to July 1,1982. Employees hired on or after July 1,1982, but prior to January 1,2009 are \"new plan\" members subject to the modified plan provisions. Effective January 1,2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the \"old\" or \"new\" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1,2009 also have the option to change their membership to the GSEPS plan. \nUnder both the old plan and new plan, members become vested after 1 0 years of creditable service. A member may retire and receive normal retirement benefits after completion of 1 0 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. \nRetirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. \nIn addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1,1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415. \n \n ARMSTRONG ATLANTIC STATE UNIVERSIlY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010 \n \nEXHIBIT \"D\" \n \nThe ERS issues a financial report each fiscal year, which may be obtained through ERS. \n \nFunding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30,2010, for employees covered by ERS was $209,556. The University'stotal payroll for all employees was $35,898,388. \n \nFor the year ended June 30, 2010, under the old plan, member contributions consist of 4% of annual compensation up to $4,200 plus 6%of annual compensation in excess of $4,200. Of these member contributions, the employee pays the first 1.25% and the University pays the remainder on behalf of the employee. \n \nUnder the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2010, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees. \n \nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \n \nFiscal Year \n \nPercentage Contributed \n \nRequired Contribution \n \nActuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2010, financial report, which may be obtained through ERS. \nRegents Retirement Plan \nPlan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An \"eligible university system employee\" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. 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. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nFunding Policy Armstrong Atlantic State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution was 9.24% for participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \nArmstrong Atlantic State University and the covered employees made the required contributions of $1,448,877 (9.24%) and $782,536 (5%),respectively. \nAIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \nGeorgia Defined Contribution Plan \nPlan Description Armstrong Atlantic State University 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. \nBenefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. \nContributions Member contributions are seven and one-half percent (7.5%)of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. \nTotal contributions made by employees during fiscal year 2010 amounted to $134,022 which represents 7.5%of covered payroll. These contributions met the requirements of the plan. \nThe Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nNote 12. Risk Management \nThe University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options - a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Armstrong Atlantic State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees. \nThe Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Armstrong Atlantic State University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. \nA 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 Self-Insurance Fund. \nNote 13. Contingencies \nAmounts 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 that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Armstrong Atlantic State University expects such amounts, if any, to be immaterial to its overall financial position. \nLitigation, claims and assessments filed against Armstrong Atlantic State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30,2010. \n \n ARMSTRONG ATLANTIC STATE UNIVERSIlY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nNote 14. Special Item \nDuring the year, Bainbridge College transferred Capital Assets to Armstrong Atlantic State University with a total value of $17,025. The Capital Assets consisted of two vehicles. A 2006 Ford Taurus Sedan valued at $9,075 and a 2005 Ford Taurus Sedan valued at $7,950. \nNote 15. Post-Employment Benefils Other Than Pension Benefits \nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is 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. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. \nThe Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2009 and 2010 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%. \nAs of June 30, 2010, there were 198 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2010, Armstrong Atlantic State University recognized as incurred $774,243 of expenditures, which was net of $437,835 of participant contributions. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,2010 \n \nEXHIBIT \"D\" \n \nNote 16. Natural Classifiwtions with Functional Classifications The University'soperating expenses by functional classification for fiscal year 2010 are shown below: \n \nFunctional Classification \n \nNatural Classification \n \nInstruction \n \nPublic Service \n \nAcademic Support \n \nStudent Services \n \nInstitutional Support \n \nSalaries Faculty Staff \nEmployee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \nTotal Operating Expenses \n \n$ 30,990,192 5 \n \n409.210 $ 6,561,938 $ \n \n4,437,443 5 9,921.995 \n \nNatural Classification \nSalaries Faculty \nStaff \nEmployee Benefits Other Personal Serv~ces Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \nTotal Operating Expenses \n \nPlant Operations and \nMaintenance \n \nFunctional Classification \n \nScholarships \n \nand \n \nAuxiliary \n \nFellowships \n \nEnterprises \n \nTotal Operating Expenses \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2010 \n \nEXHIBIT \"D\" \n \nNote 17. A#7liated Organizations \nIn accordance with GASB Statement No. 39, Determining Whether Certain Organ~izaonsare Component Units, Armstrong Atlantic State University Foundation, Inc., and the Armstrong Atlantic State University Educational Properties Foundation, Inc., are legally separate, tax exempt organizations whose activities primarily support Armstrong Atlantic State University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should not be assessed in relation to its significance to Armstrong Atlantic State University, but instead based on its significance to the State of Georgia. Accordingly, Armstrong Atlantic State University has not included financial activity for these affiliated organizations in these financial statements. \n \n (This page left intentionally blank) \n \n SUPPLEMENTARY INFORMATION \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND JUNE 30,2010 \nASSETS \nCash and Cash Equivalents Investments Accounts Receivable \nFederal Financial Assistance Other Prepaid Expenditures Inventories \nTotal Assets \nLIABILITIESAND FUND EOUlTY \nLiabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue \nTotal Liabilities \nFund Balances Reserved Department Sales and Services Indirect Cost Recoveries Restricted/Sponsored Funds UncollectibleAccounts Receivable Tuition Carry-Over l nventories Unreserved Surplus \nTotal Fund Balances \nTotal Liabilities and Fund Balances \n \nSCHEDULE \"1\" \n \nActual amounts were preparedon a prescribed basis of accounting that demonstrates compliance with budgetaiy statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \n \n ARMSTRONG ATLANTIC STATE UNlVERSllY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) \nBUDGET FUND YEAR ENDEDJUNE 30.2010 \n \nREVENUES \nState Appropriat~on State General Funds \nFederal Funds Other Funds \nTotal Revenues \nCARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance \nTotal Funds Available \nEXPENDITURES \nExcess of Funds Available over Expenditures \nFUND BALANCE JULY 1 \nReserved ADJUSTMENTS \nPr~oYr ear Payables/Expenditures Prtor Year Rece~vables/Revenues Decrease In lnventorles Early Remtttance of Surplus In Current Year Non-Mandatory Transfers Prior Year Reserved Fund Balance Included In Funds Ava~lable FUND BALANCEJUNE 30 \nSUMMARY OF FUND BALANCE \nReserved Department Sales and Services Indirect Cost Recover~es Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories \nTotal Reserved \nUnreselved Surplus \nTotal Fund Balance \n \nBUDGET \n \nACTUAL \n \nSCHEDULE \"2\" \nVARIANCE - \nFAVORABLE (UNFAVORABLE) \n \nActual amounts were prepared on a prescr~bedbas6 of account~ngthatdemonstrates cornpl~ancew ~ t hbudgetaty statutes and regulations of the State of Georg~aw, hlch IS a comprehens~vebas6 of accountlng other than generally accepted accountlng prlnclples. \n \n ARMSTRONG ATLANTIC STATE UNlVERSlN STATEMEMOF PROGRAM REVENUES AND E(PEN0ITURESBY FUNDING SOURCECOMPAREDTOBUDGEl \n(NONGAAP BASIS) BUDGET FUND YEAR ENDED JUNESO. 2010 \n \nOr~@nal Appro~rlauon \n \nFlnal Budget \n \nCurrent Year Revenues \n \nFunds Available Compared to Budget \n \nPrlor Year Carryover \n \nTotal Funds Available \n \nVariance POSIIY~ (Ne@lve) \n \nTaschlng State Approprlatl~n StateGeneral Funds Federal Funds Amer~canRecovety and Reinvestment Act of ZOOS Federal Stsbll8zatlon Funds Other Funds \n \nActual amounts were prepared on a prescribed basis of a w o u n t i n g u l a t demonstrates compl~ancewnh budgetary stetuter and regulsuons of the Safe of G e o g a , w h ~ 1hs a mmprehensive basis of accounting other than generally accepted accountrng pnnclplas \n \n Expendtvres Compared to Budget \n \nVarlance \n \nPoslnve \n \nActual \n \n(Negative) \n \nActual FundsAva~lable \nOuer/(Under) Expenditures \n \nProor Perlod Adjustments \n \nOmer Adjustments \n \nEarly Rom~nan~ ofSurplus \n \nProgram Fund \nBalancer \n \nTransfers \n \nProgram Fund Balances \n \nReserve \n \nSurplus \n \nTotal Fund Balance \n \nUncxpndable Reserves Uncollectlble Account3 Recelvabie lnvemorles \nTotal Fund Balance \n \n (This page left intentionally blank) \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \nYEAR ENDEDJUNE 30,2010 \n \nSCHEDULE \"4\" \n \nTotals per Annual Supplement \n \nPrepaids June 30.2009 \n \nAccruals June 30,2010 June 30.2009 \n \nCompensated Absences June 30,2010 June 30.2009 \n \nAdjustments \n \nShared Services on Jointly Staffed Personnel \n \nClayton State University \n \nAberson. \n \nSusan \n \nwatjen, \n \nRussell \n \nCoastal Georgia Community College \n \nBrock, \n \nCathy \n \nCunningham, Sherri \n \nPeeples, \n \nJoseph \n \nRubager, \n \nTrish \n \nTaylor, \n \nBrenda \n \nThompson, \n \nTreg \n \nTobias. \n \nBonnie \n \nWedge. \n \nCarl \n \nGeorgia Southern University \n \nBerlin. \n \nJames \n \nCraft, \n \nJohn \n \nHeaston, \n \nAmy \n \nKee, \n \nDeanna \n \nMcCartney, \n \nWilliam \n \nSkidaway Institute of Oceanography \n \nGrant, \n \nMaurena \n \nMascolo, \n \nMarc \n \nVerify, \n \nPeter \n \nUniversitySystem of Georgia, Board of Regents \n \nAwong-Taylor, J. \n \nUnidentified Variance \n \nSALARIES \n \n$ \n \n34,875,978 $ \n \nTRAVEL 394,922 \n \n SECTION II AUDITEE'S RESPONSETO PRIOR YEAR FINDINGSAND QUESTIONED COSTS \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \nFINDING CONTROL NUMBER AND STATUS \nPartially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses \nCORRECTIVE ACTION/RESPONSES \nCASH AND CASH EQUIVALENTS GENERAL LEDGER lnadequate Accounting Controls Finding Control Number: FS-524-09-01 \nCash reconciliations are being performed on a regular basis. Many of the systems that feed data into the cash accounts have been evaluated and changed to make the reconciliation process easier. The University has also posted an RFI for banking services to acquire a banking institutions that has more electronic capabilities, allowing us easier access to the data in our account on a more timely and in-depth basis. \nStale dated check processing was reconciled and a new procedure implemented in June 2010. All stale dated checks are being accounted for per Board of Regents and State policy. \nThis finding should be resolved by the end of the second quarter fiscal year 2011. \nCAPITAL ASSETS lnadequate Accounting Procedures for Capital Assets Finding Control Number: FS-524-09-03 \nAs of June 30, 2010, the University had reconciled and balanced all capital asset accounts with the exception of capital leases. We have developed new queries and monthly reconciliations to ensure all capital assets flow correctly into the Asset Management module. By the end of the second quarter fiscal year 2 0 1 1 all asset categories will be reconciled. \nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nNo matters were reported. \n \n SECTION Ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30,2010 \n \nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \n \nCOMMUNICATION OF INTERNAL CONTROL DEFICIENCIES \n \nThe auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. \n \nA deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the Armstrong Atlantic State University's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. \n \nAny identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated December 27, 2010. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: \n \nCASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Accounting Controls Significant Deficiency Finding Control Number: FS-524-10-01 \n \nCondition: \n \nThe accounting procedures of the University were insufficient to provide for adequate controls over Cash and Cash Equivalents. This deficiency was previously reported in finding FS-524-09-01from fiscal year ended June 30, 2009. \n \nCriteria: \n \nAn adequate system of internal controls dictates that bank reconciliations be performed on a monthly basis, and include the following: 1)adequate supporting documentation, 2) reconciling items correctly identified by description, 3) adjustments which are needed are identified and made in a timely manner, and 4) evidence of an effective supervisory review and approval function. \n \nQuestioned Cost: \n \nN/A \n \nInformation: \n \nA review of the bank reconciliations for the Operating and Payroll accounts revealed the following: \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30,2010 \n \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \n \nCASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Accounting Controls Significant Deficiency Finding Control Number: FS-524-10-01 \n \n1) Bank reconciliations were not performed in a timely manner. 2) The June 2010 operating account bank reconciliation presented for \naudit contained an unidentified variance of $4,455. \n3) Adjustments totaling $97,490 were made to the general ledger in June 2010 to clear unidentified variances but the University did not have adequate supporting documentation to support the adjustments. \n4) Reconciling items recurred on the bank reconciliations for an extended period of time, including stale dated checks. \n5) The Banner cash clearing account reported a cash overdraft of $10,171 at June 30, 2010. No supporting documentation for this amount was available. \n \nCause: \n \nUniversity's management failed to implement satisfactory controls to ensure that bank reconciliations were properly performed on a monthly basis and reconciling items were properly identified and corrected within a reasonable amount of time. \n \nEffect: \n \nWithout satisfactory accounting controls and procedures in place, the University could place itself in a position where the potential misappropriation of assets could occur. In addition, the lack of controls could impact reporting of its financial position and results of operations. \n \nRecommendation: \n \nManagement should monitor accounting controls and procedures currently in place, identify weaknesses and implement procedures to strengthen the internal controls over the bank reconciliation process. \n \nGENERAL LEDGER Failure to Adequately Document Adjustments to Fund Sponsored Projects Significant Deficiency Finding Control Number: FS-524-10-02 \n \nCondition: \n \nThe University did not adequately monitor their Sponsored Projects which resulted in invalid accounts receivables and deficit fund balances in the Restricted Funds. To correct these issues, the University made significant journal entries to remove invalid accounts receivables and fund deficit fund balances in Sponsored Projects with State Appropriations and Tuition funds. However, the University was unable to provide adequate supporting documentation for these adjustments. \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30,2010 \n \nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \n \nGENERAL LEDGER Failure to Adequately Document Adjustments to Fund Sponsored Projects Significant Deficiency Finding Control Number: FS-524-10-02 \n \nCriteria: \n \nNCGA Statement 1,paragraph 1,prescribes that an accounting system (1) present fairly and fully disclose its financial position including its financial operation of its funds in accordance with generally accepted accounting principles and (2) demonstrate compliance with finance related legal and contractual provisions. Additional management is responsible for establishing, maintaining and monitoring internal controls, the purpose of which is to ensure the fair presentation of the financial statements. \n \nQuestioned Cost: \n \nN/A \n \nInformation: \n \nIn prior years, the University failed to adequately monitor their Sponsored Projects which resulted in invalid accounts receivable and deficit fund balances for certain Sponsored Projects in Restricted Funds. An examination of restricted grant projects disclosed that $308,333 of State Appropriations and $160,409 of Tuition funds were used to cover the deficit fund balances for certain Sponsored Projects. In addition, $185,723 of invalid accounts receivable were removed from the University's general ledger. The University believes that the deficit fund balances were caused by posting and allocation errors, however, adequate supporting documentation of these errors and the corrections were not provided. \n \nCause: \n \nThe University failed to implement satisfactory accounting controls and monitoring procedures to ensure that activity for restricted grant funds was properly recorded in previous fiscal years. In addition, the University made journal entries to fund the resulting deficit fund balances in restricted grants with State Appropriations and Tuition funds without documenting the posting and allocation errors that caused the deficits. \n \nEffect: \n \nFailure to implement adequate accounting controls and procedures could cause internal reports to management, grantor reimbursement requests and other restricted grant information generated from the ledger to be inaccurate and misleading. In addition, the University could place itself in a position where potential misrepresentation of financial activities could occur. \n \nRecommendation: \n \nThe University should properly monitor the accounting controls and procedures in place relative to restricted grant funds to ensure that all grant activity is properly accounted for by project, charges against Sponsored Projects are made in a timely manner to facilitate prompt billing, and any adjustments are properly documented. \n \nFEDERAL AWARD FINDINGS AND OUESTIONED COSTS \n \nNo matters were reported. \n \n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2008-h2009","title":"Armstrong Atlantic State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2009","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, Chatham County, Savannah, 32.08354, -81.09983"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2008/2009"],"dcterms_description":["Began with: Fiscal year ended June 30, 2009, released in 2010?; ceased with: Fiscal year ended June 30, 2010, released in 2010?","Fiscal year ended June 30, 2009, released in 2010? (online surrogate); title from PDF title page (Georgia Government Publications database, viewed March 23, 2020).","Fiscal year ended June 30, 2010, released in 2010? (online surrrogate) (Georgia Government Publications database, viewed March 23, 2020)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, GA : Georgia. Dept. of Audits and Accounts, 2009"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Armstrong Atlantic State University--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Armstrong Atlantic State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2009"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2008-h2009"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2008-h2009"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"ARMSTRONG ATLANTIC STATE UNIVERSITY \nSAVANNAH, GEORGIA \nREPORT ON AUDIT OF THE FINANCIAL STATEMENTS \nFOR THE FISCAL YEAR ENDED \n. . - C , . \nI 'GeorgiaDepartment of \n. : Audits and Accounts \nRussell W.Uinton \n \n ARMSTRONG ATLANTIC STATE UNIVERSITY - TABLE OF CONTENTS - \nSECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS C STATEMENT OF CASH FLOWS D NOTES TO THE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET WON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND 4 RECONCILIATION OF SALARIES AND TRAVEL \nSECTION I1 CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \n \n SECTION I FINANCIAL \n \n Russell W. Hinton \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENOTF AUDITSAND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \nJanuary 2 1,2010 \n \nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \nand Honorable Linda Bleicken, President Armstrong Atlantic State University \nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \nLadies and Gentlemen: \nWe have audited the accompanying basic financial statements (Exhibits A through D) of Armstrong Atlantic State University, an organizational unit of the State of Georgia, as of and for the year ended June 30,2009. These financial statements are the responsibility of the Armstrong Atlantic State University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \nWe conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \n \n As discussed in Note 1, the financial statements of Armstrong Atlantic State University are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of Armstrong Atlantic State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows of the State of Georgia, in conformity with accounting principles generally accepted in the United States of America. \nIn our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Armstrong Atlantic State University as of June 30,2009, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. \nManagement's Discussion and Analysis is not a past of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit this information and express no opinion on it. \nOur audit was conducted for the purpose of forming an opinion on the basic financial statements of Armstrong Atlantic State University taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \nRespectfully submitted, \n~u$ell W. Hinton, CPA, CGFM State Auditor \n \n REQUIRED SUPPLEMENTARY INFORMATION \n \n                                              "}],"pages":{"current_page":1,"next_page":null,"prev_page":null,"total_pages":1,"limit_value":10,"offset_value":0,"total_count":2,"first_page?":true,"last_page?":true},"facets":[{"name":"type_facet","items":[{"value":"Text","hits":2}],"options":{"sort":"count","limit":16,"offset":0,"prefix":null}},{"name":"creator_facet","items":[{"value":"Georgia. 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