{"response":{"docs":[{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2007-h2008","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2007/2008"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, GA : Georgia. Dept. of Audits and Accounts, 2008"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008"],"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-bs25-b2007-h2008"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2007-h2008"],"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":"STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS \r\nI \r\nSAVANNAH STATE UNIVERSITY SA VANNAH, GEORGIA REPORT ON AUDIT \r\nOF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 \r\nRussell W. Hinton State Auditor \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\n2 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n3 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n4 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n7 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\n1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND \r\n \r\n28 \r\n \r\n2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \r\n \r\n(NON-GAAP BASIS) BUDGET FUND \r\n \r\n29 \r\n \r\n3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING \r\n \r\nSOURCE COMPARED TO BUDGET \r\n \r\n(NON-GAAP BASIS) BUDGET FUND \r\n \r\n30 \r\n \r\n4 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n33 \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n Russell W. Hinton \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 21, 2009 \r\n \r\nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members ofthe Board of Regents of the University System of Georgia \r\nand Honorable Earl G. Yarbrough, Sr., President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying basic financial statements (Exhibits A through D) of Savannah State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2008. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\nWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \r\nAs discussed in Note 1, the financial statements ofSavannah 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 Savannah State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State ofGeorgia, in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n08ARL-62 \r\n \r\n In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position ofSavannah State University as ofJune 30, 2008, 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. \r\nManagement's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it. \r\nOur audit was conducted for the purpose offorming an opinion on the basic financial statements of Savannah State University taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes ofadditional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \r\nRespectfully submitted, \r\n~~... QQ.w.-a:\\-~ \r\nRussell W. Hinton, CPA, CGFM State Auditor \r\nRWH:as 08ARL-62 \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n SAVANNAH STATE UNIVERSITY Management's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State University is one of the 35 institutions of higher education of the University System of Georgia. Chartered by the State of Georgia in 1890, as a department of the State University for the education and training of Negro students, Savannah State University now serves a diverse student population as a senior university of the University System of Georgia. The University serves a primarily African-American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races. \r\n \r\nSavannah State University, located in a coastal, urban, port city setting, serves residential and commuter students from diverse educational, geographical, and racial backgrounds. In a beautiful and unique setting of a live oak forest next to a salt marsh estuary, the University is well situated for the study of commercial, technological, environmental and urban issues. The University's mission is consistent with the core missions of the University System of Georgia and the senior universities in the System. \r\n \r\nThe University's mission is to graduate students prepared to perform at higher levels of economic productivity, social responsibility, and excellence in their chosen fields of endeavor in a changing global community. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Sciences and Technology, which lead to baccalaureate, and master's degrees. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 3,000 students each year. The institution has grown over the last several fiscal years as shown by the comparison numbers that follow. \r\n \r\nFaculty \r\n \r\nStudents (Headcount) \r\n \r\nStudents \r\n(FTE) \r\n \r\nFiscal Year 2008 Fiscal Year 2007 Fiscal Year 2006 \r\n \r\n136 \r\n \r\n3,169 \r\n \r\n2,950 \r\n \r\n141 \r\n \r\n3,241 \r\n \r\n3,065 \r\n \r\n118 \r\n \r\n3,091 \r\n \r\n2,853 \r\n \r\nOverview ofthe Financial Statements and Financial Analysis \r\n \r\nSavannah State University is proud to present its financial statements for fiscal year 2008. 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 2008 and fiscal year 2007. \r\n \r\n- 1- \r\n \r\n Statement ofNet Assets \r\n \r\nThe Statement of Net Assets presents the assets, liabilities, and net assets of the University as 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 Savannah 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 Financial Statements. \r\n \r\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. \r\n \r\nFinally, 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. \r\n \r\nStatement of Net Assets, Condensed \r\n \r\nJune 30, 2008 \r\n \r\nJune 30, 2007 \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\n \r\n$ 9,368,193 84,241,090 3,769,899 \r\n \r\n$ 8,584,873 52,722,785 3,417,316 \r\n \r\nTotal Assets \r\n \r\n$ 97,379,182 \r\n \r\n$ 64,724,974 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n$ 3,399,136 29,707,437 \r\n \r\n$ 2,521,155 668,199 \r\n \r\nTotal Liabilities \r\n \r\n$ 33,106,573 \r\n \r\n$ 3,189,354 \r\n \r\nNet Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted \r\n \r\n$ 55,085,635 2,586,254 1,411,771 5,188,949 \r\n \r\n$ 52,722,785 2,305,790 1,261,120 5,245,925 \r\n \r\nTotal Net Assets \r\n \r\n$ 64,272,609 \r\n \r\n$ 61,535,620 \r\n \r\n- 11 - \r\n \r\n The total assets of the institution increased by $32,654,208. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $31,518,305 in the category of Capital Assets, Net. The increase is directly due to asset acquisitions, which included a capital lease for campus housing. \r\n \r\nThe total liabilities for the year increased by $29,917,219 due primarily to a capital lease liability incurred. The combination of the increase in total assets of $32,654,208 and the increase in total liabilities of $29,917,219 yields an increase in total net assets of $2,736,989. The increase in total net assets is primarily in the category of Invested in Capital Assets, Net of Debt, in the amount of $2,362,850. \r\n \r\nStatement ofRevenues, Expenses and Changes in Net Assets \r\n \r\nChanges in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. \r\n \r\nStatement of Revenues, Expenses and Changes in Net Assets, Condensed \r\n \r\nJune 30, 2008 \r\n \r\nJune 30, 2007 \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$ 30,793,401 51,902,854 \r\n \r\n$ 28,811,878 47,275,338 \r\n \r\nOperating Loss \r\n \r\n$ -21,109,453 \r\n \r\n$ -18,463,460 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n20,169,847 \r\n \r\n18,928,239 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \r\n \r\n$ -939,606 \r\n \r\n$ \r\n \r\n464,779 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n3,676,595 \r\n \r\n3,527,228 \r\n \r\nIncrease (Decrease) in Net Assets \r\n \r\n$ 2,736,989 \r\n \r\n$ 3,992,007 \r\n \r\nNet Assets at Beginning of Year \r\n \r\n61,535,620 \r\n \r\n57,543,613 \r\n \r\nNet Assets at End of Year \r\n \r\n$ 64,272,609 \r\n \r\n$ 61,535,620 \r\n \r\n- iii - \r\n \r\n The Statement of Revenues, Expenses and Changes in Net Assets reflects a loss before other revenues and expenses, but a positive increase in net assets. Although operating revenues increased $1,981,523 or 6.9% and nonoperating revenues increased $1,681,711 or 8.9%, operating expenses increased $4,627,516 or 9.8%. The net loss before Capital Grants and Gifts was $-939,606, a decrease in net margin of $1,404,385 over prior year. This loss was offset by capital gifts and grants in the amount of $3,676,595, creating an increase in net assets of $2,736,989. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows: \r\nRevenue By Source For The Years Ended June 30, 2008 and June 30, 2007 \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services Auxiliary Other \r\nTotal Operating Revenue \r\nNonoperating Revenue State Appropriations Gifts Investment Income Other \r\nTotal Nonoperating Revenue \r\nCapital Grants and Gifts State \r\nTotal Revenues \r\n \r\nJune 30, 2008 \r\n$ 6,365,449 13,801,927 348,107 10,199,247 78 671 \r\n$ 30,793,401 \r\n$ 18,892,885 1,235,059 517,761 -35 755 \r\n$ 20,609,950 \r\n$ 3,676,595 \r\n$ 5510791946 \r\n \r\nJune 30, 2007 \r\n$ 5,744,016 14,498,032 90,243 8,323,924 155,663 \r\n$ 28,811,878 \r\n$ 17,906,362 493,243 530,524 -1 890 \r\n$ 18,928,239 \r\n$ 3,527,228 \r\n$ 5112671345 \r\n \r\n- IV - \r\n \r\n Expenses (By Functional Classification) For The Years Ended June 30, 2008 and June 30, 2007 \r\n \r\nJune 30, 2008 \r\n \r\nJune 30, 2007 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Depreciation \r\n \r\n$ 14,703,589 1,470,687 2,219,032 4,927,690 3,163,252 7,465,528 6,836,889 2,325,150 8,791,037 \r\n \r\n$ 13,817,068 1,221,386 2,131,159 4,710,079 2,887,394 7,721,673 4,279,048 1,945,002 7,479,364 1,083,165 \r\n \r\nTotal Operating Expenses \r\n \r\n$ 51,902,854 \r\n \r\n$ 47,275,338 \r\n \r\nNonoperating Expenses Interest Expense (Capital Assets) \r\n \r\n440,103 \r\n \r\nTotal Expenses \r\n \r\n$ 52,342.957 \r\n \r\n$ 47,275.338 \r\n \r\nOperating revenues increased by $1,981,523 in fiscal 2008. Although Tuition and Fees included a 10.8% average increase and Auxiliary revenues increased 22.5%, revenues decreased in Grants and Contracts and Other categories. \r\n \r\nThe Auxiliary revenue increase of $1,875,323 is a result of the changing environment of residential life on the University's campus. February 2008, the University entered into a capital lease for University Village. Therefore, student housing fees are collected through the campus and a fee is paid to American Campus to continue to manage the facility until such time that a housing contract may be sent for proposal and accepted. University Village rents for fiscal year 2008, without consideration of fines and fee waivers, was $1,897,881. \r\n \r\nNonoperating revenues increased by $1,681,711 for the year primarily due to an increase of $986,523 in State Appropriations and an increase of $741,816 in gift revenue. \r\n \r\nThe compensation and employee benefits category increased by $2,013,568 and was primarily affected by faculty, academic and institutional support, research, and auxiliary wage increases, as well as an increase in employee benefits of $619,317 or 10.3%. The increase primarily reflects merit increases; personnel increases in academic support, institutional support, and auxiliary; and the increased cost of health insurance for the employees of the institution. \r\n \r\nDepreciation expense increased $707,252 over the prior year due directly to the acquisition of University Village housing and various other major assets (i.e., two new buses acquired in fiscal year 2008). The increase in interest expense was a direct result of the capital lease. \r\n \r\n- V- \r\n \r\n Utilities increased by $285,397 during the past year. The increase was primarily due to water, which increased $274,273 over the prior year. \r\n \r\nStatement ofCash Flows \r\n \r\nThe final statement presented by the Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \r\n \r\nCash Flows for the Years Ended June 30, 2008 and June 30, 2007, Condensed \r\n \r\nJune 30, 2008 \r\n \r\nJune 30, 2007 \r\n \r\nCash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities \r\n \r\n$ -17,595,173 20,309,941 -2,251,593 205,769 \r\n \r\n$ -16,666,913 18,264,497 -365,474 324,020 \r\n \r\nNet Change in Cash Cash, Beginning of Year \r\n \r\n$ \r\n \r\n668,944 \r\n \r\n4,734,809 \r\n \r\n$ 1,556,130 3,178,679 \r\n \r\nCash, End of Year \r\n \r\n$ 5,403.753 \r\n \r\n$ 4,734.809 \r\n \r\nCapital purchases for fiscal year 2008 were $5,489,938, as compared to $3,727,005 prior year. Additionally, the University spent $440,103 in interest expense related to a capital lease purchase. \r\n \r\nCapital Assets \r\n \r\nThe University had two significant capital asset additions for facilities in fiscal year 2008. The Hill Hall renovation was completed at a cost of $3,407,923, which was funded by GSFIC, and will reopen August, 2008. Additionally, the University entered into a capital lease for University Village Housing in the amount of $29,229,205. Other renovations funded by the GSFIC included $378,678 for the Drew Griffith Science Building. \r\n \r\nIncluded in the major equipment purchases for the University were two buses at a total cost of $398,000; five vehicles (primarily for public safety); equipment for the surveying lab; computer hardware; and various other equipment items essential for on-going operations. \r\n \r\n- vi - \r\n \r\n For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements. Long-Term Liabilities Savannah State University had Long-Term Liabilities of $30,466,225 of which $758,788 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. Even with a relatively flat funded year, the University was able to generate a modest increase in Net Assets. The University anticipates the current fiscal year will be challenging with budget cuts on the horizon at the state level, but will continue to maintain a close watch over resources providing the University with the flexibility to react to internal and external situations that may develop. \r\nEarl G. Yarbrough, Sr., Ph.D., President Savannah State University \r\n- Vll - \r\n \r\n BASIC FINANCIAL STATEMENTS - 1- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30, 2008 \r\nASSETS \r\nCurrent Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items \r\nTotal Current Assets \r\nNoncurrent Assets Noncurrent Cash Short-Term Investments Investments Notes Receivable, Net Capital Assets, Net (Note 6) \r\nTotal Noncurrent Assets \r\nTotal Assets \r\nLIABILITIES \r\nCurrent Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue (Note 7) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences \r\nTotal Current Liabilities \r\nNoncurrent Liabilities Lease Purchase Obligations Compensated Absences \r\nTotal Noncurrent Liabilities \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for: \r\nNonexpendable Expendable Unrestricted \r\nTotal Net Assets \r\nThe notes to the financial statements are an integral part of this statement. \r\n-2- \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ \r\n \r\n5,177,617 \r\n \r\n408,276 \r\n \r\n1,181,568 2,507,893 \r\n55,548 37,291 \r\n \r\n$ \r\n \r\n9,368,193 \r\n \r\n$ \r\n \r\n226,136 \r\n \r\n1,613,623 \r\n \r\n1,061,970 \r\n \r\n868,170 \r\n \r\n84,241,090 \r\n \r\n$ 88,010,989 \r\n \r\n$ 97,379,182 \r\n \r\n$ \r\n \r\n569,600 \r\n \r\n246,136 \r\n \r\n397,980 \r\n \r\n389,879 \r\n \r\n1,036,753 \r\n \r\n173,346 \r\n \r\n585,442 \r\n \r\n$ \r\n \r\n3,399,136 \r\n \r\n$ 28,982,109 725,328 \r\n$ 29,707,437 \r\n$ 33,106,573 \r\n \r\n$ 55,085,635 \r\n2,586,254 1,411,771 5,188,949 \r\n \r\n$ 64,272,609 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nEXHIBIT\"B\" \r\n \r\nOPERATING REVENUES \r\nStudent Tuition and Fees Less: Scholarship Allowances \r\nGrants and Contracts Federal State Other \r\nSales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises \r\nResidence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\nNONOPERATING REVENUES (EXPENSES) \r\nState Appropriations Gifts Interest and Other Investment Income Interest Expense Other Nonoperating Revenues (Expenses) \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\nCapital Grants and Gifts State \r\nIncrease (Decrease) in Net Assets \r\nNet Assets - Beginning of Year \r\nNet Assets - End of Year \r\nThe notes to the financial statements are an integral part of this statement. \r\n-3- \r\n \r\n$ \r\n \r\n11,750,281 \r\n \r\n-5,384,832 \r\n \r\n13,315,557 107,383 378,987 348,107 5,004 \r\n \r\n4,464,020 108,770 \r\n3,332,030 5,722 \r\n413,574 1,856,592 \r\n18,539 73667 \r\n \r\n$ 30,793,401 \r\n \r\n$ \r\n \r\n8,343,305 \r\n \r\n13,486,063 \r\n \r\n6,627,341 \r\n \r\n368,040 \r\n \r\n567,919 \r\n \r\n3,826,020 \r\n \r\n2,995,775 \r\n \r\n12,563,153 \r\n \r\n3,125,238 \r\n \r\n$ 51,902,854 \r\n \r\n$ -21 109 453 \r\n \r\n$ \r\n \r\n18,892,885 \r\n \r\n1,235,059 \r\n \r\n517,761 \r\n \r\n-440,103 \r\n \r\n-35 755 \r\n \r\n$ \r\n \r\n20,169,847 \r\n \r\n$ \r\n \r\n-939,606 \r\n \r\n3,676,595 \r\n \r\n$ \r\n \r\n2,736,989 \r\n \r\n61,535,620 \r\n \r\n$ =====64=!'=27=2;!,;,6=0=9 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2008 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) \r\nNet Cash Provided (Used) by Operating Activities \r\nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes \r\nNet Cash Flows Provided (Used) by Noncapital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases \r\nNet Cash Provided (Used) by Capital and Related Financing Activities \r\nCASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments \r\nNet Cash Provided (Used) by Investing Activities \r\nNet Increase (Decrease) in Cash \r\nCash and Cash Equivalents - Beginning of Year \r\nCash and Cash Equivalents - End of Year \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ \r\n \r\n5,932,710 \r\n \r\n14,173,243 \r\n \r\n348,107 \r\n \r\n-22,949,915 \r\n \r\n-21,591,367 \r\n \r\n-3,826,020 \r\n \r\n-49,300 \r\n \r\n4,990,726 108,770 \r\n3,213,671 5,722 \r\n407,875 1,853,280 -152,460 \r\n-60 215 \r\n \r\n$ -17 595 173 \r\n \r\n$ \r\n \r\n18,892,885 \r\n \r\n181,998 \r\n \r\n1,235,058 \r\n \r\n$ \r\n \r\n20,309,941 \r\n \r\n$ \r\n \r\n3,676,595 \r\n \r\n75,603 \r\n \r\n-5,489,938 \r\n \r\n-73,750 \r\n \r\n-440,103 \r\n \r\n$ \r\n \r\n-2,251,593 \r\n \r\n$ \r\n \r\n420,063 \r\n \r\n625,832 \r\n \r\n-840 126 \r\n \r\n$ \r\n \r\n205 769 \r\n \r\n$ \r\n \r\n668,944 \r\n \r\n4,734 809 \r\n \r\n$ ===5,=40=3=,7=5=3 \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2008 \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \r\nOperating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash \r\nProvided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences \r\nNet Cash Provided (Used) by Operating Activities \r\nNONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income \r\n \r\nEXHIBIT\"C\" \r\n$ -21, 109,453 \r\n3,125,238 -92,653 -10,037 -17,534 -49,300 736,612 51,643 \r\n-327,070 97 381 \r\n$ -17,595,173 \r\n$ ====2=9,=22=9=,2=0=5 $ ====10=8=0=7=1 \r\n \r\nThe notes to the financial statements are an integral part of this statement. -5- \r\n \r\n (This page left intentionally blank) \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS Savannah 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. \r\nREPORTING ENTITY Savannah 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 Savannah State University as a separate reporting entity. \r\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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah 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 Reporting Standards. \r\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 16, for additional information. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis/or State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFINANCIAL STATEMENT PRESENTATION Generally 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. \r\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 intra-University transactions have been eliminated. \r\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. \r\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. \r\nSHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 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. \r\nINVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. 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 Balanced Income Fund is included under Investments. \r\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 \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nACCOUNTS RECEIVABLE 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. \r\nINVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\") basis. \r\nNONCURRENT CASH AND INVESTMENTS 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. \r\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 is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and 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. \r\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. \r\nDEPOSITS Deposits represent good faith deposits from students to reserve housing assignments m a University residence hall. \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\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 received from grant and contract sponsors that have not yet been earned. \r\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. Savannah State University had accrued liability for compensated absences in the amount of $1,213,388 as of July 1, 2007. For fiscal year 2008, $932,347 was earned in compensated absences and employees were paid $834,965, for a net increase of $97,382. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $1,310,770. \r\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. \r\nNET ASSETS The University's net assets are classified as follows: \r\nInvested in capital assets, net ofrelated 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. \r\nRestricted net assets - 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. \r\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. \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nNET ASSETS Expendable Restricted Net Assets include the following: \r\n \r\nRestricted - E \u0026 G and Other Organized Activities Federal Loans Institutional Loans Term Endowments \r\n \r\n$ 199,565 875,266 21,465 315,475 \r\n \r\nTotal Restricted Expendable \r\n \r\n$ 1,411,771 \r\n \r\nUnrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $88,778.05. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\n \r\nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \r\n \r\nR\u0026RReserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted \r\n \r\n$ 2,248,542 2,795,267 49,864 95,276 \r\n \r\nTotal Unrestricted Net Assets \r\n \r\n$ 5,188,949 \r\n \r\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. \r\n \r\nINCOME TAXES Savannah 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. \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria: \r\nOperating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. \r\nNonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\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. \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\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: \r\n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nDEPOSITS 3. Bonds of any public authority created by the laws of the State of Georgia, providing that \r\nthe statute that created the authority authorized the use of the bonds for this purpose. \r\n \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n \r\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 Mortgage Association. \r\n \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\n \r\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. \r\n \r\nAt June 30, 2008, the carrying value of deposits was $7,424,275 and the bank balance was $8,696,037. Of the University's deposits, $8,368,834 was uninsured. Of these uninsured deposits, $8,368,834 were collateralized with securities held by the financial institution's trust department or agent in the University's name. \r\n \r\nINVESTMENTS At June 30, 2008, the carrying value of the University's investments was $1,061,970, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows: \r\n \r\nInvestments Pools Board of Regents Balanced Income Fund \r\n \r\n$ 1,061.970 \r\n \r\nThe Board of Regents Investment 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 Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nINVESTMENTS \r\n \r\nAdditional information on the Board of Regents Investment Pool is disclosed in the audited \r\n \r\nFinancial Statements of the Board of Regents of the University System of Georgia - University \r\n \r\nSystem Office (oversight unit). This audit can be obtained from the Georgia Department of \r\n \r\nAudits \r\n \r\nEducation Audit Division or on their web site at \r\n \r\nhttp://www.audits.state.ga.us/intemet/searchRpts.html. \r\n \r\nInterest Rate Risk Interest 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. \r\n \r\nThe Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $1,061,970 in the Balanced Income Fund, $682,846 is invested in debt securities. \r\n \r\nCredit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk. \r\n \r\nNOTE 3: ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the following at June 30, 2008: \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Other \r\n \r\n$ 585,260 631,898 \r\n1,181,568 1,988,026 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n$ 4,386,752 697,291 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 3,689,461 \r\n \r\nNOTE 4: INVENTORIES \r\n \r\nInventories consisted of the following at June 30, 2008: \r\n \r\nPhysical Plant Other \r\n \r\n$ \r\n \r\n50,854 \r\n \r\n4 694 \r\n \r\nTotal \r\n \r\n$====55-,5==4==8 \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. 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. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was $0. \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nFollowing are the changes in capital assets for the year ended June 30, 2008: \r\n \r\nCapital Assets, Not Being Depreciated: Land Construction Work-In-Progress \r\nTotal Capital Assets Not Being Depreciated \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections \r\nTotal Assets Being Depreciated \r\nLess: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections \r\nTotal Accumulated Depreciation \r\nTotal Capital Assets, Being Depreciated, Net \r\nCapital Assets, Net \r\n \r\nBeginning Balance July 1, 2007 \r\n$ 575,975 444,189 \r\n$ 1,020,164 \r\n$ 68,976,721 2,520,259 7,740,282 0 6,818,959 55,285 \r\n$ 86,111,506 \r\n$ 22,424,877 1,368,843 5,248,359 0 5,358,247 8,559 \r\n$ 34,408,885 \r\n$ 51,702,621 \r\n$ 52 722 785 \r\n \r\nAdditions \r\n$ 3,671,145 \r\n$ 3,671,145 \r\n$ 4,868,267 812,312 \r\n29,229,205 253,548 \r\n$ 35,163,332 \r\n$ 1,653,601 97,634 \r\n712,735 401,776 258,110 \r\n1,382 $ 3,125,238 \r\n$ 32,038,094 \r\n$ 35.709.239 \r\n \r\nReductions $ 4,115,334 $ 4,115,334 \r\n \r\n$ \r\n \r\n75,600 \r\n \r\n7,098 \r\n \r\n$ \r\n \r\n82,698 \r\n \r\n$ \r\n \r\n7,098 \r\n \r\n$ \r\n \r\n7 098 \r\n \r\n$ \r\n \r\n75,600 \r\n \r\n$ 4 190 934 \r\n \r\nEnding Balance June 30, 2008 \r\n$ 575,975 0 \r\n$ 575,975 \r\n$ 73,844,988 2,520,259 8,476,994 \r\n29,229,205 7,065,409 55,285 \r\n$ 121,192,140 \r\n$ 24,078,478 1,466,477 5,961,094 401,776 5,609,259 9 941 \r\n$ 37,527,025 \r\n$ 83,665,115 \r\n$ 84.24).090 \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nDeferred revenue consisted of the following at June 30, 2008: \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nOther Deferred Revenue NOTE 8: LONG-TERM LIABILITIES \r\n \r\n$====3==89~,8~7==9 \r\n \r\nLong-term liability activity for the year ended June 30, 2008 was as follows: \r\n \r\nLeases Lease Obligations \r\nOther Liabilities Compensated Absences \r\nTotal Long-Term Obligations \r\n \r\nBeginning Balance Julx I, 2007 \r\n \r\n$ \r\n \r\n0 \r\n \r\n1,213,388 \r\n$ 1,213.388 \r\n \r\nAdditions $ 29,229,205 \r\n932,347 \r\n$ 30 161 552 \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2008 \r\n \r\n$ \r\n \r\n73,750 $ 29,155,455 \r\n \r\n834,965 \r\n \r\n1,310,770 \r\n \r\n$ 908 715 $ 30.466.225 \r\n \r\nCurrent Portion \r\n$ 173,346 \r\n585,442 \r\n$ 758.788 \r\n \r\nNOTE9: SIGNIFICANT COMMITMENTS \r\n \r\nIn February 2008, Savannah State University entered into a capital lease of $24,586,826 at 4.655 percent with the SSU Foundation Real Estate Ventures, LLC. Under the capital lease agreement, the University will lease a 742-bed housing facility and adjacent buildings situated on existing land acquired by the SSU Foundation Real Estate Ventures, LLC. The twenty-five-year lease for this facility commences August 2009 and expires June 2033, with payments due the 15th of month each February, May, August, and November. The 0.275 acre of land on which these buildings are located (also known as 4750 LaRoche Avenue) is part of the capital lease agreement. This capital lease is not reflected in the accompanying basic financial statements. The University did not have any significant unearned, outstanding, construction or renovation contracts. \r\n \r\nNOTE 10: LEASE OBLIGATIONS \r\n \r\nSavannah State University is obligated under various operating leases for the use of equipment, but has no operating leases for real property (land, buildings, and office facilities). The University is obligated under a capital lease for the acquisition of real property. \r\n \r\nCAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2033. During the year, the University paid the SSU Foundation Real Estate Ventures, LLC $416,037 (principal of $73,750, interest of $276,614, and rent expense of $65,673) for the capital lease related to University Village. At \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 10: LEASE OBLIGATIONS \r\n \r\nCAPITAL LEASES year-end, the University recorded interest accrual on this same lease in the amount of $163,489, for total interest recorded of $440,103 for fiscal year 2008. Total principal paid on capital leases was $73,750 for the fiscal year ended June 30, 2008. The interest rate was 4.486 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008: \r\n \r\nBuildings \r\n \r\n$ 28,827.429 \r\n \r\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. \r\n \r\nSavannah State University Foundation, Inc., a Georgia nonprofit corporation (the \"Foundation\") adopted resolutions authorizing the organization of SSU Foundation Real Estate Ventures, LLC (the \"LLC\"), a Georgia limited liability company of which the Foundation is the sole member. Savannah State University has one capital lease with the LLC in the current fiscal year. In February 2008, Savannah State University entered into a capital lease of $29,229,205 at 4.486 percent with the LLC. Under the agreement, the University leases a 660-bed housing facility, University Village, for a twenty-five-year period that began February 2008 and expires June 2032, with payments due the 15th of month each February, May, August, and November. The 13.768 acres of land on which this building is located is owned by the Board of Regents, and was leased to the LLC for $10 per year, payable in advance upon commencement of the lease. \r\n \r\nOPERATING LEASES Savannah State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2010. 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. \r\n \r\nSavannah State University has two operating leases. The Xerox lease for copy machines requires a monthly minimum lease payment in the amount of $26,182 and expires at the end of September, 2008. The University also has a lease agreement with LADCO Leasing for the use of credit card machines, which carries a minimum lease payment of $188. \r\n \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 10: LEASE OBLIGATIONS \r\n \r\nFUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows: \r\n \r\nReal Property and Equipment \r\n \r\nCapital \r\n \r\nOperating \r\n \r\nLeases \r\n \r\nLeases \r\n \r\nYear Ending June 30: 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024-2028 2029 -2033 \r\n \r\n$ 1,478,371 $ 1,522,723 1,568,404 1,614,914 1,663,280 9,090,869 \r\n10,535,487 12,213,518 11,157,220 \r\n \r\n80,802 2,256 \r\n \r\nTotal Minimum Lease Payments \r\n \r\n$ 50,844,786 $ \r\n \r\n83.058 \r\n \r\nLess: Interest \r\n \r\n21,689,331 \r\n \r\nPrincipal Outstanding \r\n \r\n$ 29,155.455 \r\n \r\nSavannah State University's fiscal year 2008 expense for rental of real property and equipment under operating leases was $289,981. \r\n \r\nNOTE 11: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah State University participates in the Teachers Retirement System of Georgia {TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or from the Georgia Department of Audits and Accounts. \r\n \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nFunding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2008 \r\n \r\n100% \r\n \r\n$ 1,286,574 \r\n \r\n2007 \r\n \r\n100% \r\n \r\n$ 1,244,360 \r\n \r\n2006 \r\n \r\n100% \r\n \r\n$ 1,147,046 \r\n \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah 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. \r\n \r\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. All other members are \"new plan\" members subject to the modified plan provisions. \r\n \r\nUnder both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 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. \r\n \r\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. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution 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. \r\n \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\n \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description In 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. \r\n \r\nThe ERS issues a financial report each fiscal year, which may be obtained through ERS. \r\n \r\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, 2008, for employees covered by ERS was $101,500. The University's total payroll for all employees was $21,829,368. \r\n \r\nFor the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee. \r\n \r\nUnder the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees. \r\n \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as \r\n \r\nfollows: \r\n \r\nPercentage \r\n \r\nRequired \r\n \r\nFiscal Year \r\n \r\nContributed \r\n \r\nContribution \r\n \r\n2008 2007 2006 \r\n \r\n100% 100% 100% \r\n \r\n$ 10,566 $ 3,383 $ 4,164 \r\n \r\nActuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS. \r\n \r\n- 20- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\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. 4721-1 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. \r\nFunding Policy Savannah State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustee in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the 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. \r\nSavannah State University and the covered employees made the required contributions of $453,784 (8.13% or 8.15%) and $275,923 (5%), respectively. \r\nAIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah 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. \r\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 \r\n- 21 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nBenefits 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. \r\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. \r\nTotal contributions made by employees during fiscal year 2008 amounted to $28,292 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nThe Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. \r\nNOTE 12: RISK MANAGEMENT \r\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. Savannah 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 selfinsured 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. \r\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 \r\n-22- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 12: RISK MANAGEMENT \r\nlosses 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. Savannah 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. \r\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. \r\nNOTE 13: CONTINGENCIES \r\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 Savannah State University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against Savannah 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, 2008. \r\nNOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, 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 \r\n- 23 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\ninsurance 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. \r\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 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. \r\nAs of June 30, 2008, there were 191 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Savannah State University recognized as incurred $922,999 of expenditures, which was net of $384,331 of participant contributions. \r\nNOTE 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\nThe University's operating expenses by functional classification for fiscal year 2008 are shown below: \r\n \r\n- 24- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2008 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstruction \r\n \r\nFunctional Classification \r\n \r\nResearch \r\n \r\nPublic Service \r\n \r\nAcademic Su1mort \r\n \r\nStudent Services \r\n \r\n$ 8,060,146 2,099,717 2,499,343 \r\n98,287 \r\n408,777 82,675 \r\n1,385,797 68 847 \r\n$ 14 703 589 \r\n \r\n$ 144,387 272,875 75,059 \r\n26,886 \r\n305,237 8,015 \r\n622,788 15 440 \r\n$ l 470 687 \r\n \r\n$ \r\n \r\n48,501 \r\n \r\n1,009,509 \r\n \r\n219,981 \r\n \r\n38,626 \r\n \r\n133,037 12,555 \r\n \r\n754,249 2 574 \r\n \r\n$ 2 219 032 \r\n \r\n$ \r\n \r\n88,771 \r\n \r\n2,504,082 \r\n \r\n623,622 \r\n \r\n127,923 \r\n \r\n25,540 49,218 \r\n \r\n1,154,135 354,399 \r\n \r\n$ 4 927 690 \r\n \r\n$ \r\n \r\n1,500 \r\n \r\n1,680,333 \r\n \r\n472,510 \r\n \r\n60,518 \r\n \r\n17,200 32,424 \r\n \r\n884,488 14 279 \r\n \r\n$ 3 163 252 \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstitutional Su1mort \r\n \r\nFunctional Classification \r\n \r\nPlant \r\n \r\nOperations and Scholarships \r\n \r\nAuxiliary \r\n \r\nMaintenance and Fellowshi11s Entemrises \r\n \r\nTotal Operating Ex11enses \r\n \r\n$ 3,500,767 1,984,677 368,040 109,422 \r\n61,675 \r\n1,296,316 144,631 \r\n$ 7 465 528 \r\n \r\n$ 1,093,777 387,266 -254,294 6,177 \r\n2,542,937 \r\n1,513,936 1,547,090 \r\n$ 6 836 889 \r\n \r\n$ 2,324,150 1,000 \r\n$ 2 325 150 \r\n \r\n$ 1,325,003 364,883 254,294 100,080 \r\n612,079 206,276 \r\n4,950,444 977 978 \r\n$ 8 791 037 \r\n \r\n$ 8,343,305 13,486,063 6,627,341 368,040 567,919 \r\n3,826,020 2,995,775 \r\n12,563,153 3,125,238 \r\n$ 51 902 854 \r\n \r\nNOTE 16: AFFILIATED ORGANIZATIONS \r\n \r\nIn accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, Savannah State University Foundation and Savannah State University Student Athletic Fund Association have been determined to be legally separate, tax exempt organizations whose activities primarily support Savannah State University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, Savannah State University has not included financial activity for Savannah State University Foundation and Savannah State University Student Athletic Fund Association in these financial statements. \r\n \r\n- 25 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SUPPLEMENTARY INFORMATION \r\n- 27 - \r\n \r\n SAVANNAH STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) \r\nBUDGET FUND JUNE 30, 2008 \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable \r\nFederal Financial Assistance Other Prepaid Expenditures Inventories \r\nTotal Assets \r\nLIABILITIES AND FUND EQUITY \r\nLiabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue \r\nTotal Liabilities \r\nFund Balances Reserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Unreserved Surplus \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\nSCHEDULE \"1\" \r\n \r\n$ \r\n \r\n1,173,072.93 \r\n \r\n8,275.65 \r\n \r\n1,181,567.63 1,932,279.19 \r\n37,099.90 55,548.49 \r\n \r\n$ ====4=,3=87=,=84=3=.7=9= \r\n \r\n$ \r\n \r\n235,313.28 \r\n \r\n2,143,624.84 \r\n \r\n63,314.16 \r\n \r\n389,878.60 \r\n \r\n$ \r\n \r\n2,832,130.88 \r\n \r\n$ \r\n \r\n110,832.61 \r\n \r\n509,384.37 \r\n \r\n177,751.33 \r\n \r\n67,283.72 \r\n \r\n402,170.83 \r\n \r\n49,863.99 \r\n \r\n149,648.01 \r\n \r\n88,778.05 \r\n \r\n$ \r\n \r\n1,555,712.91 \r\n \r\n$ ==4='=38=7=,8=43==79= \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n- 28 - \r\n \r\n SAVANNAH STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) \r\nBUDGET FUND YEAR ENDED JUNE 30, 2008 \r\n \r\nSCHEDULE \"2\" \r\n \r\nREVENUES \r\nState Appropriation State General Funds \r\nOther Funds \r\nTotal Revenues \r\nCARRY-OVER FROM PRIOR YEAR \r\nTransfer from Reserved Fund Balance \r\nTotal Funds Available \r\nEXPENDITURES \r\nSpecial Funding Initiative Teaching \r\nTotal Expenditures \r\nExcess of Funds Available over Expenditures \r\nFUND BALANCE JULY 1 \r\nReserved Unreserved \r\nADJUSTMENTS \r\nPrior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned \r\nto Board of Regents - University System Office Year Ended June 30, 2007 \r\nPrior Year Reserved Fund Balance Included in Funds Available \r\nFUND BALANCE JUNE 30 \r\n \r\nBUDGET \r\n \r\nACTUAL \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ \r\n \r\n19,262,450.00 $ \r\n \r\n19,262,450.00 $ \r\n \r\n30 416 385.00 \r\n \r\n29,981,138.92 \r\n \r\n$ \r\n \r\n49,678,835.00 $ \r\n \r\n49,243,588.92 $ \r\n \r\n0.00 -435 246.08 \r\n-435,246.08 \r\n \r\n0.00 \r\n \r\n1 253 482.78 \r\n \r\n$ \r\n \r\n49,678,835.00 $ \r\n \r\n50 497 071. 70 $ \r\n \r\n1 253 482.78 818 236.70 \r\n \r\n$ \r\n \r\n466,038.00 $ \r\n \r\n462,177.49 $ \r\n \r\n49,212,797.00 \r\n \r\n49,063,722.03 \r\n \r\n$ \r\n \r\n49 678 835.00 $ \r\n \r\n49,525,899.52 $ \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n971,172.18 $ \r\n \r\n3,860.51 149 074.97 \r\n152 935.48 \r\n971 172.18 \r\n \r\n1,749,245.46 369,564.64 \r\n \r\n318,799.63 -230,021.58 \r\n \r\n-369,564.64 -1,253,482. 78 \r\n \r\n$ \r\n \r\n1 555 712.91 \r\n \r\nSUMMARY OF FUND BALANCE \r\nReserved Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over \r\nTotal Reserved \r\nUnreserved Surplus \r\n \r\n$ \r\n \r\n110,832.61 \r\n \r\n509,384.37 \r\n \r\n177,751.33 \r\n \r\n67,283.72 \r\n \r\n402,170.83 \r\n \r\n49,863.99 \r\n \r\n149 648.01 \r\n \r\n$ \r\n \r\n1,466,934.86 \r\n \r\n88 778.05 \r\n \r\nTotal Fund Balance \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n- 29 - \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET \r\n(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008 \r\n \r\nSpecial Funding Initiatives \r\nState Appropriation State General Funds \r\n \r\nOriginal Appropriation \r\n \r\nFinal Budget \r\n \r\nCurrent Year Revenues \r\n \r\nFunds Available Comeared to Budget \r\n \r\nPrior Year Carry-Over \r\n \r\nTotal Funds Available \r\n \r\nVariance Positive (Negative) \r\n \r\n$ \r\n \r\n466 038.00 $ \r\n \r\n466 038.00 $ \r\n \r\n466 038.00 $ \r\n \r\n0.00 $ \r\n \r\n466,038.00 $ \r\n \r\n0.00 \r\n \r\nTeaching State Appropriation State General Funds Other Funds \r\nTotal Teaching \r\n \r\n$ \r\n \r\n18,639,605.00 $ \r\n \r\n18,796,412.00 $ \r\n \r\n18,796,412.00 $ \r\n \r\n25,737 434.00 \r\n \r\n30 416 385.00 \r\n \r\n29 981 138.92 \r\n \r\n44,377 039.00 $ \r\n \r\n49 212 797.00 $ \r\n \r\n48 777 550.92 $ \r\n \r\n0.00 $ 1 253,482.78 \r\n1 253 482. 78 $ \r\n \r\n18,796,412.00 $ 31234621.70 \r\n \r\n0.00 818 236.70 \r\n \r\n50 031 033.70 $ ==\"\"\"81_.8,.,2_.3;;;.6.7.0..._ \r\n \r\nGrand Totals - All Programs \r\n \r\n$ \r\n \r\n44,843,077.00 $ \r\n \r\n49,678,835.00 $ \r\n \r\n49,243,588.92 $ \r\n \r\n1,253,482.78 $ \r\n \r\nso,497,011. 10 $ = = = 8..1..,8.,.2..3.=6..7.,...o \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, wh..h is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n \r\n-30- \r\n \r\n SCHEDULE \"3\" \r\n \r\nExe!nditures Comeared to Budget \r\n \r\nVariance \r\n \r\nPositive \r\n \r\nActual \r\n \r\n(Negative) \r\n \r\nActual Funds Available \r\nOver/(Under) Expenditures \r\n \r\nPrior Period Adjustments \r\n \r\nOther Adjustments \r\n \r\nProgram Fund \r\nBalances \r\n \r\nTransfers \r\n \r\nProgram Fund Balances \r\n \r\nReserve \r\n \r\nSurplus \r\n \r\nTotal Fund Balance \r\n \r\n$ \r\n \r\n462177.49 $ \r\n \r\n3 860.51 $ \r\n \r\n3 860.51 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n3 860.51 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ 3,860.51 $ \r\n \r\n3 860.51 \r\n \r\n18,591,449.81 $ 204,962.19 $ \r\n \r\n30.472 272.22 \r\n \r\n-55 887.22 \r\n \r\n$ 49 063 722.03 $ 149 074.97 $ \r\n \r\n204,962.19 $ 762 349.48 \r\n967 311.67 $ \r\n \r\n-120,044.65 $ 208,822.70 \r\n88 778.05 $ \r\n \r\n0.00 $ 43 727.86 \r\n43127.86 s \r\n \r\n84,917.54 $ \r\n \r\n0.00 $ \r\n \r\n1,014 900.04 --~o=.o=o~ \r\n \r\n1.099 817.58 s_==o=.o=o= s \r\n \r\n0.00 $ 1 014.900.04 \r\ns 1.014.900.04 \r\n \r\n84,917.54 $ \r\no.oo 84 917.54 s \r\n \r\n84,917.54 1 014 900.04 \r\n1.099.817.58 \r\n \r\n$ 49,525,899.52 $ 152,935.48 $ \r\n \r\n971,172.18 $ 88,778.05 $ 43,727.86 s 1,103,678.09 s===o=.o_o= s 1,014,900.04 s 88,778.05 s 1,103,678.09 \r\n \r\nUnexpendable Reserves Uncollectible Accounts Receivable Inventories \r\n \r\n402,170.83 49 863.99 \r\n$ 1 555 712.91 \r\n \r\n-31- \r\n \r\n {This page left intentionally blank) \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nSCHEDULE \"4\" \r\n \r\nTotals per Annual Supplement \r\n \r\nAccruals June 30, 2008 June 30, 2007 \r\n \r\nCompensated Absences June 30, 2008 June 30, 2007 \r\n \r\nAdjustments \r\n \r\nShared Services on Jointly Staffed Personnel \r\n \r\nArmstrong Atlantic State University \r\n \r\nGerman, \r\n \r\nMillie \r\n \r\nRichardson, \r\n \r\nJoseph \r\n \r\nAccounts Receivables Established for Salary Overpayments \r\n \r\nUnidentified Variance \r\n \r\nSALARIES \r\n \r\n$ \r\n \r\n21,629,523 $ \r\n \r\nTRAVEL 567,919 \r\n \r\n246,136 -104,147 \r\n \r\n1,217,622 -1,127,161 \r\n \r\n-463 -5,687 \r\n-1,800 \r\n \r\n$ \r\n \r\n21,829,368 $ ======56=7=,9=1=9 \r\n \r\n- 33 - \r\n \r\n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-06-01 FS-548-06-04 FS-548-06-06 FS-548-06-08 FS-548-07-01 FS-548-07-02 FS-548-07-03 FS-548-07-04 FS-548-07-05 FS-548-07-06 FS-548-07-07 \r\n \r\nPreviously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Finding Control Number: FS-548-07-01 \r\n \r\nSavannah State University's corrective action plan was not fully implemented until fiscal year 2009. \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-548-07-02 \r\n \r\nSavannah State University will ensure that the Budget Reports are properly prepared and reviewed. Support for the entries, particularly the budget adjustments, will be reviewed to ensure that they have been appropriately accounted for. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Finding Control Number: FS-548-07-04 \r\n \r\nSavannah State University has taken steps to reduce, and eventually eliminate, the number and percentage ofstudents having a balance that has not been guaranteed by Financial Aid or some other source. Additionally, the University has taken steps to strengthen the registration clearance process. The University is confident that these steps taken together will resolve these issues. \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Finding Control Number: FS-548-07-07 \r\n \r\nSavannah State University is going to work with OIIT to resolve this issue since this is due to a system error. However, ifthis issue cannot be resolved through OIIT, an adjustment will be made for the system variance. Additionally, the University is reviewing existing asset receiving and tagging processes. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-06-01 FA-548-06-02 FA-548-06-03 FA-548-06-04 FA-548-06-05 FA-548-07-01 FA-548-07-02 FA-548-07-03 FA-548-07-04 FA-548-07-05 \r\n \r\nPreviously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses \r\n \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-07-05 The University is waiting on a response from the U. S. Department ofEducation regarding resolution of this finding. \r\n-3 - \r\n \r\n SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCONTROL DEFICIENCIES \r\n \r\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. \r\n \r\nA control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Savannah State University's ability to initiate, authorize, record, process, or report financial data reliability in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Savannah State University's financial statements that is more than inconsequential will not be prevented or detected by the Savannah State University's internal control. \r\n \r\nA material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Savannah State University's internal control. \r\n \r\nInternal control deficiencies identified during the course ofthis engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-08-01 \r\n \r\nCondition: \r\n \r\nThrough our examination of the University's budgetary basis financial statements, it was determined that the financial statements contained a number of errors. This deficiency was previously reported in finding FS548-07-02 from fiscal year ended June 30, 2007. \r\n \r\nCriteria: \r\n \r\nManagement is responsible for establishing and maintammg internal controls, including monitoring ongoing activities and for the fair presentation of the budgetary basis financial statements. \r\n \r\nQuestioned Cost: NIA \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-08-01 \r\n \r\nInformation: \r\n \r\nA review of the budget basis financial statements revealed the following: \r\n \r\n1. Problems were detected in the way that the University voids student refund checks. From our testing, it appears that when the University voids a student refund check, a coding error has been occurring which improperly creates a Student Accounts Receivable. Normally a voided refund should produce a liability which would either be paid to the student or returned to the appropriate funding agency or lender. In an effort to correct the overstatement of Accounts Receivable created by this processing error, the University wrote off $108,579.73 of student receivables in the year under review. However, it does not appear that the University has addressed situations where a credit/liability should have been created and posted to students' accounts. \r\n \r\n2. The University inadvertently wrote off accounts receivables for payroll withholdings in Agency Funds of $87,819.50 against the budgeted funds. A correcting entry was proposed by the auditor and made to correct the financial statements. \r\n \r\n3. The University adjusted an accounts receivable from GSFIC in error by $19,340.89. An adjustment was proposed by the auditor and made to correct the financial statements. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of a lack of controls over the preparation of the budgetary basis financial statements. \r\n \r\nEffect: \r\n \r\nA lack of adequate accounting controls and procedures could place the University in a situation where incorrect reporting offinancial position could occur. \r\n \r\n-2 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-08-01 \r\n \r\nRecommendation: \r\n \r\nThe University should establish policies and procedures to ensure that amounts posted to the budgetary basis statements are accurate and properly documented. \r\n \r\nThe University should also review activity posted to students' accounts in the Banner subsidiary ledger to determine ifcharges/credits are properly applied to students' accounts and if information is properly fed to the Peoplesoft general ledger. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Significant Deficiency Finding Control Number: FS-548-08-02 \r\n \r\nCondition: \r\n \r\nInternal control procedures were insufficient to provide for adequate collection of tuition and fees. This deficiency was previously reported in findings FS-548-07-04 and FS-548-06-04 from fiscal years ended June 30, 2007 and June 30, 2006, respectively. \r\n \r\nCriteria: \r\n \r\nThe Board of Regents Policy Manual Section 704.03 states \"All tuition and fees are due and payable upon registration. Exceptions to the time of payment are as follows: \r\n \r\nI. An institution may defer tuition and fees up to the amount authorized for a specific academic term for students whose fees are guaranteed and will be paid by an outside agency under a documented agreement with the institution. \r\n \r\n2. An institution may defer tuition and fees up to the amount of the aid granted for a specified academic term for students who have an institution administered loan or scholarship in process. \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Significant Deficiency Finding Control Number: FS-548-08-02 \r\n \r\n3. An institution may defer tuition and fees up to the limit stated in the certificate or other document for a specified academic term for foreign students who have a certificate or other acceptable documented evidence that payment will be made after a statement of charges from the student has been presented for payment\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nA test of 10 students accounts receivable under one year old revealed 7 instances in which Savannah State University did not comply with the Board ofRegents' policies for collecting tuition and fees. It was determined that out ofthe $28,805.96 accounts receivable tested, $22,210.96, were not supported by approved student financial aid. \r\n \r\nInadequate collection procedures contributed to the increase of $157,888.41 in Allowance for Doubtful Accounts. Also, the University wrote off $129,688.92 of accounts receivable considered to be uncollectible during fiscal year 2008. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that only students with approved financial aid would receive tuition and fee deferments in accordance with the Board of Regents' policies. \r\n \r\nEffect: \r\n \r\nBy allowing students to enroll and remain in school without approved financial aid, the University has incurred student accounts receivable which were not in accordance with Board of Regents policy. In addition, the University continued to establish accounts receivable that are not likely to be collected. \r\n \r\nRecommendation: \r\n \r\nThe University should follow billing and collection guidelines as set forth in the Board ofRegents' Business Procedures Manual. Furthermore, no student should be granted a deferment without having approved financial aid. \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Significant Deficiency - Material Weakness Finding Control Number: FS-548-08-03 \r\n \r\nCondition: \r\n \r\nAccounting procedures of the University were insufficient to provide adequate control over Capital Assets. This deficiency was previously reported in finding FS-548-07-07 from fiscal year ended June 30, 2007. \r\n \r\nCriteria: \r\n \r\nThe University should maintain capital asset records in accordance with capitalization guidelines and Instructions provided in Chapter 7 ofthe Board of Regents' Business Procedures Manual. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies were noted relating to Capital Assets: \r\n \r\n1. The University's Capital Asset Management Module could not be reconciled to the balances reported in the Annual Financial Report. Unidentified variances of$605,222.00 for Accumulated DepreciationBuildings and $2,247.00 for Accumulated Depreciation - Equipment were noted. \r\n \r\n2. The schedule ofLibrary Collections was not corrected for adjustments made during the prior year audit. The beginning balances on the schedule for Library Collections and Accumulated Depreciation Library Collections did not agree to prior year ending balances by $12,130.00 and $7,848.00 respectively. \r\n \r\n3. One asset in the amount of $6,624.00 was erroneously excluded from the Equipment account balance at June 30th. \r\n \r\n4. Variances were noted between the Capitals Ledger and Asset Management Module for Buildings and Accumulated Depreciation Buildings in the amounts of $10,826,670.00 and $2,872,817.00 respectively; however, the University's financial statements were adjusted to properly reflect this information. \r\n \r\n5. A sample of sixty-six (66) equipment items revealed the following: \r\na) Five assets selected from the listing totaling $52,288.54 could not be located. \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCAPITAL ASSETS Inadequate Capital Asset Records Significant Deficiency- Material Weakness Finding Control Number: FS-548-08-03 \r\n \r\nb) Two assets totaling $67,031.01 were traded-in and one asset with a cost of $58,000.00 was surplused, however, the University failed to remove these items from the Capital Asset Module. \r\nc) One asset was not properly decaled. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement appropriate internal controls and procedures necessary to properly record, maintain and track capital assets. \r\n \r\nEffect: \r\n \r\nBy failing to accurately record and track capital assets, the University could place itself in a position where potential misappropriation of assets could occur and impact reporting ofits financial position and results ofoperations. \r\n \r\nRecommendation: \r\n \r\nThe University should establish appropriate procedures and controls to ensure that reconciliations are performed for the Capital Assets Module and the related subsidiary records. In addition, policies and procedures should be established to ensure that an accurate physical inventory of equipment is performed and that all capital assets listed on the capital assets inventory records can be identified by decal number, description and location. \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSpecial Tests and Provisions Deficiencies in Student Financial Aid Refund Process Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-08-01 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid office failed to properly perform the refund process and to ensure that unearned Title IV funds were returned in a timely manner. This deficiency was previously reported in findings FA-548-07-05 and FA-548-06-05 from fiscal years ended June 30, 2007 and June 30, 2006, respectively. \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSpecial Tests and Provisions Deficiencies in Student Financial Aid Refund Process Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-08-01 \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general requirements for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Program, respectively. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nFifteen students that received Federal financial aid and officially withdrew from the University were randomly selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student. Our examination revealed the following deficiencies: \r\n \r\n1. For two students, unearned Title IV funds were not applied by the University to the appropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244. \r\n \r\n2. In one instance, the University applied the second disbursement ofSFA funds to a student's account in error after receiving notification of the student's official withdrawal. The University failed to \"drop\" the student from classes in the student information system (BANNER) before the refund was disbursed. The student received funds in excess ofamount earned, resulting in an accounts receivable of$634.06 that is due to the University. The $634.06 was returned to the grantor agency. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of management's failure to properly process student financial aid refunds in accordance with Federal regulations. \r\n \r\nEffect: \r\n \r\nThe SFA Office refunded SFA funds to a student incorrectly and unearned funds were not returned in a timely manner. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2008 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSpecial Tests and Provisions Deficiencies in Student Financial Aid Refund Process Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-08-01 \r\n \r\nRecommendation \r\n \r\nThe University should develop and implement procedures to ensure that student financial aid refunds are properly calculated and unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\n-8- \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2006-h2007","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2006/2007"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007"],"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-bs25-b2006-h2007"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2006-h2007"],"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":"STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS \r\nI \r\nSAVANNAH STATE UNIVERSITY SA VANNAH, GEORGIA REPORT ON AUDIT \r\nOF THE FINANCIAL STATEMENTS \r\nFOR THE FISCAL YEAR ENDED JUNE 30, 2007 \r\nRussell W. Hinton State Auditor \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\n2 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n3 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n4 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n6 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\n1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND \r\n \r\n24 \r\n \r\n2 BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \r\n \r\n(NON-GAAP BASIS) BUDGET FUND \r\n \r\n25 \r\n \r\n3 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n27 \r\n \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n Russell W. Hinton \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nDecember 18, 2007 \r\n \r\nHonorable Sonny Perdue, Governor Members ofthe General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Honorable Earl G. Yarbrough, Sr., President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying basic financial statements (Exhibits A through D) of Savannah State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2007. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\nWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \r\nAs discussed in Note 1, the financial statements ofSavannah 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 Savannah State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n07ARL-62 \r\n \r\n In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 2007, 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 ofAmerica. \r\nManagement's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it. \r\nOur audit was conducted for the purpose offorming an opinion on the basic financial statements of Savannah State University taken as a whole. The accompanying supplementary information (Schedules I through 3) 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. \r\nRespectfully submitted, \r\n~w4.k. \r\nRussell W. Hinton, CPA, CGFM State Auditor \r\nRWH:as 07ARL-62 \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n SAVANNAH STATE UNIVERSITY \r\nManagement's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Savannah, Georgia, was founded in 1890 as a department of the State University for the education and training of Negro students. Savannah State University now serves a diverse student population as a senior University of the University System of Georgia. The University serves primarily an African American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Science and Technology, which leads to baccalaureate and master's degrees. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 3,000 students each year. The institution continues to grow as shown by the comparison numbers that follow. \r\n \r\nStudents Faculty (Headcount) \r\n \r\nStudents {FTE) \r\n \r\nFY2007 FY2006 FY2005 \r\n \r\n134 \r\n \r\n3,241 \r\n \r\n118 \r\n \r\n3,091 \r\n \r\n123 \r\n \r\n2,800 \r\n \r\n3,065 2,853 2,564 \r\n \r\nOverview ofthe Financial Statements and Financial Analysis \r\n \r\nSavannah State University is proud to present its financial statements for fiscal year 2007. 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 2007 and fiscal year 2006. \r\n \r\nStatement ofNet Assets \r\n \r\nThe Statement of Net Assets presents the assets, liabilities, and net assets of the University as 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 Savannah State University. The Statement of Net Assets presents end-of-year 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 Financial Statements. \r\n \r\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. \r\n \r\n-I- \r\n \r\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. \r\n \r\nStatement ofNet Assets, Condensed \r\n \r\nJune 30. 2007 \r\n \r\nJune 30, 2006 \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\n \r\n$ 8,584,873 52,722,785 3,417.316 \r\n \r\n$ 7,528,388 50,705,415 3,150,016 \r\n \r\nTotal Assets \r\n \r\n$ 64,724.974 \r\n \r\n$ 61,383,819 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n$ 2,521,155 668.199 \r\n \r\n$ 3,165,535 674.671 \r\n \r\nTotal Liabilities \r\n \r\n$ 3,189,354 \r\n \r\n$ 3,840.206 \r\n \r\nNet Assets Invested in Capital Assets, Net of Debt Restricted- Nonexpendable Restricted - Expendable Unrestricted \r\n \r\n$ 52,722,785 2,305,790 1,261,120 5,245.925 \r\n \r\n$ 50,705,415 1,034,603 1,184,490 4,619.105 \r\n \r\nTotal Net Assets \r\n \r\n$ 61,535,620 \r\n \r\n$ 5:Z1543li13 \r\n \r\nThe total assets of the institution increased by $3,341,155. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $2,017,370 in the category of Capital Assets, Net. \r\n \r\nThe total liabilities for the year decreased by $650,852. The combination of the increase in total assets of $3,341,155 and the decrease in total liabilities of $650,852 yields an increase in total net assets of $3,992,007. The increase in total net assets is primarily in the category of Invested in Capital Assets, Net of Debt, in the amount of $2,017,370. \r\n \r\n- 11 - \r\n \r\n Statement ofRevenues, Expenses and Changes in Net Assets \r\n \r\nChanges in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. \r\n \r\nStatement of Revenues, Expenses and Changes in Net Assets, Condensed \r\n \r\nJune 30, 2007 \r\n \r\nJune 30, 2006 \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$ 28,811,878 47,275,338 \r\n \r\n$ 27,042,961 45,560,682 \r\n \r\nOperating Loss \r\n \r\n$ -18,463,460 \r\n \r\n$ -18,517,721 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n18,928,239 \r\n \r\n19,543,706 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \r\n \r\n$ 464,779 \r\n \r\n$ 1,025,985 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n3,527,228 \r\n \r\n1,775,031 \r\n \r\nIncrease (Decrease) in Net Assets \r\n \r\n$ 3,992,007 \r\n \r\n$ 2,801,016 \r\n \r\nNet Assets at Beginning of Year \r\n \r\n57,543,613 \r\n \r\n54,742,597 \r\n \r\nNet Assets at End of Year \r\n \r\n$ 61,535,620 \r\n \r\n$ 57,543,613 \r\n \r\nThe Statement of Revenues, Expenses and Changes in Net Assets reflect a positive year with an increase in the net assets at the end of the year of $3,992,007. This represents an increase of $1,190,991 over fiscal year 2006. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows: \r\n \r\n- 111 - \r\n \r\n Revenue By Source For The Years Ended June 30, 2007 and June 30, 2006 \r\n \r\nJune 30, 2007 \r\n \r\nJune 30. 2006 \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services Auxiliary Other \r\n \r\n$ 5,744,016 14,498,032 90,243 8,323,924 155,663 \r\n \r\n$ 4,339,387 14,110,218 118,193 8,387,811 87,352 \r\n \r\nTotal Operating Revenue \r\n \r\n$ 28,811.878 \r\n \r\n$ 27,042.961 \r\n \r\nNonoperating Revenue State Appropriations Gifts Investment Income Other \r\n \r\n$ 17,906,362 493,243 530,524 -1 890 \r\n \r\n$ 17,413,552 806,871 154,809 \r\n1,168.474 \r\n \r\nTotal Nonoperating Revenue \r\n \r\n$ 18.928.239 \r\n \r\n$ 19,543.706 \r\n \r\nCapital Grants and Gifts State \r\n \r\n$ 3,527,228 \r\n \r\n$ 1,775.031 \r\n \r\nTotal Revenues \r\n \r\n$ 51,267.345 \r\n \r\n$ 48,361,698 \r\n \r\nExpenses (By Functional Classification) For The Years Ended June 30, 2007 and June 30, 2006 \r\n \r\nJune 30. 2007 \r\n \r\nJune 30. 2006 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Expenses \r\n \r\n$ 13,817,068 1,221,386 2,131,159 4,710,079 2,887,394 7,721,673 4,279,048 1,945,002 7,479,364 1,083.165 \r\n \r\n$ 12,807,464 1,454,994 2,182,564 4,680,972 2,815,833 6,648,195 5,344,945 933,898 5,704,494 2,987.323 \r\n \r\nTotal Expenses \r\n \r\n$ 47,275.338 \r\n \r\n$ 45,560.682 \r\n \r\n- iv - \r\n \r\n Operating revenues increased by $1,768,917 in fiscal year 2007. Although Tuition and Fees included a 4% increase, revenues decreased in Sales and Services and Auxiliary categories. \r\n \r\nThe Auxiliary revenue decreased by $63,887 in fiscal year 2007. This decrease is associated with a decrease in revenues earned in Residence Halls for fiscal year 2007. \r\n \r\nNonoperating revenues decreased by $615,467 in fiscal year 2007. Although State Appropriations included an increase of$492,810 revenues decreased in the Other category. \r\n \r\nThe compensation and employee benefits category increased by $1,310,858. The increase reflects an increased cost of health insurance for the employees of the Institution. Utilities decreased by $31,082 during the past year. The decrease was primarily associated with the efficiency in gas and water usage at the University during fiscal year 2007. \r\n \r\nStatement ofCash Flows \r\n \r\nThe final statement presented by the Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \r\n \r\nCash Flows for the Years Ended June 30, 2007 and 2006, Condensed \r\n \r\nJune 30. 2007 \r\n \r\nJune 30. 2006 \r\n \r\nCash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities \r\n \r\n$ -16,666,913 18,264,497 -365,474 324,020 \r\n \r\n$ -15,662,225 18,316,374 -980,525 161.614 \r\n \r\nNet Change in Cash Cash, Beginning of Year \r\n \r\n$ 1,556,130 3.178.679 \r\n \r\n$ 1,835,238 1,343.441 \r\n \r\nCash, End of Year \r\n \r\n$ 4,734.809 \r\n \r\n$ 3,178.679 \r\n \r\n-v- \r\n \r\n Capital Assets The University capitalized building improvements for two facilities in fiscal year 2007. The Wiley Wilcox renovation was completed and the facility was reopened for use. Additionally the Drew Griffith Science Building expansion was completed and placed in service during the fiscal year. The costs of these projects were funded by the Georgia State Financing and Investment Commission (GSFIC). Projected funding by GSFIC for fiscal year 2008 will be approximately the same. For additional information concerning Capital Assets, see Notes 1 and 6 in the Notes to the Financial Statements. Long-Term Liabilities Savannah State University had Long-Term Liabilities of $1,213,388 of which $545,189 was reflected as current liability at June 30, 2007. For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. Even with a relatively flat funded year, the University was able to generate a modest increase in Net Assets. The \r\nUniversity anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. \r\nEarl G. Yarbrough, Sr., Ph.D, President Savannah State University \r\n- VI - \r\n \r\n BASIC FINANCIAL STATEMENTS -I- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30, 2007 \r\nASSETS \r\nCurrent Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items \r\nTotal Current Assets \r\nNoncurrent Assets Noncurrent Cash Short-Term Investments Investments Notes Receivable, Net Capital Assets, Net (Note 6) \r\nTotal Noncurrent Assets \r\nTotal Assets \r\nLIABILITIES \r\nCurrent Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue (Note 7) Deposits Held for Other Organizations Compensated Absences \r\nTotal Current Liabilities \r\nNoncurrent Liabilities Compensated Absences \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for: \r\nNonexpendable Expendable Unrestricted \r\nTotal Net Assets \r\nThe notes to the financial statements are an integral part of this statement. -2- \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ \r\n \r\n4,499,964 \r\n \r\n408,276 \r\n \r\n1,500,747 2,110,618 \r\n45,511 19 757 \r\n \r\n$ \r\n \r\n8,584,873 \r\n \r\n$ \r\n \r\n234,845 \r\n \r\n1,254,211 \r\n \r\n1,109,390 \r\n \r\n818,870 \r\n \r\n52,722,785 \r\n \r\n$ 56,140,101 \r\n \r\n$ 64,724,974 \r\n \r\n$ \r\n \r\n525,803 \r\n \r\n104,147 \r\n \r\n153,026 \r\n \r\n338,235 \r\n \r\n854,755 \r\n \r\n545,189 \r\n \r\n$ \r\n \r\n2,521,155 \r\n \r\n668,199 \r\n \r\n$ \r\n \r\n3,189,354 \r\n \r\n$ 52,722,785 \r\n2,305,790 1,261,120 5,245,925 \r\n \r\n$ 61,535,620 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nEXHIBIT\"B\" \r\n \r\nOPERATING REVENUES \r\nStudent Tuition and Fees Less: Scholarship Allowances \r\nGrants and Contracts Federal State Other \r\nSales and Services Rents and Royalties Auxiliary Enterprises \r\nResidence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\nNONOPERATING REVENUES /EXPENSES) \r\nState Appropriations Gifts Interest and Other Investment Income Other Nonoperating Revenues (Expenses) \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\nCapital Grants and Gifts State \r\nIncrease (Decrease) in Net Assets \r\nNet Assets - Beginning of Year \r\nNet Assets - End of Year \r\nThe notes to the financial statements are an integral part of this statement. \r\n-3- \r\n \r\n$ \r\n \r\n11,210,313 \r\n \r\n-5,466,297 \r\n \r\n13,757,058 170,067 570,907 90,243 20,878 \r\n \r\n2,294,867 111,260 \r\n3,286,383 15,128 \r\n431,838 2,151,211 \r\n33,237 134,785 \r\n \r\n$ 28,811,878 \r\n \r\n$ \r\n \r\n8,061,985 \r\n \r\n12,373,132 \r\n \r\n6,008,024 \r\n \r\n289,508 \r\n \r\n591,528 \r\n \r\n3,526,391 \r\n \r\n2,710,378 \r\n \r\n11,296,406 \r\n \r\n2,417,986 \r\n \r\n$ 47,275,338 \r\n \r\n$ -18,463,460 \r\n \r\n$ \r\n \r\n17,906,362 \r\n \r\n493,243 \r\n \r\n530,524 \r\n \r\n-1 890 \r\n \r\n$ 18,928,239 \r\n \r\n$ \r\n \r\n464,779 \r\n \r\n3,527,228 \r\n \r\n$ \r\n \r\n3,992,007 \r\n \r\n57,543,613 \r\n \r\n$ =====6=1,=53=5=,6=2=0 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2007 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) \r\nNet Cash Provided (Used) by Operating Activities \r\nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts (Disbursements) \r\nNet Cash Flows Provided (Used) by Noncapital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets \r\nNet Cash Provided (Used) by Capital and Related Financing Activities \r\nCASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments \r\nNet Cash Provided (Used) by Investing Activities \r\nNet Increase (Decrease) in Cash \r\nCash and Cash Equivalents - Beginning of Year \r\nCash and Cash Equivalents - End of Year \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ \r\n \r\n6,499,192 \r\n \r\n14,197,229 \r\n \r\n90,243 \r\n \r\n-21,397,877 \r\n \r\n-20,546,743 \r\n \r\n-3,526,391 \r\n \r\n-123,580 \r\n \r\n102,436 \r\n \r\n1,586,564 110,453 \r\n3,937,372 15,328 \r\n429,731 2,375,842 \r\n49,902 -466 614 \r\n \r\n$ -16,666,913 \r\n \r\n$ \r\n \r\n17,906,362 \r\n \r\n-133,218 \r\n \r\n493,243 \r\n \r\n-1 890 \r\n \r\n$ \r\n \r\n18,264,497 \r\n \r\n$ \r\n \r\n3,361,531 \r\n \r\n-3,727,005 \r\n \r\n$ \r\n \r\n-365 474 \r\n \r\n$ \r\n \r\n388,396 \r\n \r\n530,524 \r\n \r\n-594 900 \r\n \r\n$ \r\n \r\n324,020 \r\n \r\n$ \r\n \r\n1,556,130 \r\n \r\n3,178,679 \r\n \r\n$ ==4='=73=4=,8=0=9 \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2007 \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \r\nOperating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash \r\nProvided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Other Assets Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences \r\nNet Cash Provided (Used) by Operating Activities \r\nNONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts \r\n \r\nEXHIBIT\"C\" \r\n$ -18,463,460 \r\n2,417,986 320,673 -2, 107 -310,033 5,788 -6,726 -325,712 -80,379 -226,869 3926 \r\n$ -16,666,913 \r\n$ ===.,..16..,,5=,6=9=7 \r\n \r\nThe notes to the financial statements are an integral part of this statement. -5- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS Savannah 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. \r\nREPORTING ENTITY Savannah 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 Savannah State University as a separate reporting entity. \r\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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah 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 Reporting Standards. \r\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 16 for additional information. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required. \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFINANCIAL STATEMENT PRESENTATION Generally 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. \r\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 intra-University transactions have been eliminated. \r\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. \r\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. \r\nSHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 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. \r\nINVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. 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 Balanced Income Fund is included under Investments. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\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 grant and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \r\nINVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\") basis. \r\nNONCURRENT CASH AND INVESTMENTS 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. \r\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 significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and 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. \r\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, 2007, GSFIC transferred capital additions valued at $165,697 to Savannah State University. \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nDEPOSITS Deposits represent good faith deposits from students to reserve housing assignments m a University residence hall. \r\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 received from grant and contract sponsors that have not yet been earned. \r\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 Statements of Revenues, Expenses and Changes in Net Assets. Savannah State University had accrued liability for compensated absences in the amount of $1,209,462 as of July 1, 2006. For fiscal year 2007, $851,936 was earned in compensated absences and employees were paid $848,010, for a net increase of$3,926. The ending balance as of June 30, 2007, in accrued liability for compensated absences was $1,213,388. \r\nNONCURRENT LIABILITIES Noncurrent liabilities include liabilities that will not be paid within the next fiscal year. \r\nNET ASSETS The University's net assets are classified as follows: \r\nInvested in capital assets, net ofrelated debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. The term \"debt obligations\" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section. \r\nRestricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia. \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nNET ASSETS Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. \r\n \r\nExpendable Restricted Net Assets include the following: \r\n \r\nRestricted - E \u0026 G and Other Organized Activities Federal Loans Institutional Loans Term Endowments \r\n \r\n$ \r\n \r\n71,384 \r\n \r\n874,028 \r\n \r\n22,225 \r\n \r\n293.483 \r\n \r\nTotal Restricted Expendable \r\n \r\n$ 1,261,120 \r\n \r\nUnrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $369,564.64. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\n \r\nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \r\n \r\nR\u0026RReserve Reserve for Encumbrances Other Unrestricted \r\n \r\n$ 1,745,813 2,359,915 1,140,197 \r\n \r\nTotal Unrestricted Net Assets \r\n \r\n$ 5,245.925 \r\n \r\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. \r\n \r\nINCOME TAXES Savannah 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. \r\n \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES The University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria: \r\nOperating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts, and (4) interest on institutional student loans. \r\nNonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\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. \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\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: \r\n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nDEPOSITS 3. Bonds of any public authority created by the laws of the State of Georgia, providing that \r\nthe statute that created the authority authorized the use of the bonds for this purpose. \r\n \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n \r\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 Mortgage Association. \r\n \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\n \r\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. \r\n \r\nAt June 30, 2007, the carrying value of deposits was $6,395,919 and the bank balance was $7,401,519. Of the University's deposits, $6,987,331 were uninsured. Of these uninsured deposits, $1,068,972 were collateralized with securities held by the financial institution's trust department or agent in the University's name, $5,918,359 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name. \r\n \r\nINVESTMENTS At June 30, 2007, the carrying value of the University's investments was $1,109,390, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows: \r\n \r\nInvestment Pools Board of Regents Balanced Income Fund \r\n \r\n$ 1,109,390 \r\n \r\nThe Board of Regents Investment 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 Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nINVESTMENTS Additional information on the Board of Regents Investment 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 http://www.audits.state.ga.us/intemet/ searchRpts.html. \r\n \r\nThe Weighted Average Maturity of the Balanced Income Fund is 9.35 years. Of the University's total investment of $1,109,390 in the Balance Income Fund, $669,628 is invested in debt securities. \r\n \r\nInterest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk. \r\n \r\nNOTE 3: ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the following at June 30, 2007: \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Other \r\n \r\n$ 558,687 433,233 \r\n1,500,747 1,868,341 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n$ 4,361,008 749,643 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 3,611,365 \r\n \r\nNOTE 4: INVENTORIES \r\n \r\nInventories consisted of the following at June 30, 2007: \r\n \r\nPhysical Plant Other \r\n \r\n$ \r\n \r\n45,088 \r\n \r\n423 \r\n \r\nTotal \r\n \r\n$==4-5-,5~1~1 \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2007. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nFollowing are the changes in capital assets for the year ended June 30, 2007: \r\n \r\nBeginning Balance Jul~ I, 2006 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2007 \r\n \r\nCapital Assets, Not Being Depreciated: \r\n \r\nLand \r\n \r\n$ 575,975 \r\n \r\n$ \r\n \r\nConstruction Work-In-Progress \r\n \r\n0 $ 444 189 \r\n \r\n0 $ \r\n \r\n575,975 444 189 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n$ 575,975 $ 444,189 $ \r\n \r\n0 $ 1,020,164 \r\n \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$ 65,675,569 $ 3,301,152 \r\n \r\n2,520,259 \r\n \r\n7,206,873 \r\n \r\n633,324 $ \r\n \r\n6,762,706 \r\n \r\n246,923 \r\n \r\n55,285 \r\n \r\n99,915 190,670 \r\n \r\n$ 68,976,721 2,520,259 7,740,282 6,818,959 55,285 \r\n \r\nTotal Assets Being Depreciated \r\n \r\n$ 82,220,692 $ 4,181,399 $ 290,585 $ 86,111,506 \r\n \r\nLess: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$ 20,929,618 $ 1,495,259 \r\n \r\n1,269,924 \r\n \r\n98,919 \r\n \r\n4,721,353 \r\n \r\n621,545 $ \r\n \r\n5,163,337 \r\n \r\n200,881 \r\n \r\n7,020 \r\n \r\n1,382 \r\n \r\n94,539 5,971 -157 \r\n \r\n$ 22,424,877 1,368,843 5,248,359 5,358,247 8 559 \r\n \r\nTotal Accumulated Depreciation \r\n \r\n$ 32,091,252 $ 2,417,986 $ 100,353 $ 34,408,885 \r\n \r\nTotal Capital Assets, Being Depreciated, \r\n \r\nNet \r\n \r\n$ 50,129,440 $ 1,763,413 $ \r\n \r\n190,232 $ 51,702,621 \r\n \r\nCapital Assets, Net \r\n \r\n$ S0,Z0S,41S $ 2,201,602 $ 120,232 $ S2,122,18S \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nDeferred revenue consisted of the following at June 30, 2007. \r\n \r\nOther Deferred Revenue \r\n \r\nNOTE 8: LONG-TERM LIABILITIES \r\n \r\nLong-term liability activity for the year ended June 30, 2007 was as follows: \r\n \r\nOther Liabilities Compensated Absences \r\n \r\nBeginning Balance July 1, 2006 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2007 \r\n \r\nCurrent Portion \r\n \r\n$ 1,202,~62 $ 851,236 $ 848,010 $ 1,213,388 $ 5~5,182 \r\n \r\nNOTE 9: SIGNIFICANT COMMITMENTS \r\n \r\nThe University did not have unearned, outstanding, construction or renovation contracts at June 30, 2007. \r\n \r\nNOTE 10: LEASE OBLIGATIONS \r\n \r\nSavannah State University had no expense for rental of real property and equipment under operating leases in fiscal year 2007. \r\n \r\nNOTE 11: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nPlan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer 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. \r\n \r\nFunding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah 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 2007, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nFunding Policy \r\nFiscal Year \r\n2007 2006 2005 \r\n \r\nPercentage Contributed \r\n100% 100% 100% \r\n \r\nRequired Contribution \r\n$ 1,244,360 $ 1,147,046 $ 1,138,813 \r\n \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah 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. \r\n \r\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. All other members are \"new plan\" members subject to the modified plan provisions. \r\n \r\nUnder both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 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. \r\n \r\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. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution 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. \r\n \r\nIn addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January I, 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. \r\n \r\nThe ERS issues a financial report each fiscal year, which may be obtained through ERS. \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\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, 2007, for employees covered by ERS was $32,500. The University's total payroll for all employees was $20,435,117. \r\nFor the year ended June 30, 2007, under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee. \r\nUnder the new plan, member contributions consist solely of 1.5% 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, 2007, 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. \r\nTotal contributions to the plan made during fiscal year 2007 amounted to $3,870, of which $3,383 was made by the University and $487 was made by employees. These contributions met the requirements of the plan. \r\nActuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2007 financial report, which may be obtained through ERS. \r\nREGENTS RETIREMENT PLAN \r\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. 4721-1 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. \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\nFunding Policy Savannah 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 2007, the employer contribution was 9.66% for the first six months and 8.13% for the last six months of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \r\nSavannah State University and the covered employees made the required contributions of $484,154 (9.66% or 8.13%) and $250,598 (5%), respectively. \r\nAIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah 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. \r\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. \r\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. \r\n \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 11: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nContributions Total contributions made by employees during fiscal year 2007 amounted to $37,323 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nThe Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. \r\nNOTE 12: RISK MANAGEMENT \r\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. Savannah 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 selfinsured 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, two fully insured HMO healthcare plan options are also offered to System employees. \r\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. Savannah 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. \r\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 \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 12: RISK MANAGEMENT \r\nGeorgia 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. \r\nNOTE 13: CONTINGENCIES \r\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 Savannah State University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against Savannah 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, 2007. \r\nNOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and \r\nlife insurance programs for regular employees of the University System of Georgia. It is the \r\npolicy 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. \r\nAs of June 30, 2007, there were 181 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2007, Savannah State University recognized as incurred $840,377 of expenditures, which was net of $350,454 of participant contributions. \r\n \r\n-20- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2007 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nThe University's operating expenses by functional classification for fiscal year 2007 are shown below: \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstruction \r\n \r\nResearch \r\n \r\nFunctional Classification \r\n \r\nPublic Service \r\n \r\nAcademic Sui:mort \r\n \r\nStudent Services \r\n \r\nInstitutional Surmort \r\n \r\n$ 7,796,459 1,700,820 2,323,659 \r\n72,892 \r\n465,124 76,363 \r\n1,279,667 102 084 \r\n$ 13 817.068 \r\n \r\n$ 134,351 137,616 55,575 \r\n32,616 \r\n309,752 4,233 \r\n490,681 56,562 \r\n$ 1 221 386 \r\n \r\n$ \r\n \r\n86,264 \r\n \r\n1,028,354 \r\n \r\n221,013 \r\n \r\n31,191 \r\n \r\n166,750 19,869 \r\n \r\n575,144 2 574 \r\n \r\n$ 2131159 \r\n \r\n$ \r\n \r\n32,411 \r\n \r\n2,360,377 \r\n \r\n572,101 \r\n \r\n141,492 \r\n \r\n34,046 46,901 \r\n \r\n1,203,922 318 829 \r\n \r\n$ 4 710 079 \r\n \r\n$ \r\n \r\n12,500 \r\n \r\n1,569,116 \r\n \r\n424,898 \r\n \r\n71,590 \r\n \r\n28,945 28,862 \r\n \r\n739,326 12 157 \r\n \r\n$ 2 887 394 \r\n \r\n$ 3,215,651 1,714,909 289,508 130,695 \r\n57,795 \r\n2,119,674 193 441 \r\n$ 7 721 673 \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nPlant Operations and Maintenance \r\n \r\nFunctional Classification \r\n \r\nScholarships and FellowshiQs \r\n \r\nAuxiliary Entemrises \r\n \r\nUnallocated ExQenses \r\n \r\nTotal Operating ExQenses \r\n \r\n$ 1,155,358 389,724 -245,327 6,033 \r\n2,335,892 \r\n563,436 73 932 \r\n$ 4 279 048 \r\n \r\n$ 1,945,002 $ I 945 002 \r\n \r\n$ 1,205,840 306,145 245,327 105,019 \r\n576,772 140,463 \r\n4,324,556 575,242 \r\n$ 7 479 364 \r\n \r\n$ 1,083,165 $ I 083 165 \r\n \r\n$ 8,061,985 12,373,132 6,008,024 289,508 591,528 \r\n3,526,391 2,710,378 \r\n11,296,406 2,417,986 \r\n$ 47 275 338 \r\n \r\nNOTE 16: AFFILIATED ORGANIZATIONS \r\n \r\nIn accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, Savannah State University Foundation and Savannah State University Student Athletic Fund Association have been determined to be legally separate, tax exempt organizations whose activities primarily support Savannah State University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, Savannah State University has not included financial activity for Savannah State University Foundation and Savannah State University Student Athletic Fund Association in these financial statements. \r\n \r\n- 21 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SUPPLEMENTARY INFORMATION - 23 - \r\n \r\n SAVANNAH STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) \r\nBUDGET FUND JUNE 30, 2007 \r\nASSETS \r\nCash and Cash Equivalents Accounts Receivable \r\nFederal Financial Assistance Other Prepaid Items Inventories \r\nTotal Assets \r\nLIABILITIES AND FUND EQUITY \r\nLiabilities Accounts Payable Other Liabilities \r\nTotal Liabilities \r\nFund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Unreserved Surplus \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\nSCHEDULE \"1\" \r\n \r\n$ \r\n \r\n934,388.88 \r\n \r\n1,476,056.85 2,113,677.53 \r\n19,535.69 45,510.66 \r\n \r\n$ =====4,=58=9=1, =6=9.=61= \r\n \r\n$ \r\n \r\n2,647,685.27 \r\n \r\n-177,325.76 \r\n \r\n$ \r\n \r\n2,470,359.51 \r\n \r\n$ \r\n \r\n16,442.98 \r\n \r\n818,702.41 \r\n \r\n346,953.67 \r\n \r\n71,383.72 \r\n \r\n495,762.68 \r\n \r\n369,564.64 \r\n \r\n$ \r\n \r\n2,118,810.10 \r\n \r\n$ =====4,=58=9=1, =69==61= \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n-24 - \r\n \r\n SAVANNAH STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) \r\nBUDGET FUND YEAR ENDED JUNE 30, 2007 \r\n \r\nSCHEDULE \"2\" \r\n \r\nREVENUES \r\nState Appropriation State General Funds \r\nFederal Funds Other Funds \r\nTotal Revenues \r\nEXPENDITURES \r\nPublic Service/Special Funding Initiatives Teaching \r\nTotal Expenditures Excess of Funds Available over Expenditures \r\nFUND BALANCE JULY 1 \r\nReserved \r\nADJUSTMENTS \r\nPrior Year Payables/Expenditures Prior Year Receivables/Revenues FUND BALANCE JUNE 30 \r\n \r\nBUDGET \r\n \r\nACTUAL \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ 17,906,362.00 $ 17,906,362.00 $ \r\n \r\n13,193,132.00 \r\n \r\n14,197,982.32 \r\n \r\n12,401,569.00 \r\n \r\n15788914.11 \r\n \r\n$ 43,501,063.00 $ 47,893,258.43 $ \r\n \r\n0.00 1,004,850.32 3 387 345.11 \r\n4 392 195.43 \r\n \r\n$ \r\n \r\n457,768.00 $ \r\n \r\n457,451.06 $ \r\n \r\n43,043,295.00 \r\n \r\n46,809,292.06 \r\n \r\n316.94 -3 765 997.06 \r\n \r\n$ 43,501,063.00 $ \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n626,515.31 $ ======62=6:!:5=1=5.=31= \r\n \r\n1,227,043.40 \r\n \r\n346,428.41 -81 177.02 \r\n$ 2,118,810.10 \r\n \r\nSUMMARY OF FUND BALANCE \r\nReserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable \r\nTotal Reserved \r\nUnreserved Surplus \r\n \r\n$ \r\n \r\n16,442.98 \r\n \r\n818,702.41 \r\n \r\n346,953.67 \r\n \r\n71,383.72 \r\n \r\n495,762.68 \r\n \r\n$ 1,749,245.46 \r\n \r\n369 564.64 \r\n \r\nTotal Fund Balance \r\n \r\n$ 2,118,810.10 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n- 25 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTotals per Annual Supplement \r\n \r\nAccruals June 30, 2007 June 30, 2006 \r\n \r\nCompensated Absences June 30, 2007 June 30, 2006 \r\n \r\nAdjustments \r\n \r\nShared Services on Jointly Staffed Personnel \r\n \r\nArmstrong Atlantic State University \r\n \r\nGerman, \r\n \r\nMillie \r\n \r\nRichardson, \r\n \r\nJoseph \r\n \r\nSajwan, \r\n \r\nKenneth \r\n \r\nAccounts Receivables Established for Salary Overpayments \r\n \r\nSALARIES \r\n \r\n$ \r\n \r\n20,602,751 $ \r\n \r\nTRAVEL 591,528 \r\n \r\n104,147 -240,547 \r\n \r\n1,127,161 -1,123,513 \r\n \r\n-1,316 -20,244 \r\n-8, 166 \r\n-5156 \r\n \r\n$ \r\n \r\n20,435,117 $ ===59=1=,5=2=8 \r\n \r\n- 27 - \r\n \r\n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-05-01 FS-548-05-02 FS-548-06-01 FS-548-06-02 FS-548-06-03 FS-548-06-04 FS-548-06-05 FS-548-06-06 FS-548-06-07 FS-548-06-08 FS-548-06-09 \r\n \r\nPreviously Reported Corrective Action Implemented Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Finding Control Number: FS-548-06-01 \r\n \r\nThe finding is partially resolved. The planned corrective action implemented only partially corrected the deficiencies. The University will implement policies and procedures during fiscal year 2008 to address the unresolved deficiencies. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Finding Control Number: FS-548-06-04 \r\n \r\nThe finding is not corrected. The planned corrective action that was implemented did not correct the deficiency. New policies and procedures will be implemented for fiscal year 2008. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures Finding Control Number: FS-548-06-06 \r\n \r\nThe finding is partially resolved. The planned corrective action implemented only partially corrected the deficiencies. The University will implement policies and procedures during fiscal year 2008 to address the unresolved deficiencies. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficiencies in Accounting Procedures Finding Control Number: FS-548-06-08 \r\n \r\nThe finding is partially resolved. The planned corrective action implemented only partially corrected the deficiencies. The University will implement policies and procedures during fiscal year 2008 that will address the unresolved deficiencies. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-06-01 FA-548-06-02 F A-548-06-03 FA-548-06-04 FA-548-06-05 \r\n \r\nUnresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nELIGIBILITY Inadequate Satisfactory Academic Progress Procedures Student Financial Aid Cluster Program Finding Control Number: FA-548-06-01 \r\n \r\nThe University is waiting on a response from the U.S. Department ofEducation regarding resolution of this finding. \r\n \r\nELIGIBILITY Inadequate Control Procedures for Determining Enrollment Status Student Financial Aid Cluster Program Finding Control Number: FA-548-06-02 \r\n \r\nThe University is waiting on a response from the U. S. Department ofEducation regarding resolution of this finding. \r\n \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Costs: $16,611.00 Finding Control Number: FA-548-06-03 The University is waiting on a response from the U.S. Department ofEducation regarding resolution of this finding. SPECIAL TESTS AND PROVISIONS Inadequate Control Procedures over Unofficial Withdrawals Student Financial Aid Cluster Program Finding Control Number: FA-548-06-04 The University is waiting on a response from the U.S. Department ofEducation regarding resolution of this finding. SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-06-05 The University is waiting on a response from the U. S. Department ofEducation regarding resolution of this finding. \r\n-3- \r\n \r\n SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Significant Deficiency Finding Control Number: FS-548-07-01 \r\n \r\nCondition: \r\n \r\nThrough our examination of Savannah State University it was determined that the financial information maintained in the University's financial accounting system is not adequately protected, thus creating a potential for misstatement of the basic financial statements. \r\n \r\nCriteria: \r\n \r\nThe University's management is responsible for designing and maintaining internal controls that reasonably mitigate the risk of loss, manipulation, or corruption of data due to internal or external threats. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nBased on information revealed by audit procedures, it was determined that financial information could be lost due to threats in the form ofunauthorized access, disaster, and/or failure of back-ups. \r\n \r\nCause: \r\n \r\nManagement's risk assessment or lack thereof failed to identify risk to financial data. Management further failed to implement an adequate control structure to mitigate the impact ofvulnerabilities to the financial information. \r\n \r\nEffect: \r\n \r\nWithout satisfactory controls in place, losses, changes or misuses of data could occur and possibly not be detected, resulting in a misstatement of the financial statements. \r\n \r\nRecommendation: \r\n \r\nManagement should perform a complete risk assessment to identify internal and external threats that could cause loss, manipulation, or corruption ofdata maintained in the financial information system. Policies and procedures should be developed and implemented to address the weaknesses identified in the risk assessment. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-02 \r\n \r\nCondition: \r\n \r\nThrough our examination of the University's Annual Financial Report and budgetary basis financial statements, it was determined that the financial statements were inaccurate and employees and/or management lacked adequate guidance/training to reasonably ensure that these financial statements are fairly presented. \r\n \r\nCriteria: \r\n \r\nManagement is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for ensuring employees or management are proficient in their assigned functions; for selection and application of accounting principles; and for the fair presentation of the financial statements in conformity with generally accepted accounting principles. \r\n \r\nQuestioned Cost: Information: \r\n \r\nNIA \r\n Based on information revealed by audit procedures, employees and/or management have insufficient training and/or knowledge to adequately perform their assigned functions. \r\n \r\n A review ofthe budget basis financial statements revealed the following: \r\n1) Inadequate documentation was provided to support four adjusting journal entries. Upon further review, it was discovered that the entries were incorrect and should not have been recorded. Correcting entries were proposed by the auditor and made to correct financial statements. \r\n2) The University failed to properly reconcile Fund Balance, July 1, 2006 to amounts reported on Schedule \"1\" in the prior year audit report. Adjustments were proposed by the auditor and made to correct errors identified. \r\n3) The University inadvertently requested and received reimbursement from GSFIC twice. Management was unaware that the journal entry to record the receipt of funds was made incorrectly resulting in Accounts Receivable being understated by$ 102,750. An adjustment was proposed by the auditor and made to reclassify the amount to Accounts Payable. \r\n \r\n-2 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-02 \r\n \r\n A review of the University's Statement of Revenues, Expenses and Changes in Net Assets revealed that Investment Income was overstated in the amount of$284,470.80 due to the erroneous inclusion ofcurrent year contributions, deductions, and adjustments to endowment funds. \r\n \r\n For the year under review, the following deficiencies were noted on the University's Statement of Cash Flows: \r\n \r\n1) No documentation was available to support the purchases of capital assets reported as Cash Flows from Capital and Related Financing Activities. \r\n \r\n2) No documentation was provided for the change in Other Assets of $310,033 on the Reconciliation of Operating Loss to Net Cash Provided (Used) by Operating Activities. \r\n \r\n3) The University failed to properly report the change in the fair value of investments in the amount of $48,895 as noncash activity. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of a lack of internal controls over the preparation of the basic financial statements and budgetary basis financial statements. In addition, the University failed to ensure that personnel in key accounting functions were adequately trained and proficient. \r\n \r\nEffect: \r\n \r\nA lack of adequate accounting controls and procedures, coupled with ineffective or insufficient training ofpersonnel, could place the University in a situation where incorrect reporting of financial position could occur. \r\n \r\nRecommendation: \r\n \r\nThe University should establish policies and procedures to ensure that personnel responsible for the accounting and reporting functions are adequately trained and proficient in preparing the entity's financial statements. \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Accounting Controls Significant Deficiency Finding Control Number: FS-548-07-03 \r\n \r\nCondition: \r\n \r\nThe accounting procedures ofthe University were insufficient to provide for adequate controls over Cash and Cash Equivalents. \r\n \r\nCriteria: \r\n \r\nAn adequate system of internal controls dictate 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. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nA review ofthe bank reconciliations for the Operating and Payroll accounts revealed the following: \r\n \r\n1) Bank reconciliations were not performed in a timely manner. The bank reconciliations for July 2006 through February 2007 were not completed until March 2007. The University contracted with a CPA firm to complete all bank reconciliations for the Operating and Payroll accounts for the year under review. \r\n \r\n2) The University failed to post receipts and disbursement in a timely manner to the financial records for items that had cleared the bank. Reconciling items were carried on the bank reconciliation for an unreasonable amount of time. \r\n \r\n3) An unidentified variance of$15,250.00 was noted on the December 2006 reconciliation for the Operating account and an unidentified variance of $31,297.56 was noted on the February 2007 reconciliation of the Payroll account. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement satisfactory controls to ensure that bank reconciliations were performed on a monthly basis and reconciling items were properly identified and corrected within a reasonable amount of time. \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Accounting Controls Significant Deficiency Finding Control Number: FS-548-07-03 \r\n \r\nEffect: Recommendation: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itselfin a position where potential misappropriation of assets could occur. In addition, the lack ofcontrols could impact reporting of its financial position and results of operations. \r\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. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Significant Deficiency Finding Control Number: FS-548-07-04 \r\n \r\nCondition: \r\n \r\nInternal control procedures were insufficient to provide for adequate collection of tuition and fees. This deficiency was previously reported in finding FS-548-06-04 from fiscal year ended June 30, 2006. \r\n \r\nCriteria: \r\n \r\nThe Board of Regents Policy Manual Section 704.03 states \"All tuition and fees are due and payable upon registration. Exceptions to the time of payment are as follows: \r\n \r\n1) An institution may defer tuition and fees up to the amount authorized for a specific academic term for students whose fees are guaranteed and will be paid by an outside agency under a documented agreement with the institution. \r\n \r\n2) An institution may defer tuition and fees up to the amount of the aid granted for a specified academic term for students who have an institution administered loan or scholarship in process. \r\n \r\n3) An institution may defer tuition and fees up to the limit stated in the certificate or other document for a specified academic term for foreign students who have a certificate or other acceptable documented evidence that payment will be made after a statement of charges from the student has been present for payment\". \r\n \r\nQuestioned Cost: NIA \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Significant Deficiency Finding Control Number: FS-548-07-04 \r\n \r\nInformation: \r\n \r\nA test of 10 students accounts receivable under one year old revealed 7 instances in which Savannah State University did not comply with the Board of Regents Policy Manual for collecting tuition and fees. It was determined that out of the $35,972.93 accounts receivable tested, $27,132.93 were not supported by approved student financial aid. \r\n \r\nAdditional testing of 10 accounts receivable over one year old revealed that all 10 accounts receivable totaling $88,009.97 were not supported by financial aid or any other method of payment. \r\n \r\nInadequate collection procedures contributed to the reserve for uncollectible student accounts receivable balance, on the budget statements increasing from $290,678.34 in the prior year to $495,762.68 at fiscal year ended June 30, 2007. In addition, the University wrote off$ I02, 144.58 ofaccounts receivable considered to be uncollectible during fiscal year 2007. The University also made a GAAP journal entry to increase Allowance for Doubtful Accounts by $534,628.68. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that only students with approved financial aid would receive tuition and fee deferments in accordance with the Board of Regents Policy Manual. \r\n \r\nEffect: \r\n \r\nBy allowing students to enroll and remain in school without approved financial aid, the University has incurred student accounts receivable which were not in accordance with Board of Regents policy. In addition, the University continued to establish accounts receivable that are not likely to be collected. \r\n \r\nRecommendation: \r\n \r\nThe University should follow billing and collection guidelines as set forth in the Board ofRegents' Business Procedures Manual. Furthermore, no student should be granted a deferment without having approved financial aid. \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-05 \r\n \r\nCondition: \r\n \r\nThe accounting procedures ofthe University were insufficient to provide for adequate controls over Revenues/Receivables/Receipts and the General Ledger. \r\n \r\nCriteria: \r\n \r\nThe University's management is responsible for designing and maintaining internal controls that provide reasonable assurance that receipts are properly documented, processed and reported within its accounting records. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following: \r\n \r\n1) The Accounts Receivable on the Annual Financial Report were understated by $102,750.00. The University inadvertently requested and received reimbursement from GSFIC twice. \r\n \r\n2) Based on a review of thirty journal entries, recording the receipt of State and Federal funds, three instances were noted where the University failed to post receipts for two Restricted Fund grants to the financial records in a timely manner. \r\n \r\n3) Based on a review of the daily receipt files, three checks were held for an extensive period of time before remittance to the Cashier's office for deposit. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement satisfactory controls to: ( 1) ensure revenues, receivables and receipts were properly documented and recorded in the accounting records in a timely manner and (2) ensure amounts posted to the general ledger were accurate. \r\n \r\nEffect: \r\n \r\nFailure to implement satisfactory accounting controls and procedures could cause information generated from the general ledger to be inaccurate or misleading which could impact the University's reporting of its financial position and results of operations. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-05 \r\n \r\nRecommendation: \r\n \r\nThe University should review the accounting controls and procedures currently in place, identify weaknesses and design and implement procedures necessary to ensure correct reporting ofRevenues, Receivables and Receipts. \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-06 \r\n \r\nCondition: \r\n \r\nThe accounting procedures for the University were not adequate to ensure that activity ofaccounts payable and prepaid items were properly maintained on the accounting records. In addition, for budgetary reporting purposes, invalid encumbrances were reported as payables. \r\n \r\nCriteria: \r\n \r\nThe University's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly approved, documented, processed and reported. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following: \r\n \r\n1) For budgetary purposes, encumbrances tested of $224,677.30 were deemed invalid. The invalid encumbrances included amounts that were previously paid, items that were never ordered, or encumbrances for which supporting documentation could not be provided by the University. \r\n \r\n2) A complete and accurate listing of accounts payable could not be obtained for housing deposits and the medical spending account. The listings contained positive and negative amounts. Students whose room deposits were refunded or forfeited were included and account balances for former employees with spending accounts were never cleared. \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Significant Deficiency Finding Control Number: FS-548-07-06 \r\n \r\n3) Prepaid items for travel and telecommunication charges were not cleared in a timely manner and/or in accordance with institutional policy. The University failed to recognize expenditures for travel that was completed and telecommunication services that were used. \r\n \r\n4) The reconciliation of prepaid postage was performed incorrectly, resulting in the University inadvertently expensing $58,965.28 of prepaid postage. \r\n \r\nCause: \r\n \r\nThe University failed to implement satisfactory controls to: (1) ensure that accounts payable, prepaid items, and encumbrances were properly documented and recorded in the accounting records, (2) ensure that accounts were monitored and cleared in a timely manner, and (3) ensure that amounts posted to the general ledger were accurate. \r\n \r\nEffect: \r\n \r\nFailure to implement satisfactory accounting controls and procedures could cause information generated from the general ledger to be inaccurate or misleading which could impact the University's reporting of its financial position and results of operations. \r\n \r\nRecommendation: \r\n \r\nThe University should review the accounting controls and procedures currently in place, identify weaknesses and design and implement procedures necessary to ensure correct reporting of expenditures and liabilities for GAAP basis and budgetary basis purposes. \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Significant Deficiency - Material Weakness Finding Control Number: FS-548-07-07 \r\n \r\nCondition: \r\n \r\nAccounting procedures of the University were insufficient to provide adequate control over Capital Assets. \r\n \r\nCriteria: \r\n \r\nThe University should maintain capital asset records in accordance with capitalization guidelines and instructions provided in Chapter 7 ofthe Board of Regents' Business Procedures Manual. \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Significant Deficiency - Material Weakness Finding Control Number: FS-548-07-07 \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies were noted relating to Capital Assets: \r\n \r\n1) The University's Capital Asset Management Module was not reconciled to the Capital Ledger. There was an unidentified variance of $143,753.69 for Equipment. \r\n \r\n2) Assets listed on the capital assets inventory records were not identified by decal number or the dates of acquisition. \r\n \r\n3) A sample of forty-four (44) equipment items revealed the following: \r\n \r\n(a) One asset valued at $38,054.00 with a description of \"Other Equipment\" could not be located. Further research by the University revealed that this was actually a 22 foot Boston Whaler boat that was incorrectly recorded in the Capital Asset Module twice. \r\n(b) Two assets selected from the listing totaling $21,659.60 were missing and could not be located. \r\n(c) Two assets totaling $26,235.00 were traded-in butthe University failed to remove them from the Capital Asset Module. \r\n(d) Eight assets tested were not properly decaled. Four of these assets were new items. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement appropriate internal controls and procedures necessary to properly record, maintain and track capital assets. \r\n \r\nEffect: \r\n \r\nBy failing to accurately record and track capital assets, the College could place itself in a position where potential misappropriation of assets could occur and impact reporting ofits financial position and results of operations. \r\n \r\n- IO - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Significant Deficiency - Material Weakness Finding Control Number: FS-548-07-07 \r\n \r\nRecommendation: \r\n \r\nThe University should establish appropriate procedures and controls to ensure that reconciliations are performed for the Capital Assets Module and the related subsidiary records. In addition, policies and procedures should be established to ensure that an accurate physical inventory of equipment is performed and that all capital assets listed on the capital assets inventory records can be identified by decal number, description and location. \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Satisfactory Academic Progress Procedures Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-01 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid (SFA) Office improperly applied satisfactory academic progress standards to SFA aid recipients. The University has not included in its written satisfactory academic progress academic policy the handling ofcourse repetitions. This is a repeat finding (FA-548-06-01) from fiscal year ended June 30, 2006. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nAn examination of the University's procedures revealed that satisfactory academic progress standards were evaluated on students enrolled for Spring semester only. The University's policy also allows for course repetitions where only the highest grade is counted. However, the University failed to include the method of handling course repetitions in its written policy. \r\n \r\nCause: \r\n \r\nThe University did not properly monitor satisfactory academic progress as required by the Federal guidelines. \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Satisfactory Academic Progress Procedures Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-01 \r\n \r\nEffect: \r\n \r\nStudents not enrolled for Spring semester failed to be evaluated for satisfactory academic progress standards and were awarded SFA funds even though they were not eligible. The University's written policy did not meet Federal guidelines. \r\n \r\nRecommendation: \r\n \r\nProcedures should be implemented to ensure satisfactory academic progress is performed for all SFA students enrolled in any semester during the academic year under review. The University should contact the U.S. Department of Education regarding the resolution of this finding. \r\n \r\nELIGIBILITY Inadequate Control Procedures for Determining Enrollment Status Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-02 \r\n \r\nCondition: \r\n \r\nThe University did not have adequate procedures in place to determine a student's enrollment status prior to disbursing Federal financial aid. In addition, procedures were not in place to determine if a student's award should be recalculated due to a change in enrollment status. This is a repeat finding (FA-548-06-02) from fiscal year ended June 30, 2006. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to the William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nQuestioned Cost: NIA \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Control Procedures for Determining Enrollment Status Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-02 \r\n \r\nInformation: \r\n \r\nFor Fall 2006, the procedures utilized to determine a student's enrollment status prior to disbursing Federal financial aid were inadequate. The University's grading policy requires instructors to report those students who never attend class to the Registrar's office. However, the enrollment hours utilized in disbursing student financial aid was determined prior to the reporting deadline for instructors noted above. In addition, once the instructors identified students on the class roster that had never attended, the University did not reevaluate to determine if Federal financial aid was adequately distributed. \r\n \r\nCause: \r\n \r\nThe Registrar's Office did not have effective procedures in place to determine a student's enrollment status prior to the disbursement of financial aid. \r\n \r\nEffect: \r\n \r\nThe Student Financial Aid Office disbursed funds without regard to enrollment status. The SFA Office has failed to implement procedures to identify Pell recipients who drop below half time status. \r\n \r\nRecommendation: \r\n \r\nThe University should review internal controls in place and implement procedures to properly monitor and update a student's enrollment status. Recalculations should be performed, if necessary, prior to disbursement of financial aid. The University should also contact the U. S. Department of Education regarding the resolution of this finding. \r\n \r\nELIGIBILITY Overpayment of Student Financial Aid Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-03 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid (SFA) Office improperly determined the eligibility status of students receiving financial aid. This is a repeat finding (FA-548-06-03) from fiscal year ended June 30, 2006. \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Overpayment of Student Financial Aid Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-03 \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general requirements for administering Student Financial Aid (SFA) programs, 34 CFR 685 provides eligibility and other related program requirements that are specific to the Federal Direct Student Loan program, and 34 CFR 690 provides eligibility and other related program requirements specific to the Federal Pell Grant Award Program. \r\n \r\nQuestioned Cost: \r\n \r\nQuestioned Costs of $8,510.50 were identified for students who received student financial aid in excess of their eligible need. The projection of Questioned Costs was $913,145.79 for students who received student financial aid in excess of their eligible need. \r\n \r\nInformation: \r\n \r\nA sample offorty financial aid files was selected to determine iffinancial aid was properly calculated and disbursed to eligible students. The items sampled contained financial aid disbursements of $224,942.80 out of a population of $26,496,067.00. The following deficiencies were noted: \r\n \r\n1) Two students were not in compliance with the University's published satisfactory academic progress policies. Federal regulations (34 CFR 668.32 and 668.34) state that a student must maintain satisfactory academic progress to be eligible to receive financial assistance under the Title IV programs. The University's policy states that students are required to earn a minimum number of hours each academic year depending upon their enrollment status. The two students failed to meet the quantitative requirements ofsatisfactory academic progress and this noncompliance resulted in SFA over disbursements of $8,510.50. \r\n \r\n2) The University allowed two students to enroll and remain in school without approved financial aid. The University has incurred an accounts receivable of $2,710.00 for these students which is not in accordance with Board of Regents policy. This deficiency did not result in an SFA overpayment. \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Overpayment of Student Financial Aid Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-03 \r\n \r\n3) The University failed to charge one student tuition and fees for Fall 2006. As a result, the student's account reflected a credit balance of $1,758.34. This credit was then applied as payment for charges assessed for Spring 2007. Due to this error, the student was erroneously issued a refund of $699.02. The student owes the University $1,513.66. This deficiency did not result in an SFA overpayment. \r\n \r\nCause: \r\n \r\nSFA Office had not performed a risk assessment ofits procedures to identify areas subject to nonconformity with eligibility requirements, and thus there were insufficient controls in place to assure that SFA funds were awarded to eligible students. In addition, the University failed to follow billing and collection guidelines as set forth in the Board of Regents' Business Procedures Manual. \r\n \r\nEffect: \r\n \r\nSFA office was not in compliance with Federal regulations concerning the awarding of SFA funds to students. For two students, a total of $8,510.50 was disbursed in excess oftheir eligibility. Also, the University has incurred student accounts receivable which are not in accordance with Board of Regents policy. \r\n \r\nRecommendation: \r\n \r\nThe University should perform a risk assessment of its procedures to assure that a proper eligibility determination of a student's financial aid is made in line with regulations. Where vulnerable, the University should develop and/or modify its policies and procedures to ensure that correct amounts are awarded to students in conformity with financial need requirements. Additionally, the University should develop and implement a monitoring process to ensure that controls are properly implemented. The University should also contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Inadequate Control Procedures over Unofficial Withdrawals Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-04 \r\n \r\nCondition: \r\n \r\nThe internal control procedures to determine whether a student completed the academic period or unofficially withdrew were inadequate. This is a repeat finding (FA-548-06-04) from fiscal year ended June 30, 2006. \r\n \r\nCriteria: \r\n \r\nProvisions included 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe University failed to perform refund calculations for students who unofficially withdrew in accordance with the University's grading policy. Based on the grading policy, a student with all IW grades denotes an unofficial withdrawal. For the year under review, the Bursar's office did not calculate a refund for students with all IW grades. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University did not follow its established procedures for unofficial withdrawals. \r\n \r\nEffect: \r\n \r\nThe University has not properly calculated a refund for students who unofficially withdrew. Unearned Title IV funds are not being returned as required. \r\n \r\nRecommendation: \r\n \r\nThe University should establish appropriate controls to ensure that the procedures in place are utilized and properly applied to determine whether a SFA recipient who began attendance during a semester completed the academic period or unofficially withdrew. The University should also contact the U.S. Department of Education regarding the resolution of this finding. \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-05 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid office failed to properly perform the refund process and to ensure that unearned Title IV funds were returned in a timely manner. This is a repeat finding (FA-548-06-05) from fiscal year ended June 30, 2006. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general requirements for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nQuestioned Cost: $3,289.00 \r\n \r\nInformation: \r\n \r\nEighteen students that received Federal financial aid and officially withdrew from the University were randomly selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student. Our examination revealed the following deficiencies: \r\n \r\n1) Unearned Title IV funds were not applied by the University to the appropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244 for two students. \r\n \r\n2) The University applied the second disbursement ofSFA funds to four students' accounts in error after receiving notification oftheir official withdrawal. The University applied the disbursement to the outstanding balance on the students' account and remaining amounts, if any, were refunded to the student. The University failed to \"drop\" the students from their classes in the student information system (BANNER) before the refund was disbursed. None of the Title IV funds, totaling $3,289.00 were returned. \r\n \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2007 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Significant Deficiency Student Financial Aid Cluster Program Finding Control Number: FA-548-07-05 \r\n \r\n3) The University failed to properly calculate a withdrawal refund for one student who received an institutional basketball scholarship of $2,355.00. The entire scholarship was removed from the students account, resulting in an accounts receivable of $1,105.09. The University failed to consider and prorate the portion of the scholarship earned by the student in either the refund calculation or the establishing of the student accounts receivable. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of management's failure to properly process student financial aid refunds in accordance with Federal regulations. \r\n \r\nEffect: \r\n \r\nThe SFA Office refunded SFA funds to students incorrectly and unearned funds were not returned in a timely manner. \r\n \r\nRecommendation: \r\n \r\nThe University should develop and implement procedures to ensure that student financial aid refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should also contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\n- 18 - \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2005-h2006","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2005/2006"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, GA : Georgia. Dept. of Audits and Accounts, 2006"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006"],"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-bs25-b2005-h2006"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2005-h2006"],"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":"STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS \r\nI \r\nSAVANNAH STATE UNIVERSITY SAVANNAH, GEORGIA REPORT ON AUDIT \r\nOF THE FINANCIAL STATEMENTS \r\nFOR THE FISCAL YEAR ENDED JUNE 30, 2006 \r\nRussell W. Hinton State Auditor \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\n2 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n3 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n4 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n5 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\n1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND \r\n \r\n24 \r\n \r\n2 BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \r\n \r\n(NON-GAAP BASIS) BUDGET FUND \r\n \r\n25 \r\n \r\n3 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n27 \r\n \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n Russell W. Hinton \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nSeptember 29, 2006 \r\n \r\nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Honorable Dr. Julius Scott, Jr., Interim President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying basic financial statements (Exhibits A through D) of Savannah State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2006. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\nWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \r\nAs discussed in Note 1, the financial statements ofSavannah 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 Savannah State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n06ARL-62 \r\n \r\n In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 2006, 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. \r\nManagement's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it. \r\nOur audit was conducted for the purpose of forming an opinion on the basic financial statements of Savannah State University taken as a whole. The accompanying supplementary information (Schedules 1 through 3) 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. \r\nRespectfully submitted, \r\n \r\nRWH:gp 06ARL-62 \r\n \r\nRussell W. Hinton, CPA, CGFM State Auditor \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n SAVANNAH STATE UNIVERSITY \r\nManagement's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State University is one of the 35 institutions of the University System of Georgia. The University, located in Savannah, Georgia, was founded in 1890 as a department of the State University for the education and training of Negro students. Savannah State University now serves a diverse student population as a senior University of the University System of Georgia. The University serves a primarily African American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Science and Technology, which leads to baccalaureate and master's degrees. This wide range of educational opportunities attracts highly qualified faculty and a student body of almost 3,000 students each year. The institution continues to grow as shown by the comparison numbers that follows: \r\n \r\nFaculty \r\n \r\nStudents \r\n \r\nFY2006 FY2005 FY2004 \r\n \r\n120 \r\n \r\n2,801 \r\n \r\n136 \r\n \r\n2,507 \r\n \r\n124 \r\n \r\n2,504 \r\n \r\nOverview ofthe Financial Statements and Financial Analysis \r\n \r\nSavannah State University is proud to present its financial statements for fiscal year 2006. 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 2005 and fiscal year 2006. \r\n \r\nStatement ofNet Assets \r\n \r\nThe Statement of Net Assets presents the assets, liabilities, and net assets of the University as 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 Savannah 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 Financial Statements. \r\n \r\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. \r\n \r\n- 1- \r\n \r\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. \r\n \r\nStatement of Net Assets, Condensed \r\n \r\nJune 30, 2006 \r\n \r\nJune 30, 2005 \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\n \r\n$ 7,528,387.70 50,705,415.28 3,150,016.53 \r\n \r\n$ 5,136,183.87 50,459,188.20 2,695,584.56 \r\n \r\nTotal Assets \r\n \r\n$61,383,819.51 \r\n \r\n$58,290,956.63 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n$ 3,165,535.23 674,671.00 \r\n \r\n$ 3,084,206.27 657,259.73 \r\n \r\nTotal Liabilities \r\n \r\n$ 3,840,206.23 \r\n \r\n$ 3,741,466.00 \r\n \r\nNet Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted \r\n \r\n$50,705,415.28 1,034,603.30 1,184,490.35 4,619,104.35 \r\n \r\n$50,459,188.20 814,507.96 856,454.00 \r\n2,419,340.47 \r\n \r\nTotal Net Assets \r\n \r\n$57,543,613.28 \r\n \r\n$54,549,490.63 \r\n \r\nThe total assets of the institution increased by $3,092,862.88. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,835,238.13 and $1,189,257.53 in cash and cash equivalents and investments respectively. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution. \r\n \r\nThe total liabilities for the institution increased by $98,740.23. The combination of the increase in total assets of $3,092,862.88 and the increase in total liabilities of $98,740.23 yields an increase in total net assets of $2,994,122.65. The increase in total net assets is primarily in the category of unrestricted assets in the amount of$2,199,763.88. \r\n \r\n- 11 - \r\n \r\n Statement ofRevenues, Expenses and Changes in Net Assets \r\n \r\nChanges in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. \r\n \r\nStatement of Revenues, Expenses and Changes in Net Assets, Condensed \r\n \r\nJune 30, 2006 \r\n \r\nJune 30, 2005 \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$ 27,042,961.03 45,560,682.04 \r\n \r\n$25,763,451.90 44,370,963.44 \r\n \r\nOperating Loss \r\n \r\n$-18,517,721.01 $-18,607,511.54 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n19,543,706.73 \r\n \r\n17,408,209.12 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \r\n \r\n$ 1,025,985.72 $ -1,199,302.42 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n1,775,031.00 \r\n \r\n536,833.49 \r\n \r\nIncrease (Decrease) in Net Assets \r\n \r\n$ 2,801,016.72 $ -662,468.93 \r\n \r\nNet Assets at Beginning of Year, as Originally Reported \r\n \r\n$ 54,549,490.63 \r\n \r\n$ 55,211,959.56 \r\n \r\nPrior Year Adjustments \r\n \r\n193,105.93 \r\n \r\nNet Assets at Beginning of Year Restated \r\n \r\n$ 54,742,596.56 $ 55,211,959.56 \r\n \r\nNet Assets at End of Year \r\n \r\n$ 57,543,613.28 \r\n \r\n$ 54,549,490.63 \r\n \r\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: \r\n \r\n- iii - \r\n \r\n Revenue By Source For The Years Ended June 30, 2006 and June 30, 2005 \r\n \r\nJune 30, 2006 \r\n \r\nJune 30. 2005 \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Auxiliary Other \r\n \r\n$ 4,339,387.01 14,110,218.48 \r\n118,193.08 8,387,810.68 \r\n87,351.78 \r\n \r\n$ 4,770,024.29 13,877,574.65 \r\n50,612.82 6,903,196.88 \r\n162,043.26 \r\n \r\nTotal Operating Revenue \r\n \r\n$27,042.961.03 \r\n \r\n$25,763,451.90 \r\n \r\nNonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other \r\n \r\n$17,413,552.00 \r\n806,871.71 154,809.08 1,168,473.94 \r\n \r\n$15,477,839.23 171,575.91 \r\n1,554,669.09 23,137.24 180,987.65 \r\n \r\nTotal Nonoperating Revenue \r\n \r\n$19,543,706.73 \r\n \r\n$17,408,209.12 \r\n \r\nCapital Grants and Gifts State \r\n \r\n$ 1,775,031.00 \r\n \r\n$ 536,833.49 \r\n \r\nTotal Revenues \r\n \r\n$48,361,698.76 \r\n \r\n$43, 708A94.51 \r\n \r\nExpenses (By Functional Classification) For The Years Ended June 30, 2006 and June 30, 2005 \r\n \r\nJune 30. 2006 \r\n \r\nJune 30. 2005 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Expenses \r\n \r\n$12,807,464.43 1,454,993.78 2,182,563.58 4,680,972.29 2,815,832.93 6,648,194.50 5,344,945.83 933,897.83 5,704,493.69 2,987,323.18 \r\n \r\n$11,104,133.29 1,362,198.55 2,369,124.01 4,266,845.64 2,730,946.23 7,006,716.84 6,970,587.64 1,677,076.90 6,883,334.34 \r\n \r\nTotal Expenses \r\n \r\n$45,560,682.04 \r\n \r\n$443 70,963.44 \r\n \r\n- IV - \r\n \r\n The compensation and employee benefits category increased by $1,195,861.10. The increase reflects an increased cost of health insurance for the employees of the institution. Utilities increased by $552,063.24 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2006. \r\n \r\nUnder nonoperating revenues (expenses) state appropriations increased by $1,935,712.77. The increase of state appropriations can be contributed to Savannah State University's increased student enrollment. \r\n \r\nStatement of Cash Flows \r\n \r\nThe final statement presented by Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \r\n \r\nCash Flows for the Years Ended June 30, 2006 and June 30, 2005, Condensed \r\n \r\nJune 30, 2006 \r\n \r\nJune 30, 2005 \r\n \r\nCash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities \r\n \r\n$-15,662,225.60 18,316,374.22 -980,524.88 161,613.95 \r\n \r\n$-14,771,216.72 17,002,387.49 -1,163,120.69 23,137.24 \r\n \r\nNet Change in Cash Cash, Beginning of Year \r\n \r\n$ 1,835,237.69 1,343,441.44 \r\n \r\n$ 1,091,187.32 252,254.12 \r\n \r\nCash, End of Year \r\n \r\n$ 3,178,679.13 $ 1,343,441.44 \r\n \r\nCapital Assets \r\n \r\nThe University did not add any capital assets for facilities in fiscal year 2006. \r\n \r\nFor additional information concerning Capital Assets, see Notes 1 and 6 in the Notes to the Financial Statements. \r\n \r\n- V- \r\n \r\n Long-Term Liabilities Savannah State University had Long-Term Liabilities of $1,209,462.00 of which $534,791.00 was reflected as current liability at June 30, 2006. For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements. Economic Outlook The University is aware of decisions or conditions that are expected to have a significant effect on the financial position or results of operations. Student tuition and fee increases and energy and health insurance cost increases will have a significant adverse impact on the University's ability to expand programs, undertake new initiatives, and meet its core mission and ongoing operational needs. Additionally, the need to continue to address priority needs such as requirements for deferred maintenance, new technology, public safety, and student development and new academic programs is a large challenge facing the University in years to come. Various committees and individuals are assessing the University's performance toward identified goals, use of energy resources and ways to achieve greater efficiencies and reduce expenses in an effort to assist in meeting those future challenges. Dr. Julius Scott, Jr., Interim President Savannah State University \r\n- VI - \r\n \r\n BASIC FINANCIAL STATEMENTS - 1- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30, 2006 \r\nASSETS \r\nCurrent Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items \r\nTotal Current Assets \r\nNoncurrent Assets Noncurrent Cash Short-Term Investments Investments Notes Receivable, Net Capital Assets, Net (Note 6) \r\nTotal Noncurrent Assets \r\nTotal Assets \r\nLIABILITIES \r\nCurrent Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue (Note 7) Other Liabilities Funds Held for Others Compensated Absences \r\nTotal Current Liabilities \r\nNoncurrent Liabilities Compensated Absences \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for: \r\nNonexpendable Expendable Unrestricted \r\nTotal Net Assets \r\nThe notes to the financial statements are an integral part of this statement. \r\n-2- \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ \r\n \r\n3,119,941.01 \r\n \r\n408,457.65 \r\n \r\n1,243,263.38 2,687,777.57 \r\n43,403.20 25,544.89 \r\n \r\n$ \r\n \r\n7,528,387.70 \r\n \r\n$ \r\n \r\n58,738.12 \r\n \r\n826,182.98 \r\n \r\n1,452,951.07 \r\n \r\n812,144.36 \r\n \r\n50,705,415.28 \r\n \r\n$ 53,855,431.81 \r\n \r\n$ 61,383,819.51 \r\n \r\n$ \r\n \r\n622,819.23 \r\n \r\n240,547.00 \r\n \r\n133,921.39 \r\n \r\n418,614.73 \r\n \r\n226,868.55 \r\n \r\n987,973.33 \r\n \r\n534,791.00 \r\n \r\n$ \r\n \r\n3,165,535.23 \r\n \r\n674,671.00 \r\n \r\n$ \r\n \r\n3,840,206.23 \r\n \r\n$ 50,705,415.28 \r\n1,034,603.30 1,184,490.35 4,619,104.35 \r\n \r\n$ 57,543,613.28 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nEXHIBIT\"B\" \r\n \r\nOPERATING REVENUES \r\nStudent Tuition and Fees Less: Scholarship Allowances \r\nGrants and Contracts Federal State Other \r\nSales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises \r\nResidence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES \r\nSalaries Faculty Staff \r\nEmployee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\nNONOPERATING REVENUES (EXPENSES) \r\nState Appropriations Gifts Interest and Other Investment Income Other Nonoperating Revenues \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\nCapital Grants and Gifts State \r\nIncrease (Decrease) in Net Assets \r\nNet Assets - Beginning of Year, as Originally Reported \r\nPrior Year Adjustments \r\nNet Assets - Beginning of Year, Restated \r\nNet Assets - End of Year \r\nThe notes to the financial statements are an integral part of this statement. \r\n-3- \r\n \r\n$ \r\n \r\n9,615,471.06 \r\n \r\n-5,276,084.05 \r\n \r\n13,529,770.41 86,908.66 \r\n493,539.41 118,193.08 \r\n8,925.00 \r\n \r\n2,574,932.93 99,162.40 \r\n3,273,168.94 8,095.97 \r\n416,018.40 1,949,511.91 \r\n66,920.13 78,426.78 \r\n \r\n$ 27,042,961.03 \r\n \r\n$ \r\n \r\n7,571,741.69 \r\n \r\n11,988,590.64 \r\n \r\n5,571,950.12 \r\n \r\n618,632.50 \r\n \r\n2,604,226.50 \r\n \r\n2,741,459.87 \r\n \r\n11,819,863.49 \r\n \r\n2,644,217.23 \r\n \r\n$ 45,560,682.04 \r\n \r\n$ -18,517,721.01 \r\n \r\n$ 17,413,552.00 \r\n806,871.71 154,809.08 1,168,473.94 \r\n \r\n$ 19,543,706.73 \r\n \r\n$ \r\n \r\n1,025,985.72 \r\n \r\n$ \r\n \r\n1,775,031.00 \r\n \r\n$ \r\n \r\n2,801,016.72 \r\n \r\n$ 54,549,490.63 \r\n \r\n193,105.93 \r\n \r\n$ 54,742,596.56 \r\n \r\n$ 57,543,613.28 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2006 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) \r\nNet Cash Provided (Used) by Operating Activities \r\nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes \r\nNet Cash Flows Provided (Used) by Noncapital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets \r\nCASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments \r\nNet Increase (Decrease) in Cash \r\nCash and Cash Equivalents  Beginning of Year \r\nCash and Cash Equivalents End of Year \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \r\nOperating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash \r\nProvided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences \r\nNet Cash Provided (Used) by Operating Activities \r\nNONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest Income Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts \r\nThe notes to the financial statements are an integral part of this statement. \r\n.4. \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ 3,796,352.07 14,668,856.50 83,677.40 -20,987,652.14 -19,533,487.29 -2,604,226.50 -13,065.11 \r\n2,578,561.70 99,162.40 \r\n3,184,786.54 8,095.97 \r\n418,808.98 1,959,136.83 \r\n66,920.13 611 846.92 \r\n$ -15,662,225.60 \r\n \r\n$ 17,413,552.00 95,950.51 \r\n806 871.71 \r\n$ 18,316,374.22 \r\n \r\n$ \r\n \r\n-980 524.88 \r\n \r\n$ \r\n \r\n161 613.95 \r\n \r\n$ 1,835,237.69 \r\n \r\n1343441.44 \r\n \r\n$ 3 178 679.13 \r\n \r\n$ -18,517,721.01 \r\n2,644,217.23 274,410.72 14,802.12 23,933.28 -44,447.62 36,901.24 -6,761.06 -91,482.87 3 922.37 \r\n$ -15,662,225.60 \r\n$ ==\"\"='6;,;;8.,.0=4~.8\"\"7 $ -1775031.00 \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS Savannah 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 those throughout the country. \r\nREPORTING ENTITY Savannah 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 Savannah State University as a separate reporting entity. \r\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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah 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 Reporting Standards. \r\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 14 for additional information. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999, by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required. \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFINANCIAL STATEMENT PRESENTATION Generally 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 activity predominately takes place. \r\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 intra-University transactions have been eliminated. \r\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. \r\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. \r\nSHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 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. \r\nINVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. 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 Balanced Income Fund and the Board of Regents Short-Term Fund are included under Investments. \r\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 \r\n-6 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nACCOUNTS RECEIVABLE expenditures made pursuant to the University's grant and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \r\nINVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\") basis. \r\nNONCURRENT CASH AND INVESTMENTS 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. \r\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 $5,000.00 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000.00 and significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and 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. \r\nEffective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to Savannah State University when complete. For the year ended June 30, 2006, GSFIC transferred capital additions for renovation projects to Savannah State University for $1,775,031.00. \r\nDEPOSITS Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\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 received from grant and contract sponsors that have not yet been earned. \r\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 accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses and Changes in Net Assets. Savannah State University had accrued liability for compensated absences in the amount of $1,205,539.00 as of July 1, 2005. For fiscal year 2006, $787,327.00 was earned in compensated absences and employees were paid $783,404.00, for a net increase of $3,923.00. The ending balance as of June 30, 2006 in accrued liability for compensated absences was $1,209,462.00. \r\nNONCURRENT LIABILITIES Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; and (2) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets. \r\nNET ASSETS The University's net assets are classified as follows: \r\nInvested in capital assets, net ofrelated debt: This classification 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. \r\nRestricted net assets - 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 4415-7 of Annotated Code of Georgia. \r\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. \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nNET ASSETS Expendable Restricted Net Assets include the following: \r\n \r\nRestricted - E\u0026G and Other Organized Activities Federal Loans Institutional Loans Term Endowments \r\n \r\nJune 30, 2006 \r\n$ 38,860.22 858,435.91 21,562.22 265,632.00 \r\n \r\nTotal Restricted Expendable \r\n \r\n$ 1,184,490.35 \r\n \r\nUnrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). 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. At June 30, 2006, there was no surplus balance to be refunded. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\n \r\nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \r\n \r\nR \u0026 R Reserve Reserve for Encumbrances Other Unrestricted \r\nTotal Unrestricted Net Assets \r\n \r\nJune 30, 2006 \r\n$1,071,244.15 1,748,996.09 1,798,864.11 \r\n$4,619,104.35 \r\n \r\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. \r\n \r\nINCOME TAXES Savannah 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. \r\n \r\nCLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria: \r\n \r\n-9 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts, and (4) interest on institutional student loans. \r\nNonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\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. \r\nRESTATEMENT OF PRIOR YEAR NET ASSETS In the prior fiscal year, the depreciable capital assets and associated depreciation were not recorded correctly. As a result of adjustments made to depreciable capital assets, net assets at July 1, 2005, were increased by $193,105.93. \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\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: \r\n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \r\n \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\nDEPOSITS 2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or \r\nmunicipalities of the State of Georgia. \r\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. \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\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 Mortgage Association. \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\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. \r\nAt June 30, 2006, the carrying value of deposits was $4,411,760.76 and the bank balance was $5,649,323.15. Of the University's deposits, $5,324,472.57 was uninsured. Of these uninsured deposits, $5,293,398.71 were collateralized with securities held by the financial institution's trust department or agent in the University's name, and $31,073.86 were uncollateralized. \r\nINVESTMENTS Savannah State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws. \r\nThe University's investments as of June 30, 2006 are presented below. All investments are presented by investment type and debt securities are presented by maturity. \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nINVESTMENTS Investment Type \r\n \r\nFair Value \r\n \r\nOther Investments Equity Securities - Domestic \r\n \r\n$ 410,855.22 \r\n \r\nInvestment Pools Board of Regents Short-Term Fund Balanced Income Fund \r\n \r\n182.00 1,042,095.85 \r\n \r\nTotal Investments \r\n \r\n$ 1,453,133.07 \r\n \r\nThe Board of Regents Investment 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 Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits - Education Audit Division or on their web site at http://www.audits.state.ga.us/intemet/ead/colltech.html. \r\n \r\nThe Weighted Average Maturity of the Short-Term Fund is 3.1 years. Of the University's total investment of $182.00 in the Short-Term Fund, $179.00 is invested in debt securities. \r\n \r\nThe Weighted Average Maturity of the Balanced Income Fund is 8.2 years. Of the University's total investment of $1,042,095.85 in the Balanced Income Fund, $686,329.00 is invested in debt securities. \r\n \r\nInterest Rate Risk Interest 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. \r\n \r\nCustodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investments or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments. \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: DEPOSITS AND INVESTMENTS \r\n \r\nINVESTMENTS At June 30, 2006, $410,855.22 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name and $1,042,277.85 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name. \r\n \r\nNOTE 3: ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the following at June 30, 2006. \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Other \r\n \r\n$ 1,287,607.00 416,994.00 \r\n1,243,263.38 1,366,237.57 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n$ 4,314,101.95 383,061.00 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 3,931,040.95 \r\n \r\nNOTE 4: INVENTORIES \r\n \r\nInventories consisted of the following at June 30, 2006. \r\n \r\nPhysical Plant Other \r\nTotal \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\n$ 39,531.89 3,871.31 \r\n$====4=3'=\"'40=3=.2\"=0 \r\n \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2006. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nFollowing are the changes in capital assets for the year ended June 30, 2006: \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE6: CAPITAL ASSETS \r\n \r\nBeginning Balance (Restated) \r\nJulx I, 2005 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2006 \r\n \r\nCapital Assets, Not Being Depreciated: Land \r\n \r\n$ 575 975.16 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ 575 975.16 \r\n \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$ 63,869,000.50 $ 1,806,568.54 \r\n \r\n2,520,259.00 \r\n \r\n6,532,517.76 \r\n \r\n780,783.63 $ \r\n \r\n6,546,290.51 \r\n \r\n222,460.59 \r\n \r\n55,285.00 \r\n \r\n106,428.80 6,045.58 \r\n \r\n$ 65,675,569.04 2,520,259.00 7,206,872.59 6,762,705.52 55,285.00 \r\n \r\nTotal Assets Being Depreciated \r\n \r\n$ 79,523,352.77 $ 2,809,812.76 $ 112 474.38 $ 82,220,691.15 \r\n \r\nLess: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$ 19,270,707.84 $ 1,658,910.23 $ \r\n \r\n1,166,811.07 \r\n \r\n103,112.77 \r\n \r\n4,210,736.97 \r\n \r\n510,616.03 \r\n \r\n4,792,984.28 \r\n \r\n370,352.33 \r\n \r\n5 793.64 \r\n \r\n1,225.87 \r\n \r\n0.00 $ 20,929,618.07 1,269,923.84 4,721,353.00 5,163,336.61 7 019.51 \r\n \r\nTotal Accumulated Depreciation \r\n \r\n$ 29,447,033.80 $ 2,644,217.23 $ \r\n \r\n0.00 $ 32,091,251.03 \r\n \r\nTotal Capital Assets, Being Depreciated, \r\n \r\nNet \r\n \r\n$ 50,076,318.97 $ 165,595.53 $ 112 474.38 $ 50,129,440.12 \r\n \r\nCapital Assets, Net \r\n \r\n$ 50,652,294.13 $ 165,595.53 $ 112 474.38 $ 50,705,415.28 \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nDeferred revenue consisted of the following at June 30, 2006. \r\n \r\nOther Deferred Revenue \r\n \r\n$ 418,614.73 \r\n \r\nNOTE 8: LONG-TERM LIABILITIES \r\n \r\nLong-term liability activity for the year ended June 30, 2006 was as follows: \r\n \r\nOther Liabilities Compensated Absences \r\n \r\nBeginning \r\nBalance July I, 2005 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2006 \r\n \r\nCurrent Portion \r\n \r\n$ 1 205 539.00 $ 787 327.00 $ 783 404.00 $ I 209 462.00 $ 534,791.00 \r\n \r\nNOTE 9: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nPlan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. TRS \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description 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. \r\n \r\nFunding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah 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 2006, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2006 2005 2004 \r\n \r\n100% 100% 100% \r\n \r\n$1,147,045.76 $1,138,813.05 $1,157,294.27 \r\n \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah State University participates in the Employees' Retirement System of Georgia (ERS), a single-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. \r\n \r\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. All other members are \"new plan\" members subject to the modified plan provisions. \r\n \r\nUnder both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 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. \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\nPlan Description Retirement 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. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution 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. \r\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 ofERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415. \r\nThe ERS issues a financial report each fiscal year, which may be obtained through ERS. \r\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, 2006, for employees covered by ERS was $40,000.00. The University's total payroll for all employees was $19,560,332.33. \r\nUnder the old plan, member contributions consist of 7.41 % of annual compensation. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.5% 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 the year ended June 30, 2006, 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. \r\nTotal contributions to the plan made during fiscal year 2006 amounted to $4,764.00, of which $4,164.00 was made by the University and $600.00 was made by employees. These contributions met the requirements of the plan. \r\nActuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2006, financial report, which may be obtained through ERS. \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\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. 4721-1 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. \r\nFunding Policy Savannah 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 2006, the employer contribution was 9.65% of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \r\nSavannah State University and the covered employees made the required contributions of $501,274.94 (9.65%) and $259,025.20 (5%), respectively. \r\nAIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah 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. \r\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 $3,500.00 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 \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nBenefits 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. \r\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. \r\nTotal contributions made by employees during fiscal year 2006 amounted to $47,466.36 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nThe Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. \r\nNOTE 10: RISK MANAGEMENT \r\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. Savannah 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 selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of Well Point, 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, two fully insured HMO healthcare plan options are also offered to System employees. \r\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' \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 10: RISK MANAGEMENT \r\nindemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Savannah 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. \r\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. \r\nNOTE 11: CONTINGENCIES \r\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 Savannah State University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against Savannah 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, 2006. \r\nNOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, 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 $25,000.00 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. \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\n \r\nAs of June 30, 2006, there were 168 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2006, Savannah State University recognized as incurred $781,073.66 of expenditures, which was net of $322,653.17 of participant contributions. \r\n \r\nNOTE 13: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nThe University's operating expenses by functional classification for fiscal year 2006 are shown below: \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstruction \r\n \r\nResearch \r\n \r\nFunctional Classification \r\n \r\nPublic Service \r\n \r\nAcademic Sutmort \r\n \r\nStudent Services \r\n \r\nInstitutional Sum;iort \r\n \r\n$ 7,283,408.75 $ 193,551.43 $ 48,981.54 $ 33,299.97 $ 12,500.00 \r\n \r\n1,617,552.70 \r\n \r\n97,596.64 \r\n \r\n1,110,744.04 \r\n \r\n2,321,496.14 \r\n \r\n1,421,038.29 $ 3,023,257.54 \r\n \r\n2,155,486.14 \r\n \r\n54,417.18 \r\n \r\n206,831.66 \r\n \r\n574,008.95 \r\n \r\n376,652.66 \r\n \r\n1,565,276.16 \r\n \r\n70,832.69 \r\n \r\n80,154.26 \r\n \r\n33,237.97 \r\n \r\n114,607.22 \r\n \r\n56,099.65 \r\n \r\n179,040.12 \r\n \r\n364,376.18 92,501.25 \r\n \r\n366,563.42 3,216.23 \r\n \r\n148,779.80 23,243.40 \r\n \r\n9,806.00 63,627.18 \r\n \r\n18,223.00 32,991.62 \r\n \r\n277,934.11 76,001.59 \r\n \r\nI, 130,196.50 93,110.22 \r\n \r\n610,370.14 49 124.48 \r\n \r\n610,986.49 -241.32 \r\n \r\n1,131,235.90 432,890.93 \r\n \r\n886,879.62 11 448.09 \r\n \r\n1,409,112.86 117,572.12 \r\n \r\n$ 12 807 464 43 $ 1,454,993 78 $ 218256358 $ 4 680 972 29 $ 2,815 832 93 $ 6 648,194 50 \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nPlant Operations and Maintenance \r\n \r\nFunctional Classification \r\n \r\nScholarships and Fellowshigs \r\n \r\nAuxiliary Entergrises \r\n \r\nUnallocated Exgenses \r\n \r\nTotal Operating Exgenses \r\n \r\n$ 1,302,155.13 402,220.72 -294,524.93 3,740.15 \r\n \r\n$ 1,094,750.16 237,056.65 294,524.93 80,920.44 \r\n \r\n$ 7,571,741.69 11,988,590.64 5,571,950.12 0.00 618,632.50 \r\n \r\n$ 932,897.83 2,263,060.03 \r\n \r\n485,646.16 186,818.57 \r\n \r\n2,604,226.50 2,741,459.87 \r\n \r\n1,592,742.92 75551.81 \r\n \r\n1,000.00 \r\n \r\n3,514,420.42 $ 932,918.64 \r\n \r\n-189 643.64 \r\n \r\n2,054,404.54 \r\n \r\n11,819,863.49 2,644,217.23 \r\n \r\n$ 5,344,945 83 $_2.ll89783 $ 5 704,493.69 $_2,9_8,_\"Z,lli_J_8 $ 45 560,682 04 \r\n \r\nNOTE 14: AFFILIATED ORGANIZATIONS \r\n \r\nIn accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, Savannah State University Foundation and Savannah State University Student Athletic Fund Association have been determined to be legally separate, tax exempt organizations whose activities primarily support Savannah State University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The \r\n \r\n- 20 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2006 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 14: AFFILIATED ORGANIZATIONS \r\nState Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, Savannah State University has not included financial activity for Savannah State University Foundation and Savannah State University Student Athletic Fund Association in these financial statements. \r\n \r\n- 21 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SUPPLEMENTARY INFORMATION - 23 - \r\n \r\n SAVANNAH STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) \r\nBUDGET FUND JUNE 30, 2006 \r\nASSETS \r\nCash and Cash Equivalents Accounts Receivable \r\nFederal Financial Assistance Other Prepaid Items Inventories \r\nTotal Assets \r\nLIABILITIES AND FUND EQUITY \r\nLiabilities Accrued Payroll Accounts Payable Other Liabilities \r\nTotal Liabilities \r\nFund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\nSCHEDULE \"1\" \r\n \r\n$ \r\n \r\n546,269.10 \r\n \r\n1,275,072.72 1,500,283.95 \r\n19,032.89 43,403.20 \r\n \r\n$ 3,384,061.86 \r\n \r\n$ \r\n \r\n269,725.54 \r\n \r\n1,846,381.09 \r\n \r\n40,911.83 \r\n \r\n$ 2,157,018.46 \r\n \r\n$ \r\n \r\n24,154.54 \r\n \r\n702,120.45 \r\n \r\n171,229.85 \r\n \r\n38,860.22 \r\n \r\n290,678.34 \r\n \r\n$ 1,227,043.40 \r\n \r\n$ 3,384,061.86 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n- 24 - \r\n \r\n SAVANNAH STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) \r\nBUDGET FUND YEAR ENDED JUNE 30, 2006 \r\n \r\nSCHEDULE \"2\" \r\n \r\nREVENUES State Appropriations State General Funds Federal Funds Other Funds Total Revenues \r\nEXPENDITURES Public Services/Special Funding Initiatives Teaching Total Expenditures Excess of Funds Available over Expenditures \r\nFUND BALANCE JULY 1 Reserved \r\nADJUSTMENTS Prior Year Payables/Expenditures \r\nFUND BALANCE JUNE 30 \r\nSUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable \r\nTotal Fund Balance \r\n \r\nBUDGET \r\n \r\nACTUAL \r\n \r\nVARIANCE FAVORABLE (UNFAVORABLE) \r\n \r\n$ 17,413,552.00 $ 17,413,552.00 $ \r\n \r\n15,168,752.00 \r\n \r\n13,831,408.58 \r\n \r\n11,505,355.00 \r\n \r\n12,109,822.87 \r\n \r\n$ 44,087,659.00 $ 43,354,783.45 $ \r\n \r\n0.00 -1,337,343.42 \r\n604,467.87 \r\n-732,875.55 \r\n \r\n$ \r\n \r\n448,847.00 $ \r\n \r\n451,283.58 $ \r\n \r\n43,638,812.00 \r\n \r\n42,778,612.93 \r\n \r\n$ 44,087,659.00 $ 43,229,896.51 $ \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n124,886.94 $ \r\n \r\n-2,436.58 860 199.07 \r\n857,762.49 \r\n124,886.94 \r\n \r\n820,507.00 \r\n \r\n281,649.46 \r\n$ 1,227,043.40 \r\n \r\n$ \r\n \r\n24,154.54 \r\n \r\n702,120.45 \r\n \r\n171,229.85 \r\n \r\n38,860.22 \r\n \r\n290,678.34 \r\n \r\n$ 1,227,043.40 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n- 25 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTotals per Annual Supplement \r\nAccruals June 30, 2006 June 30, 2005 \r\nCompensated Absences June 30, 2006 June 30, 2005 \r\nAdjustments Shared Services on Jointly Staffed Personnel Armstrong Atlantic State University Alemayehu, Tsehai Richardson, Joseph \r\nUnidentified Variance \r\n \r\nSALARIES \r\n \r\nTRAVEL \r\n \r\n$ 19,551,837.94 $ \r\n \r\n618,632.50 \r\n \r\n240,547.00 -216,784.80 \r\n \r\n1,123,512.78 -1,119,869.15 \r\n \r\n-6,415.56 -20,764.81 \r\n8,268.93 \r\n$ 19,560,332.33 $ ==61=8=,6=3=2.=50= \r\n \r\n- 27 - \r\n \r\n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-04-01 FS-548-04-02 FS-548-04-04 FS-548-04-06 FS-548-05-01 FS-548-05-02 FS-548-05-03 \r\n \r\nFurther Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Action Implemented Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Action Implemented \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-05-01 \r\n \r\nThe finding is not corrected. The planned corrective action that was implemented did not correct the deficiency and the University exceeded the allowable number of out-of-state fee waivers for fiscal year 2006. New policies and procedures which include the direct monitoring ofthe out-of-state fee waivers issued by the Office of the Comptroller will be implemented for fiscal year 2007. It is anticipated that these new procedures will fully correct the finding. \r\n \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-05-02 \r\n \r\nThe finding is partially resolved. The planned corrective action implemented only partially corrected the deficiency. The University will implement policies and procedures during fiscal year 2007 that will address the unresolved deficiency. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-01-07 FA-548-02-01 FA-548-02-03 FA-548-03-02 FA-548-04-01 \r\n \r\nPreviously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented \r\n \r\n SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Finding Control Number: FS-548-06-01 \r\n \r\nCondition: \r\n \r\nThe accounting procedures ofthe University were insufficient to provide for adequate controls over (1) Cash and Cash Equivalents; (2) Revenues/ Receivables/Receipts; and (3) Expenditures/Liabilities/Disbursements. \r\n \r\nCriteria: \r\n \r\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 and account groups in accordance with generally accepted accounting principles and (2) demonstrate compliance with finance related legal and contractual provisions. Administrative requirements contained in the University System of Georgia, Board of Regents Business Procedures Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A.). \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nWe noted the following weaknesses/deficiencies relating to various control categories: \r\n \r\n(1) Cash and Cash Equivalents \r\n \r\nA review of the bank reconciliations for the Operating and Payroll accounts revealed the following: \r\n \r\n(a) The University failed to post receipts and disbursements in a timely manner to the financial records for items that had cleared the bank. Reconciling items were carried on the bank reconciliation for an unreasonable amount of time. \r\n(b) The University erroneously recorded duplicate receipts totaling $337,376.41 in the financial records for up to four months. \r\n(c) Unidentified variances were noted on the reconciliations for the Operating and Payroll accounts in the amounts of$4,449.19 and $15,422.68, respectively for April 2006. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Finding Control Number: FS-548-06-01 \r\n(2) Revenues/Receivables/Receipts \r\nOur examination and testing for the year under review revealed the following: \r\n(a) The University failed to properly update student accounts in the subsidiary ledger (BANNER) and interface the BANNER \r\nsystem with the GeorgiaFIRST system that records the activity \r\non the general ledger. Numerous adjustments were posted directly to the general ledger via journal entry. (b) The student information system (BANNER) acts as a subsidiary ledger for student accounts receivable, collections of student tuition and fees, and various other revenues. The University is required to prepare reconciliations of the BANNER activity to \r\nthe GeorgiaFIRST system to ensure the accuracy of the \r\ninterfaced data. Section 1.7.2 of the Business Procedures Manual published by the Board of Regents, recommends that these reconciliations be performed weekly and requires them to be performed on a monthly basis. Performance of monthly reconciliations is a necessary control to detect and correct \r\nvariances between BANNER and GeorgiaFIRST in a timely \r\nmanner. Based on a review of six months of reconciliations, the student accounts receivable subsidiary ledger (BANNER) was not properly reconciled to the general ledger. No reconciliation was performed for August 2005 and numerous adjustments to student accounts in the BANNER system were necessary in order to reconcile to the general ledger. (c) Based on a review often j oumal entries, recording the receipt of Federal funds, the University failed to post receipts for thirtyeight Restricted Fund grants to the financial records in a timely manner. (d) Based on a review of twenty-five daily receipt files, adequate documentation was not available to support the cash receipts for two of the days tested. \r\n-2 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Finding Control Number: FS-548-06-01 \r\n \r\n(3) Expenditures/Liabilities/Disbursements \r\n \r\nOur examination and testing for the year under review revealed the following: \r\n \r\n(a) Based on testing of eighty-five expenditures, one item did not have an approved purchase order or check request. Additionally, original invoice documentation was not maintained for one of the vouchers tested. A copy of this invoice was not properly stamped to prevent duplicate payment. \r\n(b) Based on testing of fifty purchasing card transactions, adequate documentation was not available to support six transactions. In addition, sales tax was paid on ten transactions and one instance of splitting payments was noted. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University failed to have adequate accounting policies and procedures in place. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls could impact reporting of its financial position and results of operations. \r\n \r\nRecommendation: \r\n \r\nManagement should review accounting controls and procedures currently in place, identify weaknesses, and implement procedures relative to the above control categories to strengthen the internal controls over the accounting functions. \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Loan Agreement Finding Control: FS-548-06-02 \r\n \r\nCondition: \r\n \r\nThe University entered into a promissory note agreement with an employee whereby funds were loaned to the employee for personal use. \r\n \r\nCriteria: \r\n \r\nOpinion of the Attorney General 2004-3 has held that transactions of this nature would be a violation of the \"gratuities clause\" of the Constitution of the State of Georgia because no \"substantial benefit\" was obtained by the University from this transaction. The Opinion states in part: \r\n \r\n\"The common thread that runs through both the case law and our opinions is that in order to avoid violations of the gratuities clause the state, city, or county must derive some \"substantial benefit\" from the transaction.\" \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nDuring a review ofthe accounts receivable reconciliations, a reconciling item of$8,500.00 was identified. Upon examination ofthe documentation, it was determined that the University authorized and issued a hardship loan to an employee in management. A promissory note was executed and the loan was repaid by payroll deduction. \r\n \r\nCause: \r\n \r\nUniversity personnel advanced funds to an employee in violation of the \"gratuities clause\" of the Constitution of the State of Georgia. \r\n \r\nEffect: \r\n \r\nThe University disbursed funds to an employee through a promissory loan agreement without receiving any \"substantial benefit\" from the transaction which is a violation of State law. \r\n \r\nRecommendation: \r\n \r\nThe University should review current accounting policies and procedures, identify weaknesses and implement procedures to ensure that transactions of this nature do not occur in the future. \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-06-03 \r\n \r\nCondition: \r\n \r\nOur examination of fee waivers for the year under review, revealed that management failed to monitor out-of-state tuition fee waivers. \r\n \r\nCriteria: \r\n \r\nThe Board of Regents Policy Manual, Section 704.0302 concerning fee waivers states, \"the number of such waivers in effect at any time does not exceed two-percent of the equivalent full-time students enrolled at the institution in the fall semester immediately preceding the semester for which the out-of-state tuition is to be waived\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nWaivers for out-of-state tuition granted by the University exceeded the amount allowable per Board of Regents policy by $159,849.32. \r\n \r\nCause: \r\n \r\nManagement did not comply with the Board of Regents policy. \r\n \r\nEffect: \r\n \r\nThe University granted out-of-state tuition waivers in excess of amount allowable by Board of Regents policy. \r\n \r\nRecommendation: The University should follow established policies and procedures to ensure that out-of-state tuition fee waivers are within the allowable limits. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Finding Control Number: FS-548-06-04 \r\n \r\nCondition: \r\n \r\nInternal control procedures of Savannah State University were insufficient to provide for adequate collection of tuition and fees. \r\n \r\nCriteria: \r\n \r\nBoard of Regents Policy Manual Section 704.03 states \"All tuition and fees are due and payable upon registration. Exceptions to the time ofpayment are as follows: \r\n \r\nl) An institution may defer tuition and fees up to the amount authorized for a specific academic term for students whose fees are guaranteed and will be paid by an outside agency under a documented agreement with the institution. \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Inadequate Control Procedures for Collection of Tuition and Fees Finding Control Number: FS-548-06-04 \r\n \r\n2) An institution may defer tuition and fees up to the amount of the aid granted for a specified academic term for students who have an institution administered loan or scholarship in process. \r\n \r\n3) An institution may defer tuition and fees up to the limit stated in the certificate or other document for a specified academic term for foreign students who have a certificate or other acceptable documented evidence that payment will be made after a statement of charges from the student has been presented for payment\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nA test of 20 student accounts receivable under one year old revealed 17 instances in which Savannah State University did not comply with the Board of Regents Policy Manual for collecting tuition and fees. It was determined that out of the $71,784.87 accounts receivable tested, $67,657.87 was not supported by approved student financial aid. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that only students with approved financial aid would receive tuition and fee deferments. \r\n \r\nEffect: \r\n \r\nBy allowing students to enroll and remain in school without approved financial aid, the University has incurred student accounts receivable which were not in accordance with Board of Regents policy. \r\n \r\nRecommendation: \r\n \r\nThe University should follow billing and collection guidelines for student accounts receivable as established in the Board of Regents' Business Procedures Manual. Also, no student should be granted a deferment without having approved financial aid. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Improper Write-off of Accounts Receivable Finding Control Number: FS-548-06-05 \r\n \r\nCondition: \r\n \r\nAccounts Receivable approved by the State Accounting Office to be writtenoff were not appropriately removed from the University's financial records. \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Improper Write-off of Accounts Receivable Finding Control Number: FS-548-06-05 \r\n \r\nCriteria: \r\n \r\nSection 10 ofthe Board ofRegents' Business Procedures Manual (BPM) sets forth requirements for documentation and collection ofaccounts receivable. In accordance with Section 10.4 of the BPM and the Official Code of Georgia (O.C.G.A.) 50-16-18, Institutions may write-off uncollectible accounts receivable ofless than or equal to $3,000.00, ifproper due diligence has been performed and the write-offs have been approved by the State Accounting Office and the State Auditor's Office. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nAccounts Receivable written-offby the University for the current fiscal year totaled $32,585.88. This amount exceeded the amount approved by the State Accounting Office of $30,617.22. These Accounts Receivables were inappropriately removed from the general ledger by journal entry and were not removed from the subsidiary ledger (BANNER system). \r\n \r\nIn addition, the journal entry posted to write-off Accounts Receivable in the Student Activities and Auxiliary Enterprises funds was posted to the wrong accounts. The University's entry was posted to Bad Debt Expense and Allowance for Doubtful Accounts, but the entry should have been posted to Allowance for Doubtful Accounts and Accounts Receivable, removing the activity from the general ledger. Furthermore, the listing of accounts which comprised the Uncollectible Accounts Receivable balance for Student Activities and Auxiliary Enterprises funds did not include the students on this journal entry. \r\n \r\nCause: \r\n \r\nThis condition occurred because management failed to comply with state law regarding Accounts Receivable eligible to be written-off. Management also failed to appropriately remove the Accounts Receivable from the general ledger. \r\n \r\nEffect: \r\n \r\nThe University did not comply with state law concerning the write-off of Accounts Receivable. The University posted inappropriate journal entries to the general ledger. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Improper Write-off of Accounts Receivable Finding Control Number: FS-548-06-05 \r\n \r\nRecommendation: \r\n \r\nThe University should reverse the entries made to the general ledger and write-off eligible Accounts Receivable through the subsidiary ledger. Additionally, the University should follow instructions provided in Sections 10.4 and 10.7 of the BPM regarding due diligence collection efforts on accounts receivable and appropriate write-off procedures. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-548-06-06 \r\n \r\nCondition: \r\n \r\nThe accounting procedures ofthe University were insufficient to provide for adequate controls over Revenues/Receivables/Receipts and the General Ledger. \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, prescribes that an accounting system (1) present fairly and fully disclose the funds of the governmental unit in accordance with generally accepted accounting principles and (2) demonstrate compliance with finance related legal and contractual provisions. Additional administrative requirements are contained in the University System of Georgia, Board of Regents Business Procedures Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A.). \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following deficiencies: \r\n \r\n(1) The GAAP journal entry to reclassify negative student accounts receivable to accounts payable was made incorrectly. The total amount reclassified of $281,147.61 represented individual transactions on the student accounts and not the overall balance. \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-548-06-06 \r\nAdditionally, the GAAP journal entry, to reclassify Accounts Payable - BANNER Clearing Accounts of students with debit balances to Accounts Receivables, was made incorrectly. The total amount reclassified of $164,638.89 represented individual transactions on the student accounts and not the overall balance. (2) The Accounts Receivable on the Annual Financial Report was overstated by $181,631.64. The reversal entry recorded by the University in the prior period failed to remove the invalid student accounts receivable. (3) The University failed to record deferred revenue in the amount of $103,335.77 for the Restricted Funds. (4) The University recorded an accounts receivable of$133,741.19 in Unexpended Plant Funds that was determined to be invalid. (5) A GAAP journal entry, to set up Accounts Receivable for agency accounts with deficit balances, was recorded in excess ofthe actual deficits creating an overstatement of $32,502.09. (6) The Students Accounts Receivable and the BANNER Clearing Accounts reported in the General Ledger were not supported by the BANNER subsidiary ledger. Numerous adjustments to BANNER have been identified. However, the University has failed to record them. (7) Other Accounts Receivable - Travel Advances from the prior period in the amount of $32,764.80 were inappropriately reclassified to Allowance for Uncollectible Accounts Receivable. (8) In a review ofthirty-five accounts receivable over one year old, the following deficiencies were noted: \r\na. A fictitious student by the name of Jane Doe (SN#999-99999) was noted on the BANNER subsidiary ledger. The student has an invalid accounts receivable balance of $4,295.98. \r\nb. The University established an Accounts Receivable from a prior period for employee garnishments. The University remitted payment on behalf of the employee but failed to withhold the deduction from the employee's paycheck. \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-548-06-06 \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement satisfactory controls to: (1) ensure revenues, receivables and receipts were properly documented and recorded in the accounting records, (2) ensure amounts posted to the general ledger were accurate and (3) properly record and maintain the BANNER subsystem. \r\n \r\nEffect: \r\n \r\nFailure to implement satisfactory accounting controls and procedures could cause information generated from the general ledger and the BANNER subsystem to be inaccurate and misleading. In addition, the University could place itself in a position where a material misrepresentation of financial reporting could occur. \r\n \r\nRecommendation: \r\n \r\nThe University should review the accounting controls and procedures currently in place, identify weaknesses, and design and implement procedures necessary to ensure correct reporting of Revenues, Receivables and Receipts. It is recommended that the University implement all of the required processes established by the Board of Regents to ensure that the BANNER subsidiary ledger supports the general ledger accounts. \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balances Finding Control Number: FS-548-06-07 \r\n \r\nCondition: \r\n \r\nThe accounting procedures of the University were insufficient to provide adequate control over the Restricted grant account activity to ensure that funds were available prior to disbursements. \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, which 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. Administrative requirements contained in the University System of Georgia, Board of Regents Business Procedures Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A.). \r\n \r\nQuestioned Cost: NIA \r\n \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balances Finding Control Number: FS-548-06-07 \r\n \r\nInformation: \r\n \r\nAt June 30, 2006, the University had two restricted funds that had deficit cash balances totaling $25,283.65. These deficits were not supported by a valid accounts receivable. \r\n \r\nCause: \r\n \r\nThese deficits occurred because management failed to ensure funds were available prior to disbursement. \r\n \r\nEffect: \r\n \r\nThe University disbursed funds in excess of availability. \r\n \r\nRecommendation: \r\n \r\nThe University should implement procedures to ensure that funds are available prior to disbursement. The University should take appropriate action to secure funding to liquidate these deficit cash balances. \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-06-08 \r\n \r\nCondition: \r\n \r\nThe University failed to have sufficient accounting policies and procedures in place to provide for adequate controls over Expenditures/Liabilities/ Disbursements and General Ledger. \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, which 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. Administrative requirements contained in the University System of Georgia, Board of Regents Business Procedures Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A.). \r\n \r\nQuestioned Cost: NIA \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-06-08 \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following deficiencies: \r\n \r\n(1) The amounts reported in the General Ledger for Accounts Payable BANNER Clearing Accounts were not supported by the BANNER subsidiary ledger. \r\n(2) For budgetary purposes, encumbrances tested of $17,840.27 were paid and deemed invalid. \r\n(3) For budgetary purposes, $384,907.24 in encumbrances for Resident Instruction was removed to cover budget overexpenditures. This still left a budget fund balance deficit of $107,322.35 in the Resident Instruction Fund. This deficit was offset with a matching surplus amount in the Unexpended Plant Fund. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University failed to have adequate accounting policies and procedures in place. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls could impact reporting of its financial position and results of operations. \r\n \r\nRecommendation: \r\n \r\nManagement should review current accounting policies and procedures, identify weaknesses, and implement procedures to ensure that the BANNER subsidiary ledger properly supports the general ledger and that the University does not expend or encumber funds in excess of funds available. \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Finding Control: FS-548-06-09 \r\n \r\nCondition: \r\n \r\nThe accounting procedures of the University were insufficient to provide adequate control over Capital Assets. \r\n \r\nCriteria: \r\n \r\nThe University should maintain capital asset records in accordance with capitalization guidelines and instructions provided in Chapter 7 ofthe Board of Regents Business Procedures Manual. \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Finding Control: FS-548-06-09 \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies were noted relating to Capital Assets: \r\n \r\n(1) The University incorrectly capitalized encumbrances of$12,130.00 in the current year additions for Library Collections. \r\n(2) Library collections in the amount of $172,685.97 were recorded twice by the University resulting in an overstatement for Library Collections on the Annual Financial Report. \r\n(3) Library Collections - Accumulated Depreciation is overstated by $65,006.69. The University incorrectly posted Library Collections directly to the Asset Management module in the Capitals Ledger. \r\n(4) Equipment deletions in the amount of$51,506.00 were improperly removed from the Capital Asset records. The items removed were never reported on the equipment listing. \r\n(5) Equipment-Accumulated Depreciation totaling $25,755.71 for five assets was erroneously deleted from the Capital Asset records. Depreciation expense was never recognized on these items. \r\n(6) Equipment - Accumulated Depreciation is understated by $22,468.81. The University improperly removed the accumulated depreciation ofassets retired in prior periods from the Capital Asset records. \r\n(7) Depreciation Expense reported on the University's Annual Financial Report is overstated by $225,466.41. The University incorrectly recognized prior period adjustments in Accumulated Depreciation for Buildings, Library Collections and Equipment as current year expense. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement satisfactory controls and procedures necessary to properly record and maintain capital asset records. \r\n \r\nEffect: \r\n \r\nWithout proper accounting controls and procedures in place, capital acquisitions and depreciation expense could be reported at amounts not consistent with provisions set forth in Chapter 7 of the Board of Regents Business Procedures Manual. \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Asset Records Finding Control: FS-548-06-09 \r\n \r\nRecommendation: \r\n \r\nThe University should review the accounting procedures in place and design and implement procedures necessary to ensure that assets are properly recorded and accounted for in the Asset Management Module and on the general ledger. \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Satisfactory Academic Progress Procedures Student Financial Aid Cluster Program Finding Control Number: FA-548-06-01 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid (SFA) Office improperly applied satisfactory academic progress standards to SFA recipients. The University has not included in its written satisfactory academic progress policy the handling of course repetitions. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general guidelines for administering Student Financial Aid (SFA) programs. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nAn examination of the University's procedures revealed that satisfactory academic progress standards were evaluated on students enrolled for Spring semester only. The University allows for course repetitions where only the highest grade is counted. However, the University failed to include the method of handling course repetitions in its written policy. \r\n \r\nCause: \r\n \r\nThe University did not properly monitor satisfactory academic progress as required by the Federal guidelines. \r\n \r\nEffect: \r\n \r\nStudents not enrolled for Spring semester failed to be evaluated for satisfactory academic progress standards and ineligible students may have been awarded SFA funds. The University's written policy regarding course repetitions did not meet Federal guidelines. \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Satisfactory Academic Progress Procedures Student Financial Aid Cluster Program Finding Control Number: FA-548-06-01 \r\n \r\nRecommendation: \r\n \r\nProcedures should be implemented to ensure satisfactory academic progress is reviewed for all SFA students enrolled in any semester during the academic year under review. The written policy for satisfactory academic progress should be revised to include how course repetitions are processed. \r\n \r\nELIGIBILITY Inadequate Control Procedures for Determining Enrollment Status Student Financial Aid Cluster Program Finding Control Number: FA-548-06-02 \r\n \r\nCondition: \r\n \r\nThe University does not have adequate procedures in place to determine a student's enrollment status prior to disbursing Federal financial aid. In addition, procedures are not in place to determine if a student's award should be recalculated due to a change in enrollment status. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general prov1s10ns for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nProcedures utilized to determine a student's enrollment status prior to disbursing Federal financial aid are inadequate. The University's grading policy requires instructors to report those students who never attended class to the Registrar's office. However, the enrollment hours utilized in disbursing student financial aid is determined prior to the reporting deadline for instructors noted above. In addition, once the instructors have identified students on the class roster that have never attended, the University does not reevaluate to determine if Federal financial aid was adequately distributed. \r\n \r\nCause: \r\n \r\nThe Registrar's office does not have effective procedures in place to determine a student's enrollment status prior to the disbursement of financial aid. \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Inadequate Control Procedures for Determining Enrollment Status Student Financial Aid Cluster Program Finding Control Number: FA-548-06-02 \r\n \r\nEffect: \r\n \r\nThe Student Financial Aid Office disbursed funds without regard to enrollment status. The SFA Office has failed to implement procedures to identify Pell recipients who drop below half time status. \r\n \r\nRecommendation: \r\n \r\nThe University should review internal controls in place and implement procedures to properly monitor and update a student's enrollment status. Recalculations should be performed, if necessary, prior to disbursement of financial aid. \r\n \r\nELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Finding Control Number: FA-548-06-03 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid (SFA) Office improperly determined the financial need of eligible students. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general prov1s10ns for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Award Program, respectively. \r\n \r\nQuestioned Cost: \r\n \r\nQuestioned Costs of $16,611.00 were identified for students who received student financial aid in excess of their eligible need. The projection of Questioned Costs was $1,430,884.26 for students who received student financial aid in excess of their eligible need. \r\n \r\nInformation: \r\n \r\nA sample of thirty five financial aid files was selected to determine if financial aid was properly calculated and disbursed to eligible students. The items sampled contained financial aid disbursements of$266,585.00 out ofa population of $22,963,836.00. The following deficiencies were noted: \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Finding Control Number: FA-548-06-03 \r\n \r\n(1) Two students were not in compliance with the University's published satisfactory academic progress policies. Federal regulations (34 CPR 668.32 and 668.34) state that a student must maintain satisfactory academic progress to be to eligible to receive financial assistance under Title IV programs. The University's policy states that students are required to earn a minimum number of hours each academic year depending upon their enrollment status. The two students failed to meet the quantitative requirements of satisfactory academic progress and this noncompliance resulted in over-disbursements of $12,611.00. \r\n \r\n(2) One student was not in compliance with the annual loan limit provisions set forth in 34 CPR 685.203 for the Federal Direct Student Loan Program. The student exceeded the annual loan limit and received an over-disbursement of $4,000.00. \r\n \r\nCause: \r\n \r\nSFA office had not performed a risk assessment of its procedures to identify areas subject to nonconformity with eligibility requirements and thus there were insufficient controls in place to assure that SFA funds were awarded in correct amounts to students based on their financial need. \r\n \r\nEffect: \r\n \r\nSFA office was not in compliance with Federal regulations concerning the awarding of SFA funds to students. For three students, a total of$16,611.00 was disbursed in excess of their eligibility. \r\n \r\nRecommendation: \r\n \r\nThe University should perform a risk assessment of its procedures to assure that a proper eligibility determination of a student's financial aid is made in line with regulations. Where vulnerable, the University should develop and/or modify its policies and procedures to ensure that correct amounts are awarded to students in conformity with financial need requirements. Additionally, the University should develop and implement a monitoring process to ensure that controls are properly implemented. The University should also contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Inadequate Control Procedures over Unofficial Withdrawals Student Financial Aid Cluster Program Finding Control Number: FA-548-06-04 \r\n \r\nCondition: \r\n \r\nThe internal control procedures to determine whether a student completed the academic period or unofficially withdrew were inadequate. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general prov1s10ns for administering Student Financial Aid (SFA) programs. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe University failed to perform refund calculations for students who unofficially withdrew in accordance with the University's grading policy. Based on the grading policy, a student with all IW grades denotes an unofficial withdrawal. For the year under review, the Bursar's office calculated refunds for students who earned F grades and did not calculate a refund for students with all IW grades. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University did not follow its established procedures to identify unofficial withdrawals. \r\n \r\nEffect: \r\n \r\nThe University has not properly identified students who unofficially withdrew and students who have earned all F grades. Unearned Title IV funds are not being returned as required and earned Title IV funds are being returned in error. Due to the condition and lack of supporting documentation, the number ofstudents who unofficially withdrew or earned failing grades could not be determined. \r\n \r\nRecommendation: \r\n \r\nThe University should establish appropriate controls to ensure that the procedures in place are utilized and properly applied to determine whether a SFA recipient who began attendance during a semester completed the academic period or unofficially withdrew. \r\n \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-06-05 \r\n \r\nCondition: \r\n \r\nThe Student Financial Aid office failed to properly perform the refund process and to ensure that unearned Title IV funds were returned in a timely manner. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general prov1s10ns for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nEighteen students that received Federal financial aid and officially withdrew from the University were randomly selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student. Our examination revealed the following deficiencies: \r\n \r\n(1) Unearned Title IV funds were not applied by the University to the appropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244 for nine students. \r\n \r\n(2) Four student refunds were not calculated correctly. The charges for housing and meals were excluded from the refund calculation and removed from the students' accounts. The University failed to prorate housing and meals charges for the portion earned by the University. Funds were returned to SFA program that were earned by the University. All the students received a post-withdrawal disbursement. However, the University assessed the pro-rated amount to one student's account after the disbursement was issued and created a balance due from the student. \r\n \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-06-05 \r\n \r\n(3) The University established accounts receivable for two students totaling $6,380.00 after post-withdrawal disbursements were issued. The University discovered that one student was suspended in the prior semester and was not eligible to receive any SFA funds and one student's effective withdrawal date was changed to the notification date of military deployment. The withdrawal date for each student was disregarded and the University removed all charges and payments from the students' accounts and all Title IV funds were returned. \r\n \r\n(4) The University applied the second disbursement of SFA funds to three students' accounts in error after receiving notification oftheir official withdrawal. Each student was issued a refund check because the University failed to \"drop\" the students from their classes in the student information system (BANNER) before the refund was disbursed. All Title IV funds were returned. However, the University reflects accounts receivables of $4,499.00 on the students' accounts. In addition, the University has created accounts receivable for one of the students for a salary overpayment of $3, 182.21 for two direct deposits made in error. \r\n \r\n(5) The University failed to properly calculate a withdrawal refund for one student who received an institutional basketball scholarship. Initially, the University removed all charges for meals and issued a refund to the student for $1,289.99. Subsequently, the student's account was further adjusted and the entire scholarship was removed and an accounts receivable ofthe entire scholarship award of $4,200.00 was setup on the student's account. The University failed to consider and prorate the portion of the scholarship earned by the student in either the refund calculation or the establishing of the student accounts receivable. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of management's failure to properly process student financial aid refunds in accordance with Federal regulations. \r\n \r\nEffect: \r\n \r\nThe SFA Office refunded SFA funds to students incorrectly and unearned funds were not returned in a timely manner. \r\n \r\n- 20 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2006 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-06-05 \r\n \r\nRecommendation: \r\n \r\nThe University should develop and implement procedures to ensure that student financial aid refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\n- 21 - \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2003-h2004","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2003/2004"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004"],"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-bs25-b2003-h2004"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2003-h2004"],"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":"STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS \r\nI \r\nSAVANNAH STATE UNIVERSITY \r\nSAVANNAH, GEORGIA REPORT ON AUDIT \r\nOF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 \r\nRussell W. Hinton State Auditor \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\n3 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n5 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n6 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n8 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\n1 SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO \r\n \r\nBUDGET - (NON-GAAP BASIS) \r\n \r\nRESIDENT INSTRUCTION \r\n \r\n25 \r\n \r\n2 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n26 \r\n \r\n3 RECONCILIATION OF PER DIEM AND FEES \r\n \r\n27 \r\n \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n Russell W. Hinton \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 \r\nDecember 17, 2004 \r\n \r\nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members ofthe Board of Regents ofthe University System of Georgia \r\nand Honorable Carlton E. Brown, President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying basic financial statements (Exhibits A through D) of Savannah State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2004. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\nWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \r\nAs discussed in Note 1, the financial statements of Savannah 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 Savannah State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State ofGeorgia, in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n04ARL-62 \r\n \r\n In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 2004, 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. \r\nAs discussed in Note 1, the University adopted the provisions of the Governmental Accounting Standards Board, Statement Number 39, Determining Whether Certain Organizations are Component Units during the year ended June 30, 2004. \r\nManagement's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it. \r\nOur audit was conducted for the purpose offorming an opinion on the basic financial statements of Savannah State University taken as a whole. The accompanying supplementary information (Schedules 1 through 3) is presented for purposes ofadditional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \r\nRespectfully submitted, \r\n \r\nRWH:as 04ARL-62 \r\n \r\nState Auditor \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n SAVANNAH STATE UNIVERSITY \r\nManagement's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State University is one of the 34 institutions of the University System of Georgia. The University, located in Savannah, Georgia, was founded in 1890 as a department of the State University for the education and training of Negro students. Savannah State University now serves a diverse student population as a senior University of the University System of Georgia. The University serves a primarily African American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Science and Technology, which lead to baccalaureate and master's degrees. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 2,500 students each year. The institution continues to grow as shown by the comparison numbers that follows: \r\n \r\nFaculty \r\n \r\nStudents \r\n \r\nFY2004 FY2003 FY2002 \r\n \r\n124 \r\n \r\n2,504 \r\n \r\n122 \r\n \r\n2,071 \r\n \r\n135 \r\n \r\n1,831 \r\n \r\nOverview ofthe Financial Statements and Financial Analysis \r\n \r\nSavannah State University is proud to present its financial statements for fiscal year 2004. 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 2003 and fiscal year 2004. \r\n \r\nStatement ofNet Assets \r\n \r\nThe Statement of Net Assets presents the assets, liabilities, and net assets of the University as 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 Savannah State University. The Statement of Net Assets presents end-of-year 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 Financial Statements. \r\n \r\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. \r\n \r\n- 1- \r\n \r\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. \r\n \r\nStatement of Net Assets, Condensed \r\n \r\nJune 30, 2004 \r\n \r\nJune 30, 2003 \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\n \r\n$ 4,931,716.54 51,017,320.00 2,230,169.50 \r\n \r\n$ 4,303,571.00 37,504,041.24 2,281,118.80 \r\n \r\nTotal Assets \r\n \r\n$ 58,179,206.04 $44,088,731.04 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n$ 2,367,973.97 599,272.51 \r\n \r\n$ 2,085,902.05 547,373.78 \r\n \r\nTotal Liabilities \r\n \r\n$ 2,967,246.48 $ 2,633,275.83 \r\n \r\nNet Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted \r\n \r\n$51,017,320.00 963,849.67 \r\n1,116,098.30 2,114,691.59 \r\n \r\n$ 37,504,041.24 932,495.31 \r\n1,135,039.50 1,883,879.16 \r\n \r\nTotal Net Assets \r\n \r\n$ 55!2111959.56 $ 41A55A55.21 \r\n \r\nThe total assets of the institution increased by $14,090,475.00. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $13,513,278.76 of investment in plant, net of accumulated depreciation. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution. \r\n \r\nTotal liabilities for the year increased by $333,970.65. The combination of the increase in total assets of $14,090,475.00 and the increase in total liabilities of $333,970.65 yields an increase in total net assets of $13,756,504.35. The increase in total net assets is primarily in the category of invested in capital assets, net of debt in the amount of $13,513,278.76. \r\n \r\n- 11 - \r\n \r\n Statement ofRevenues, Expenses and Changes in Net Assets \r\n \r\nChanges in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues earned by the institution, both operating and nonoperating, and the expenses incurred by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues. \r\n \r\nStatement of Revenues, Expenses and Changes in Net Assets, Condensed \r\n \r\nJune 30. 2004 \r\n \r\nJune 30. 2003 \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$ 23,908,691.35 41.874.940.16 \r\n \r\n$21,934,879.15 40.942.070.54 \r\n \r\nOperating Loss \r\n \r\n$-17,966,248.81 \r\n \r\n$-19,007,191.39 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n16.800.822.88 \r\n \r\n19.626.403 .14 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \r\n \r\n$ -1,165,425.93 \r\n \r\n$ 619,211.75 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n14.921,930.28 \r\n \r\n3,545,360.53 \r\n \r\nIncrease (Decrease) in Net Assets \r\n \r\n$ 13.756.504.35 $ 4. 164,572.28 \r\n \r\nNet Assets at Beginning of Year, as Originally Reported \r\n \r\n$41,455,455.21 \r\n \r\n$ 35,411,363.62 \r\n \r\nPrior Period Adjustment \r\n \r\n1.879.519.31 \r\n \r\nNet Assets at Beginning of Year Restated \r\n \r\n$ 41.455.455.21 \r\n \r\n$ 37.290.882.93 \r\n \r\nNet Assets at End of Year \r\n \r\n$55,211,959.56 $ 41A55,455.21 \r\n \r\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: \r\n \r\n- 111 - \r\n \r\n Revenue By Source For The Years Ended June 30, 2004 and June 30, 2003 \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Auxiliary Other \r\nTotal Operating Revenue \r\nNonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other \r\nTotal Nonoperating Revenue \r\nCapital Grants and Gifts State \r\nTotal Revenues \r\n \r\nJune 30, 2004 \r\n \r\nJune 30, 2003 \r\n \r\n$ 3,362,988.89 13,653,097.47 \r\n9,245.00 6,737,618.12 \r\n145,741.87 \r\n$ 23,908,691.35 \r\n \r\n$ 3,252,991.42 11,998,487.36 \r\n154,080.74 6,194,586.79 \r\n334,732.84 \r\n$ 21,934,879.15 \r\n \r\n$ 16,366,717.63 \r\n1,165,030.73 47,028.82 186,209.66 \r\n$17,764,986.84 \r\n \r\n$17,114,139.87 179.00 \r\n415,090.13 113,915.61 1,983,078.53 \r\n$ 19,626,403.14 \r\n \r\n$ 14,921,930.28 $ 56!595!608.47 \r\n \r\n$ 3,545,360.53 $ 452106!642.82 \r\n \r\n- lV - \r\n \r\n Expenses (By Functional Classification) For The Years Ended June 30, 2004 and June 30, 2003 \r\n \r\nJune 30, 2004 \r\n \r\nJune 30, 2003 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises \r\n \r\n$ 12,585,565.85 1,368,649.69 2,693,970.17 4,053,734.37 2,428,187.75 6,182,602.23 4,114,224.30 1,767,594.85 6,680,410.95 \r\n \r\n$12,517,064.78 1,679,115.24 2,420,664.11 3,514,748.95 2,535,379.59 6,258,381.19 3,941,641.69 2,050,130.07 6,024,944.92 \r\n \r\nTotal Operating Expenses \r\n \r\n$41,874,940.16 $ 40,942,070.54 \r\n \r\nNonoperating Expenses Other \r\n \r\n964,163.96 \r\n \r\nTotal Expenses \r\n \r\n$ 42!839!104.12 $ 40!942!070.54 \r\n \r\nGrants and contracts increased by $1,654,610.11. The compensation and employee benefits category increased by $9,412.46. The increase reflects an increased cost of health insurance for the employees of the institution. Utilities increased by $440,004.81 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2004. \r\n \r\nUnder nonoperating revenues (expenses) state appropriations decreased by $747,422.24. The reduction of state appropriations system-wide, due to a sluggish economy, has created a challenge for all institutions of the University System of Georgia and, thus, for Savannah State University. We are hopeful that the economy is now on an upward trend. \r\n \r\nStatement of Cash Flows \r\n \r\nThe final statement presented by the Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \r\n \r\n- V- \r\n \r\n Cash Flows for the Years Ended June 30, 2004 and June 30, 2003, Condensed \r\n \r\nJune 30, 2004 \r\n \r\nJune 30, 2003 \r\n \r\nCash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities \r\n \r\n$-16,599,419.87 16,747,225.58 -482,865.09 11,142.14 \r\n \r\n$-18,316,519.06 20,093,990.80 -2, 795,649.43 -422,294.10 \r\n \r\nNet Change in Cash Cash, Beginning of Year \r\n \r\n$ -323,917.24 576,171.36 \r\n \r\n$ -1,440,471.79 2,016,643.15 \r\n \r\nCash, End of Year \r\n \r\n$ 252,254.12 $ 576,171.36 \r\n \r\nCapital Assets \r\n \r\nThe University had one significant capital asset addition for facilities in fiscal year 2004. Construction of the Freshman Living and Learning Center was completed and placed into service early in fiscal year 2004. The $14,976,352.71 for this project, which includes noncapitalized costs of $763,782.41, was funded by the Georgia State Financing and Investment Commission (GSFIC). Other renovations funded by the GSFIC included $373,467.42 for major renovations and improvements. Projected funding by GSFIC for fiscal year 2005 will be approximately the same. \r\n \r\nFor additional information concerning Capital Assets, see Notes 1 and 6 in the Notes to the Financial Statements. \r\n \r\nLong-Term Debt \r\n \r\nSavannah State University had a total Long-Term Debt of $1,146,494.19 of which $547,221.68 was reflected as current liability at June 30, 2004. \r\n \r\nFor additional information concerning Long-Term Debt see Notes 1 and 8 in the Notes to the Financial Statements. \r\n \r\nEconomic Outlook \r\n \r\nThe University is aware of decisions or conditions that are expected to have a significant effect on the financial position or results of operations. Decreases in the level of State support, student tuition and fee increases, and energy and health insurance cost increases will have a significant adverse impact on the University's ability to expand programs, undertake new initiatives, and meet its core mission and ongoing operational needs. \r\n \r\n- Vl - \r\n \r\n Additionally, the need to continue to address priority needs such as requirements for deferred maintenance, new technology, public safety, and student development is a large challenge facing the University in years to come. Various committees and individuals are assessing the University's performance toward identified goals, use of energy resources and ways to achieve greater efficiencies and reduce expenses in an effort to assist in meeting those future challenges. Carlton E. Brown, President Savannah State University \r\n-vn- \r\n \r\n BASIC FINANCIAL STATEMENTS - 1- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30, 2004 \r\nASSETS \r\nCurrent Assets Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories \r\nTotal Current Assets \r\nNoncurrent Assets Cash and Cash Equivalents Short-Term Investments Investments Notes Receivable Capital Assets, Net (See Note 6) \r\nTotal Noncurrent Assets \r\nTotal Assets \r\nLIABILITIES \r\nCurrent Liabilities Cash Overdraft Salaries Payable Accounts Payable Deferred Revenue Funds Held for Others Compensated Absences Other Liabilities \r\nTotal Current Liabilities \r\nNoncurrent Liabilities Compensated Absences \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for: \r\nNonexpendable Expendable Unrestricted \r\nTotal Net Assets \r\nThe notes to the financial statements are an integral part of this statement. \r\n-3- \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ \r\n \r\n411,098.86 \r\n \r\n2,710,438.95 1,683,382.78 \r\n69,881.54 56 914.41 \r\n \r\n$ 4,931,716.54 \r\n \r\n$ \r\n \r\n273,463.05 \r\n \r\n62,178.73 \r\n \r\n1,058,950.88 \r\n \r\n835,576.84 \r\n \r\n51,017,320.00 \r\n \r\n$ 53,247,489.50 \r\n \r\n$ 58,179,206.04 \r\n \r\n$ \r\n \r\n21,208.93 \r\n \r\n177,503.84 \r\n \r\n335,462.61 \r\n \r\n560,915.82 \r\n \r\n577,851.09 \r\n \r\n547,221.68 \r\n \r\n147,810.00 \r\n \r\n$ 2,367,973.97 \r\n \r\n599,272.51 $ 2,967,246.48 \r\n \r\n$ 51,017,320.00 \r\n963,849.67 1,116,098.30 2,114,691.59 \r\n \r\n$ 55,211,959.56 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30. 2004 \r\n \r\nEXHIBIT\"B\" \r\n \r\nOPERATING REVENUES \r\nStudent Tuition and Fees Less: Scholarship Allowances \r\nGrants and Contracts Federal State Nongovernmental \r\nRents and Royalties Sales and Services of Educational Departments Auxiliary Enterprises \r\nResidence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES \r\nSalaries Faculty Staff \r\nEmployee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\nNONOPERATING REVENUES (EXPENSES) \r\nState Appropriations Gifts Interest and Other Investment Income Other Nonoperating Revenues Other Nonoperating Expenses \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\nCapital Grants and Gifts State \r\nIncrease (Decrease) in Net Assets \r\nNet Assets - Beginning of Year \r\nNet Assets - End of Year \r\nThe notes to the financial statements are an integral part of this statement. \r\n-5- \r\n \r\n$ \r\n \r\n7,790,004.38 \r\n \r\n-4,427,015.49 \r\n \r\n12,867,607.11 161,450.00 624,040.36 16,843.30 9,245.00 \r\n \r\n1,648,215.19 240,581.32 \r\n2,479,433.78 130,958.32 370,901.02 \r\n1,823,708.35 43,820.14 128,898.57 \r\n \r\n$ 23,908,691.35 \r\n \r\n$ \r\n \r\n7,595,566.59 \r\n \r\n10,953,070.38 \r\n \r\n5,169,615.76 \r\n \r\n400,556.22 \r\n \r\n3,404,790.84 \r\n \r\n2,377,937.80 \r\n \r\n10,098,978.27 \r\n \r\n1,874,424.30 \r\n \r\n$ 41,874,940.16 \r\n \r\n$ -17,966,248.81 \r\n \r\n$ 16,366,717.63 1,165,030.73 47,028.82 186,209.66 -964, 163.96 \r\n$ 16,800,822.88 \r\n$ -1,165,425.93 \r\n14,921,930.28 \r\n$ 13,756,504.35 \r\n$ 41,455,455.21 \r\n \r\n$ 55,211,959.56 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30. 2004 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parkingrrransportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) \r\nNet Cash Provided (Used) by Operating Activities \r\nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts \r\nNet Cash Flows Provided (Used) by Noncapital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets \r\nCASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Purchase of Investments \r\nNet Cash Provided (Used) by Investing Activities \r\nNet Increase (Decrease) in Cash \r\nCash and Cash Equivalents - Beginning of Year \r\nCash and Cash Equivalents - End of Year \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ 3,402,551.75 12,367,116.24 9,245.00 -17,558,093.08 -18,483,333.76 -3,404, 790.84 -73,332.00 187,948.88 \r\n1,733,974.86 316,983.61 \r\n2,479,433.78 130,958.32 370,901.02 \r\n1,823,708.35 43,820.14 53,487.86 \r\n$ -16,599,419.87 \r\n \r\n$ 16,366,717.63 -107,763.63 200,866.77 287,404.81 \r\n$ 16,747,225.58 \r\n \r\n$ \r\n \r\n-482,865.09 \r\n \r\n$ \r\n \r\n41,910.70 \r\n \r\n-30,768.56 \r\n \r\n$ \r\n \r\n11142.14 \r\n \r\n$ \r\n \r\n-323,917.24 \r\n \r\n576,171.36 \r\n \r\n$ ===25=2=,2=5=4=.1=2 \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30. 2004 \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \r\nOperating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash \r\nProvided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable Accounts Payable Salaries Payable Deferred Revenue Other Liabilities Compensated Absences \r\nNet Cash Provided (Used) by Operating Activities \r\nNONCASH ACTIVITY NONCAPITAL FINANCING, CAPITAL AND RELATED FINANCING TRANSACTIONS AND INVESTING ACTIVITIES Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts Change in Fair Market Value of Investments Recognized as a Component of Interest Income \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ -17,966,248.81 \r\n1,874,424.30 \r\n-1,328,610.01 600,807.51 -61,337.46 114,616.88 -49,555.46 5,242.96 62,184.59 89,915.00 59140.63 \r\n$ -16,599,419.87 \r\n \r\n$ -14,921,930.28 \r\n \r\n$ \r\n \r\n5118.12 \r\n \r\nThe notes to the financial statements are an integral part of this statement. -7 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30. 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS Savannah 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. \r\nREPORTING ENTITY Savannah State University is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity. \r\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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah 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 Reporting Standards. \r\nThe Board of Regents of the University System of Georgia (and thus Savannah State University) is required to implement GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, for fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units of the institution. For fiscal year 2004, Savannah State University does not have any foundations or affiliated organizations that qualify as component units. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University also adopted GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, cash flows, and replaces the fund group perspective previously required. \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFINANCIAL STATEMENT PRESENTATION 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 predominate activity takes place. \r\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 intra-University transactions have been eliminated. \r\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. \r\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. \r\nSHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 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. \r\nINVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the statements of revenues, expenses and changes in net assets. The Board of Regents Balanced Income Fund is included under Investments. \r\nACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also include amounts due from the Federal government, state and \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nACCOUNTS RECEIVABLE 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. \r\nINVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\") basis. \r\nNONCURRENT CASH AND INVESTMENTS 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. \r\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 $5,000.00 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000.00 and significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and 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. \r\nEffective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to Savannah State University when complete. For the year ended June 30, 2004, GSFIC transferred capital additions valued at $14,212,570.30 to Savannah State University. \r\nDEFERRED REVENUES Deferred revenues include amounts received from grant and contract sponsors that have not yet been earned. \r\n \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\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 accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses and Changes in Net Assets. Savannah State University had accrued liability for compensated absences in the amount of $1,087,353.56 as of July 1, 2003. For fiscal year 2004, $792,688.20 was earned in compensated absences and employees were paid $733,547.57, for a net increase of $59,140.63. The ending balance as of June 30, 2004 in accrued liability for compensated absences was $1,146,494.19. Compensated absences include a current liability of $547,221.68. \r\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. \r\nNET ASSETS The University's net assets are classified as follows: \r\nInvested in capital assets, net ofrelated 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. \r\nRestricted net assets - 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 4415-7 of Annotated Code of Georgia. \r\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. \r\nExpendable Restricted Net Assets include the following: \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nNET ASSETS \r\n \r\nJune 30, 2004 \r\n \r\nFederal Loans Institutional Loans Term Endowments \r\nTotal Restricted Expendable \r\n \r\n$ 851,532.25 21,774.79 \r\n242,791.26 \r\n$ 1. 116,098.30 \r\n \r\nUnrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $238,982.77. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia - Administrative Central Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\n \r\nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \r\n \r\nJune 30, 2004 \r\n \r\nR\u0026 RReserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted \r\n \r\n$ 959,115.76 604,128.62 56,760.81 494,686.40 \r\n \r\nTotal Unrestricted Net Assets \r\n \r\n$ 2,114,691.59 \r\n \r\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. \r\n \r\nINCOME TAXES Savannah 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. \r\n \r\nCLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria: \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. \r\nNonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\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. \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia (and thus Savannah State 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: \r\n1. Bonds, bill, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. \r\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. \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\n \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. \r\n \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\n \r\nAs authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (and thus Savannah State University), the option of exempting demand deposits from the collateral requirements. \r\n \r\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. \r\n \r\nCATEGORIZATION OF DEPOSITS Cash deposits are categorized by risk as follows: \r\n \r\nCategory 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the entity or by its agent in the entity's name. \r\n \r\nCategory 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the entity's name. \r\n \r\nCategory 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the entity's name, and amounts uncollateralized. \r\n \r\nAt June 30, 2004, the University's cash deposits were as follows: \r\n \r\nCash Deposits \r\n \r\nCarrying Amount \r\n \r\nBank Balances \r\n \r\nRisk Categories \r\n \r\n2 \r\n \r\n3 \r\n \r\n$ 448.95615$ 2,714567]6 $ 123.30524$ 37327759$ 221798433 \r\n \r\nCATEGORIZATION OF INVESTMENTS Savannah State University's investments are invested in an investment pool managed by another governmental entity and are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool. \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\n \r\nCATEGORIZATION OF INVESTMENTS Investments Not Subject to Categorizations: Board of Regents Short-Term Fund Balanced Income Fund \r\n \r\n$ 275,198.36 1,058,950.88 \r\n \r\nTotal Investments \r\n \r\n$ 1,334,149.24 \r\n \r\nNOTE 3: ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the following at June 30, 2004. \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State and Private Funds Other \r\n \r\n$ 663,557.91 186,968.61 \r\n2,996,433.52 605,576.85 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n$ 4,452,536.89 58,715.16 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 4,393,821.73 \r\n \r\nNOTE 4: INVENTORIES \r\n \r\nInventories consisted of the following at June 30, 2004. \r\n \r\nCentral Stores Physical Plant \r\n \r\n$ \r\n \r\n3,579.75 \r\n \r\n53,334.66 \r\n \r\nTotal \r\n \r\n$ 56,914.41 \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nNotes/Loans receivable consisted of the following at June 30, 2004: \r\n \r\nPerkins Loans Institutional Loans \r\n \r\n$ 810,335.97 25,240.87 \r\n \r\nTotal Notes/Loans Receivable \r\n \r\n$ 835,576.84 \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2004. 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. \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nFollowing are the changes in capital assets for the year ended June 30, 2004: \r\n \r\nBeginning Balance July 1, 2003 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2004 \r\n \r\nCapital Assets, Not Being Depreciated: Land Construction Work-In-Progress \r\n \r\n$ 575,975.16 2,167,169.20 \r\n \r\n$ 575,975.16 \r\n \r\n$ 2,167,169.20 \r\n \r\n0.00 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n$ 2,743,144.36 \r\n \r\n$ 2,167,169.20 $ 575,975.16 \r\n \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$46,126,297.31 $17,081,119.70 \r\n \r\n2,520,259.00 \r\n \r\n5,933,609.39 \r\n \r\n236,934.41 $ \r\n \r\n5,913,055.43 \r\n \r\n253,910.46 \r\n \r\n55,285.00 \r\n \r\n141,520.27 13,048.00 \r\n \r\n$ 63,207,417.01 2,520,259.00 6,029,023.53 6,153,917.89 55,285.00 \r\n \r\nTotal Assets Being Depreciated \r\n \r\n$ 60,548,506.13 $ 17,571,964.57 $ 154,568.27 $ 77,965,902.43 \r\n \r\nLess: Accumulated Depreciation: \r\n \r\nBuildings and Building Improvements $ 17,072,221.18 $ 1,054,279.52 \r\n \r\nFacilities and Other Improvements \r\n \r\n932,193.16 \r\n \r\n106,108.61 \r\n \r\nEquipment \r\n \r\n3,492,539.62 \r\n \r\n451,338.05 $ \r\n \r\nLibrary Collections \r\n \r\n4,287,625.90 \r\n \r\n261,316.00 \r\n \r\nCapitalized Collections \r\n \r\n3,029.39 \r\n \r\n1,382.12 \r\n \r\n$18,126,500.70 1,038,301.77 \r\n124,427.96 3,819,449.71 13,048.00  4,535,893.90 4,411.51 \r\n \r\nTotal Accumulated Depreciation \r\n \r\n$25,787,609.25 $ 1,874,424.30 $ 137,475.96 $ 27,524,557.59 \r\n \r\nTotal Capital Assets, Being Depreciated, \r\n \r\nNet \r\n \r\n$ 34,760,896.88 $ 15,697,540.27 $ \r\n \r\n17,092.31 $ 50,441,344.84 \r\n \r\nCapital Assets, Net \r\n \r\n$ 37.504 041 24 $ 15 697 540 27 $ 2,184,261.51 $ 51.017.320.00 \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nDeferred revenue consisted of the following at June 30, 2004. \r\n \r\nOther Deferred Revenue \r\n \r\n$ 560,915.82 \r\n \r\nNOTE 8: LONG-TERM LIABILITIES \r\n \r\nLong-Term liability activity for the year ended June 30, 2004 was as follows: \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 8: LONG-TERM LIABILITIES \r\n \r\nOther Liabilities Compensated Absences \r\n \r\nBeginning Balance July 1, 2003 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2004 \r\n \r\nCurrent Portion \r\n \r\n$ l,08:Z,353.56 $ :Z22 688.20 $ 733,54:Z 5:Z $ 1 146 424 12 $ 54:Z 221.68 \r\n \r\nNOTE 9: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. 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 the Georgia Department of Audits and Accounts. \r\n \r\nFunding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah 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 2004, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2004 2003 2002 \r\n \r\n100% 100% 100% \r\n \r\n$ 1,157,294.27 $ 1,169,740.65 $ 1,112,152.15 \r\n \r\nREGENTS RETIREMENT PLAN \r\n \r\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. 4721-1 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 \r\n \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\nPlan Description 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. \r\nFunding Policy Savannah 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. The employer contributes 10.03% of the 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. \r\nSavannah State University and the covered employees made the required contributions of $435,578.18 (10.03%) and $216,885.48 (5%), respectively. \r\nAIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah 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 ofthe Employees' Retirement System of Georgia. \r\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 $3,500.00 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. \r\n \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nContributions and Vesting 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. \r\nTotal contributions made by employees during fiscal year 2004 amounted to $25,858.95 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nThe Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. \r\nNOTE 10: RISK MANAGEMENT \r\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. Savannah 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 selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000.00 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, two fully insured HMO healthcare plan options are also offered to System employees. \r\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. Savannah State University, as an organizational unit of the Board of Regents of the University System of \r\n \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 10: RISK MANAGEMENT \r\nGeorgia, 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. \r\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. \r\nNOTE 11: CONTINGENCIES \r\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 which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Savannah State University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against Savannah 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, 2004. \r\nNOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, 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 are on a pay as you go basis to finance the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000.00 for basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. \r\n \r\n-20- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2004 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\n \r\nAs of June 30, 2004, there were 180 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2004, Savannah State University recognized as incurred $653,070.96 of expenses, which was net of $254,425.69 of participant contributions. \r\n \r\nNOTE 13: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nThe University's operating expenses by functional classification are shown below: \r\n \r\nStatement ofOperating Expenses - Natural vs Functional Classifications For the Fiscal Year Ended June 30, 2004 \r\n \r\nFunctional Classification \r\n \r\nNatural Classification \r\n \r\nInstruction \r\n \r\nResearch \r\n \r\nPublic Service \r\n \r\nAcademic Su1mort \r\n \r\nStudent Services \r\n \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\n \r\n$ 7,187,727.04 $ 1,064,679.91 2,077,774.87 \r\n49,368.60 \r\n35,709.25 96,265.69 \r\n581,442.22 1,492,598.27 \r\n \r\n267,331.14 162,832.30 81,741.28 \r\n36,374.87 \r\n311,093.37 3,965.01 \r\n483,351.89 21,959.83 \r\n \r\n$ 57,280.46 1,262,560.29 244,636.49 \r\n41,511.71 \r\n221,810.62 23,084.41 \r\n843,086.19 \r\n \r\n$ 68,646.95 2,073,946.26 520,062.81 \r\n80,721.96 \r\n75,528.42 \r\n938,098.02 296,729.95 \r\n \r\n$ 10,581.00 1,340,349.06 348,208.91 \r\n35,578.83 \r\n14,725.51 34,532.48 \r\n636,937.82 7 274.14 \r\n \r\nTotal Operating Expenses \r\n \r\n$ 12 585 565 85 $ I 368 649 69 $ 2 693 970 )7 $ 4053 73437 $ 2 428 187 75 \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Other Personal Services Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstitutional Suimort \r\n \r\nFunctional Classification \r\n \r\nPlant \r\n \r\nOperations and Scholarships \r\n \r\nAuxiliary \r\n \r\nMaintenance and Fellowshil!S Entemrises \r\n \r\nTotal Operating Exl!enses \r\n \r\n$ 4,000.00 2,804,622.08 1,294,503.53 \r\n136,777.53 \r\n \r\n$ 1,358,954.67 409,917.17 \r\n-246,691. 72 1,577.93 \r\n \r\n$ 7,595,566.59 \r\n \r\n$ 885,125.81 10,953,070.38 \r\n \r\n192,770.70 5,169,615.76 \r\n \r\n246,691.72 \r\n \r\n0.00 \r\n \r\n18,644.79 \r\n \r\n400,556.22 \r\n \r\n467,403.78 66,012.37 \r\n \r\n$ 1,766,594.85 1,810,445.63 \r\n \r\n587,453.46 268,103.79 \r\n \r\n3,404,790.84 2,377,937.80 \r\n \r\n1,378,275.97 31,006.97 \r\n \r\n764,790.24 15,230.38 \r\n \r\n1,000.00 \r\n \r\n4,471,995.92 10,098,978.27 9,624.76 1,874,424.30 \r\n \r\n$ 6 182 602 23 $ 411422430 $ l 767 594 85 $ 6 680 410 95 $41874940 )6 \r\n \r\n- 21 - \r\n \r\n SUPPLEMENTARY INFORMATION - 23 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO \r\nBUDGET - (NON-GAAP BASIS} RESIDENT INSTRUCTION \r\nYEAR ENDED JUNE 30. 2004 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nState Appropriations Other Revenues Retained \r\n \r\nBUDGET \r\n \r\nACTUAL (1) \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ 16,369,087.00 $ 16,369,087.00 $ \r\n \r\n26,663,794.00 \r\n \r\n21,497,637.47 \r\n \r\n0.00 -5,166,156.53 \r\n \r\n$ 43,032,881.00 $ 37,866,724.47 $ _ _ _-5~,1_6~6,_15_6_.5_3 \r\n \r\nEXPENDITURES \r\nPersonal Services: Education, General and Departmental Services Sponsored Operations \r\nOperating Expenses: Education, General and Departmental Services Sponsored Operations \r\nSpecial Funding Initiative \r\n \r\n$ 18,656,745.00 $ 18,811,981.71 $ \r\n \r\n2,065,892.00 \r\n \r\n3,023,617.20 \r\n \r\n4,685,850.00 16,610,316.00 \r\n1,014,078.00 \r\n \r\n4,353,077.07 10,291,777.82 \r\n1,032,244.78 \r\n \r\n-155,236.71 -957,725.20 \r\n332,772.93 6,318,538.18 \r\n-18166.78 \r\n \r\n$ 43,032,881.00 $ 37,512,698.58 $ _ _ _5~,5_20~,_18_2_.4_2 \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ \r\n \r\n354,025.89 $ ====3=54=,0=2=5=.8==9 \r\n \r\n(1) Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n \r\nSee notes to the financial statements. \r\n \r\n- 25- \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30. 2004 \r\n \r\nSCHEDULE \"2\" \r\n \r\nTotals per Annual Supplement \r\nAccruals June 30, 2004 June 30, 2003 \r\nCompensated Absences June 30, 2004 June 30, 2003 \r\n \r\nSALARIES $ 18,488,456.13 $ \r\n \r\nTRAVEL 399,636.60 \r\n \r\n177,503.84 -172,260.88 \r\n \r\n919.62 \r\n \r\n1,065,020.15 -1,010,082.27 \r\n \r\n$ 18,548,636.97 $ ======40=0:!:,5=5=6.=22= \r\n \r\nSee notes to the financial statements. \r\n \r\n- 26- \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF PER DIEM AND FEES \r\nYEAR ENDED JUNE 30. 2004 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTotals per Annual Supplement \r\nAdjustment Peter Hand Association \r\n \r\nFEE \r\nAMOUNT \r\n \r\nEXPENSE \r\nAMOUNT \r\n \r\n$ \r\n \r\n215,274.16 $ \r\n \r\n32,695.39 $ \r\n \r\nTOTAL 247,969.55 \r\n \r\n4,999.50 \r\n \r\n4,999.50 \r\n \r\n$ \r\n \r\n220,273.66 $ \r\n \r\n32,695.39 $ =====25=2=,9=6=9.=05= \r\n \r\nSee notes to the financial statements. \r\n \r\n- 27 - \r\n \r\n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-98-02 FS-548-01-02 FS-548-02-02 FS-548-02-04 FS-548-02-05 FS-548-02-08 FS-548-03-01 FS-548-03-02 FS-548-03-03 FS-548-03-04 FS-548-03-05 FS-548-03-06 FS-548-03-07 \r\n \r\nFurther Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-03-01 \r\n \r\nThe University will develop the following procedure to ensure that out-of-state fee waivers are within the allowable limits. \r\n \r\nProcedure: Develop a program that extracts the information from Banner based on waiver codes rather than rate codes and certify that each student is enrolled and paid for the semester. Second, develop an electronic process that removes each waiver code from each student each semester. Third, establish each enrollment period the exact number of waivers that are available. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTION/RESPONSES \r\nREVENUES/RECEIVABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-03-02 \r\nThe University worked diligently during the year under review to carry out its action plan outlined in the Corrective Action Plan for Fiscal Year 2003. A comprehensive review of accounts receivable was performed. In this analysis, invalid receivables were identified and written off, non-student accounts receivable were reclassified to other accounts and valid receivables were written off or transferred to a collection agency. For the valid receivables not transferred to a collection agency, the University internal collection efforts included sending bills to students each semester. \r\nThe University was unable to write-off a significant amount of receivables deemed to be uncollectible because of insufficient surplus. \r\nAdditional measures taken to ensure that the University is in compliance with the Board of Regents Policy regarding deferments are outlined below: \r\n For those students in which their classes have been dropped after the drop/add period for non-payment of funds, the University has implemented a policy that written approval must be provided by the Financial Aid Office and/or the Bursar's Office before a student's classes are reinstated. \r\n The University created a Deferment Listing to identify students for the current term and their approved deadlines assigned by the Vice President for Academic Affairs. This listing is reviewed during the semester to determine ifthe student has met the deadline. Ifnot, the student is contacted to make prompt payment. If satisfactory payment arrangements are not met, the student's classes are subsequently dropped for non-payment. \r\nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-03-06 \r\nThe University has determined that the questioned agency accounts are uncollectible. The University performed the appropriate due diligence to collect the deficit balances; however, the due diligence efforts were unsuccessful. The questioned agency accounts are old and the University no longer has any business activity with the respective entities. \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-03-06 \r\n \r\nIn fiscal year 2005, the University will seek guidance from the Board ofRegents regarding resolution of those accounts that have a deficit balance of $3,000.00 or less. \r\n \r\nThe University currently has policies and procedures in place to ensure that agency funds are received prior to disbursements. \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-03-07 \r\n \r\nThe adjustments to the capitals ledger were completed in November 2004. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-01-07 FA-548-02-01 FA-548-02-02 FA-548-02-03 FA-548-02-05 FA-548-03-01 FA-548-03-02 FA-548-03-03 \r\n \r\nPartially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTION/RESPONSES \r\nPERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07 \r\nFederal Pell Grant Program: The University completed its reconciliation and submitted its findings to the U. S. Department ofEducation. The result was a refund ofcash in the amount of$62,342.65 for the 97-98 aid year. This leaves a balance of $60,870.25 in this account. The University will request guidance from the Board of Regents on how to write off this remaining balance which will not be collected. \r\nFederal Direct Student Loan Program: The University has tried relentlessly to retrieve information for years under review. However, the necessary documentation to complete the reconciliation process is no longer available. We requested the 732 Reports from the Loan Origination Center, but were informed that those years have already been closed out and the information is no longer available. In addition, the software utilized by the University (EDExpress) is no longer available to retrieve the electronic files. Without these resources, the reconciliation cannot be performed. The University will request guidance from the Board ofRegents on how to resolve this matter. \r\nPolicies and procedures have been developed and implemented to ensure that the University only disburses funds upon proper authorization. \r\nACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $7,185.07 Finding Control Number: FA-548-02-01 \r\nThe University is waiting on audit resolution from the U.S. Department of Education. \r\n-4- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $1,112.00 Finding Control Number: FA-548-02-03 The University is waiting on audit resolution from the U.S. Department of Education. ELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $3,618.05 Finding Control Number: FA-548-03-02 During the current year under review, the University established procedures to ensure that student financial aid awards and refunds are properly calculated. Those procedures included creating a worksheet to ensure Title IV funds are calculated accurately and funds are returned or refunded. This instance occurred during the time when the regular staff person that calculates the refunds was on sick leave. Going forward, the University will ensure additional staff is trained on performing Title IV calculations. The University is waiting on a reply from the U. S. Department ofEducation regarding the questioned cost of $3,618.05. \r\n-5- \r\n \r\n SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-04-01 \r\n \r\nCondition: \r\n \r\nOur examination of fee waivers for the year under review, revealed that management failed to monitor out-of-state tuition fee waivers. \r\n \r\nCriteria: \r\n \r\nThe Board of Regents Policy Manual, Section 704.0302 concerning fee waivers states, \"the number of such waivers in effect at any time does not exceed two-percent of the equivalent full-time students enrolled at the institution in the fall semester immediately preceding the semester for which the out-of-state tuition is to be waived\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nWaivers for out-of-state tuition granted by the University exceeded the amount allowable per Board of Regents policy by $310,336.96. \r\n \r\nCause: \r\n \r\nManagement did not comply with the Board of Regents policy. \r\n \r\nEffect: \r\n \r\nThe University granted out-of-state tuition waivers in excess of amount allowable by Board of Regents policy. \r\n \r\nRecommendation: The University should follow established policies and procedures to ensure that out-of-state tuition fee waivers are within the allowable limits. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-04-02 \r\n \r\nCondition: \r\n \r\nAt June 30, 2004, Savannah State University had $673,550.20 in student accounts receivable which were over one year old and not supported by approved financial aid. \r\n \r\nCriteria: \r\n \r\nThere is no provision in the policies ofthe Board of Regents for deferments of student accounts without the student having approved financial aid at the time of registration. \r\n \r\nQuestioned Cost: NIA \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-04-02 \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that only students with approved financial aid would receive tuition and fee deferments. \r\n \r\nEffect: \r\n \r\nBy allowing students to enroll and remain in school without approved financial aid, the University has incurred student accounts receivable which were not in accordance with Board of Regents policy. \r\n \r\nRecommendation: \r\n \r\nThe University should follow billing and collection guidelines for student accounts receivable as established in the Board of Regents' Business Procedures Manual. Also, no student should be granted a deferment without having approved financial aid. \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balances Finding Control Number: FS-548-04-03 \r\n \r\nCondition: \r\n \r\nAt June 30, 2004, the University had five restricted funds that had deficit cash balances totaling $207,518.53. These deficits were not supported by valid accounts receivable. \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, which 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. Administrative requirements contained in the University System of Georgia, Board of Regents Business Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A). \r\n \r\nQuestioned Cost: NIA \r\n \r\nCause: \r\n \r\nThese deficits occurred because management failed to ensure funds were available prior to disbursement. \r\n \r\nEffect: \r\n \r\nThe University disbursed funds in excess of availability. \r\n \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balances Finding Control Number: FS-548-04-03 \r\n \r\nRecommendation: \r\n \r\nThe University should implement procedures to ensure that funds are available prior to disbursement. The University should take appropriate action to secure funding for these deficit cash balances. \r\n \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-04-04 \r\n \r\nCondition: \r\n \r\nThe University failed to have adequate accounting policies and procedures in place to ensure that Georgia State Financing and Investment Commission (GSFIC) transactions were recorded in accordance with Board of Regents policies; that GSFIC reimbursement requests were filed timely; that accounts receivable and accounts payable records were appropriately maintained; and that travel advances were cleared properly. \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, which 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. Administrative requirements contained in the University System of Georgia, Board of Regents Business Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A). \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following deficiencies in accounting for financial transactions by Savannah State University. \r\n \r\n1) The University did not record non-capitalized expenses and related gift revenues for invoices submitted directly to GSFIC for payment as directed by the Board of Regents in a memo dated June 9, 2004. An audit adjustment of $200,381.55 was made to correctly report GSFIC activity. \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-04-04 \r\n \r\n2) The University did not request reimbursement from GSFIC for University expenditures on reimbursable construction projects. The University has not submitted a reimbursement request to GSFIC since fiscal year 2003. \r\n \r\n3) A complete listing ofAccounts Receivable - Other could not be obtained for the Resident Instruction Fund and the Auxiliary Enterprises Fund. \r\n \r\n4) Travel advances were not cleared in a timely manner and/or in accordance with institutional policy. \r\n \r\n5) A complete listing ofaccounts payable could not be obtained for housing deposits and flexible spending accounts. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University failed to have adequate accounting policies and procedures in place. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itselfin a position where potential misappropriation of assets could occur. In addition, the lack ofcontrols could impact reporting of its financial position and results of operations. The University's failure to properly request reimbursements from GSFIC on reimbursable construction projects could cause the University's Unexpended Plant fund to have a significant operating cash deficit. \r\n \r\nRecommendation: \r\n \r\nThe University should review current accounting policies and procedures, identify weaknesses, and implement procedures to ensure that GSFIC transactions are properly recorded, and that GSFIC reimbursement requests are made in a timely manner. Also, a complete listing ofaccounts receivable and accounts payable should be maintained, and travel advances should be cleared timely and in accordance with institutional policy. \r\n \r\n-4 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nGENERAL LEDGER Agency Fund Deficits Finding Control Number: FS-548-04-05 \r\n \r\nCondition: \r\n \r\nAt June 30, 2004, the University had nine agency funds that had deficit balances totaling $333,438.56. Three additional agency funds which had prior year deficits totaling $6,827.12 were funded in the current fiscal year by moving funds from the Resident Instruction and Restricted Funds. \r\n \r\nCriteria: \r\n \r\nAccording to Section 1 of the Board of Regents' Business Procedures Manual, \"Before establishing an agency account, each institution should determine that its relationship with the third party is that ofcustodian or fiscal agent. When this relationship has been determined, the institution should obtain, where practicable, complete information on the terms and conditions of the agency relationship, the purpose of the funds being placed, and their ultimate disposition. Complete files should be maintained for all agreements, letters, or other documents, for guidance in the proper handling ofthe funds\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nCause: \r\n \r\nThese deficiencies were the result ofthe University disbursing funds prior to or in excess of the receipt of funds. \r\n \r\nEffect: \r\n \r\nThe University disbursed funds in excess of receipts. Also, the University inappropriately used institutional resources to fund three of the agency fund deficits. \r\n \r\nRecommendation: \r\n \r\nThe University should implement procedures to ensure that all funds are received prior to disbursement. The University should seek reimbursement for the deficit balances from the organizations involved. \r\n \r\nGENERAL LEDGER Failure to Correctly Maintain Payroll Agency Funds Finding Control Number: FS-548-04-06 \r\n \r\nCondition: \r\n \r\nUniversity's management failed to correctly maintain Agency funds established for payroll withholdings and related employer contributions. \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nGENERAL LEDGER Failure to Correctly Maintain Payroll Agency Funds Finding Control Number: FS-548-04-06 \r\n \r\nCriteria: \r\n \r\nAccording to Section 1 ofthe Board ofRegents Business Procedures Manual, \"The status ofeach agency fund should be reviewed periodically, at least once a year, for the purpose of making necessary adjustments and properly disposing of unused balances. Inactive balances should not be carried forward indefinitely from year to year, but should be disposed of in accordance with the agency agreement\". \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies relating to payroll activity agency accounts were noted. \r\n \r\n1) Variances existed between monthly receipts and disbursements for many of the payroll activity agency accounts. Management failed to perform monthly reconciliations and to identify variances. \r\n \r\n2) The employee payroll deduction accounts had a net deficit of $23,916.98. \r\n \r\n3) The employer liability accounts had a net balance of $85,549.34 for which management could not provide adequate supporting documentation. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of the management's failure to properly monitor and reconcile the payroll activity agency accounts. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itselfin a position where potential misappropriation of assets could occur. In addition, the lack of controls could result in payroll withholdings and related employer contributions being improperly remitted. \r\n \r\nRecommendation: \r\n \r\nManagement should implement policies and procedures to ensure that payroll withholdings and the related employer contributions are properly recorded in the appropriate agency accounts; that disbursements are correctly charged to these accounts; and that monthly reconciliations are performed. \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-04-07 \r\n \r\nCondition: \r\n \r\nThe University's procedures were insufficient to provide adequate control over the University's capital assets. The University failed to comply with capitalization and depreciation procedures as listed in the Capital Asset Guide for the University System of Georgia. \r\n \r\nCriteria: \r\n \r\nGuidelines for accounting for capital assets are contained in the Capital Asset Guide for the University System of Georgia. Included in this guide are asset category definitions, capitalization thresholds, depreciation methodologies, and examples of expenditures for each class of assets. Additionally, guidelines for leasehold improvements and construction in progress have been included. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies relating to Capital Assets were noted. \r\n \r\n1) The University recorded a building addition for a completed project at the total amount confirmed by GSFIC. This included amounts for equipment and furniture; infrastructure; and facilities and other improvements which did not meet capitalization thresholds. An audit adjustment of$763,782.70 was made to reduce the value ofthe building and report this amount as noncapital expense. In addition, this new building was added to the Capital Asset Ledger by on-line journal entry. The building should have been entered into the Asset Management module in order for depreciation expense to properly calculate. \r\n \r\n2) In fiscal year 2004, the University recorded capitalized costs of $401,874.00 on the Hill Hall project which were paid by the Board of Regents directly to a third party contractor on behalf of the University. According to documentation obtained from the Board of Regents, the total capital costs actually paid by the Board of Regents was $709,359.98. An audit adjustmentof$307,485.98 was made to correctly reflect this activity. In addition, upon completion of the Hill Hall project, the prior year Construction in Progress activity was not properly transferred in the Asset Management Module. An audit adjustment of $2,167,169.20 was made to correctly report the capital asset activity. \r\n \r\n-7- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-04-07 \r\n \r\n3) Seven current year additions to capital assets were tested to ensure that the capitalized cost reported on the capital asset listing obtained from the Asset Management Module was supported by proper documentation. Of the seven additions tested, four were incorrectly capitalized. Two items capitalized did not include the cost of shipping, handling, or freight. Another two items capitalized included the cost ofseparately identifiable maintenance agreements. Per the Capital Asset Guide for the University System of Georgia, costs of this nature should not be capitalized. \r\n \r\n4) During fiscal year 2003, the University had restated accumulated depreciation to reflect residual values for Library Collections and Capitalized Collections. Per the Capital Asset Guide for the University System of Georgia, these asset types normally should not have residual values. Current year audit adjustments of $404,740.51 for Library Collections and $302.96 for Capitalized Collections were made to correctly report accumulated depreciation. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that the University's capital assets were properly maintained. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, capital acquisitions and depreciation expense could be recorded on the Asset Management Module in amounts not consistent with provisions ofthe Capital Asset Guide for the University System of Georgia. \r\n \r\nRecommendation: The University should establish appropriate procedures and controls to ensure that: \r\n \r\n1) Purchases and/or gifts which meet capitalization thresholds are added to the Asset Management module. \r\n \r\n2) Assets are depreciated in accordance with guidelines contained in the Capital Asset Guide for the University System of Georgia. \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $729.31 Finding Control Number: FA-548-04-01 \r\n \r\nCondition: \r\n \r\nThe SFA office was not properly performing the refund process. \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nQuestioned Cost: \r\n \r\nThe University refunded the incorrect amount of Title IV funds for one student resulting in questioned cost of$729.31. The projection ofquestioned costs could not be readily determined for students who unofficially withdrew. However, the likely questioned costs are believed to exceed $10,000.00. \r\n \r\nInformation: \r\n \r\nTen student financial aid refunds were selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student. The items tested contained financial aid disbursements of $25,648.50 out ofa population of$18,623,648.33. Our examination revealed the following deficiencies: \r\n \r\n1) One student refund was not calculated correctly. \r\n \r\n2) Unearned Title IV funds were not applied by the University to the appropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244 for three students. \r\n \r\n3) The University refunded the incorrect amount of Title IV funds for one student resulting in a questioned cost of $729.31. \r\n \r\nIn addition, the University failed to calculate refunds for students that received all failing grades due to unofficially withdrawing from school. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of management's failure to properly process student financial aid refunds in accordance with Federal regulations. \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2004 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $729.31 Finding Control Number: FA-548-04-01 \r\n \r\nEffect: \r\n \r\nSFA office refunded SFA funds to a student incorrectly. \r\n \r\nRecommendation: \r\n \r\nThe University should develop and implement procedures to ensure that student financial aid refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. University officials should also ensure that students who received failing grades for unofficially withdrawing from school are properly included in the SFA refund process. The University should contact the U. S. Department of Education regarding resolution of this finding. \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2002-h2003","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2002/2003"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003"],"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-bs25-b2002-h2003"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2002-h2003"],"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":"STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS \r\nI \r\nSAVANNAH STATE UNIVERSITY \r\nSAVANNAH, GEORGIA REPORT ON AUDIT \r\nOF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 \r\nRussell W. Hinton State Auditor \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\n3 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n5 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n6 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n8 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\nSCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO \r\n \r\nBUDGET - (NON-GAAP BASIS) \r\n \r\n1 \r\n \r\nRESIDENT INSTRUCTION \r\n \r\n25 \r\n \r\n2 \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\n26 \r\n \r\n3 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n27 \r\n \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n RUSSELL W. HINTON \r\nSTATE AUDITOR (404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400 \r\nJanuary 14, 2004 \r\n \r\nHonorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Honorable Carlton E. Brown, President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying basic financial statements (Exhibits A through D) of Savannah State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2003. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. \r\nAs discussed in Note 1, the financial statements of Savannah 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 Savannah State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n03ARL-61 \r\n \r\n In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as of June 30, 2003, 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. \r\nManagement's Discussion and Analysis is not a required part ofthe basic financial statements but is supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation of this supplementary information. However, we did not audit this information and express no opinion on it. \r\nOur audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information (Schedules 1 through 3) is presented for purposes of additional analysis and is not a required part of the basic financial statements of Savannah State University. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, based on our audit, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \r\nRespectfully submitted, \r\n1:)~ t\u003cJ.~ 1 RJ:n W. Hinton State Auditor \r\nRWH:as 03ARL-61 \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n SAVANNAH STATE UNIVERSITY \r\nManagement's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State University is one of the 34 institutions of the University System of Georgia. The University, located in Savannah, Georgia, was founded in 1890 as a department of the State University for the education and training of Negro students. Savannah State University now serves a diverse student population as a senior university of the University System of Georgia. The University serves a primarily African American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Sciences and Technology, which lead to baccalaureate and master's degrees. This wide range of educational opportunities attracts a highly qualified faculty and a student body of around 2,100 students each year. The institution continues to grow as shown by the comparison numbers that follows: \r\n \r\nFaculty \r\n \r\nStudents \r\n \r\nFY2003 FY2002 FY2001 \r\n \r\n122 \r\n \r\n2,071 \r\n \r\n135 \r\n \r\n1,831 \r\n \r\n116 \r\n \r\n1,688 \r\n \r\nOverview ofthe Financial Statements and Financial Analysis \r\n \r\nSavannah State University is proud to present its financial statements for fiscal year 2003. 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 2002 and fiscal year 2003. \r\n \r\nStatement ofNet Assets \r\n \r\nThe Statement of Net Assets presents the assets, liabilities, and net assets of the University as 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 Savannah State University. The Statement of Net Assets presents end-of-year 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 Financial Statements. \r\n \r\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. \r\n \r\n- 1- \r\n \r\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. \r\n \r\nStatement of Net Assets, Condensed \r\n \r\nJune 30, 2003 \r\n \r\nJune 30, 2002 \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\n \r\n$ 4,303,571.00 37,504,041.24 \r\n2,281,118.80 \r\n \r\n$ 4,560,959.26 31,137,164.01 \r\n1,957,303.11 \r\n \r\nTotal Assets \r\n \r\n$44,088,731.04 \r\n \r\n$37,655,426.38 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n$ 2,085,902.05 547,373.78 \r\n \r\n$ 1,748,636.80 495,425.96 \r\n \r\nTotal Liabilities \r\n \r\n$ 2,633,275.83 \r\n \r\n$ 2,244,062.76 \r\n \r\nNet Assets Invested in Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted \r\n \r\n$37,504,041.24 932,495.31 \r\n1,135,039.50 1,883,879.16 \r\n \r\n$31,137,164.01 1,104,605.19 916,738.19 2,252,856.23 \r\n \r\nTotal Net Assets \r\n \r\n$41!455!455.21 \r\n \r\n$35!411!363.62 \r\n \r\nThe total assets of the institution increased by $6,433,304.66. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $6,366,877.23 in capital assets, net of accumulated depreciation. See Note 1 in the Notes to the Financial Statements for additional information concerning the restatement of beginning net assets and the effect of this restatement on depreciable capital assets. The current assets category showed a decrease of $257,388.26. This decrease was the result of the University System's attempt to be consistent in the classification of investment pools. The other asset category, showed an increase during the year of $323,815.69. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution. \r\n \r\n- 11 - \r\n \r\n The total liabilities of the institution for the year increased by $389,213.07. The primary cause for the increase was a combination of an increase in current and noncurrent liabilities. The combination of the increase in total assets of $6,433,304.66 and the increase in total liabilities of $389,213.07 yields an increase in total net assets of $6,044,091.59. The increase in total net assets is primarily in the category of invested in capital assets, net of debt in the amount of $6,366,877.23. Statement ofRevenues, Expenses and Changes in Net Assets Changes 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. \r\n- 111 - \r\n \r\n Statement of Revenues, Expenses and Changes in Net Assets, Condensed \r\n \r\nJune 30, 2003 \r\n \r\nJune 30, 2002 \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$21,934,879.15 40,942,070.54 \r\n \r\n$ 12,688,299.67 39,659,108.65 \r\n \r\nOperating Loss \r\n \r\n$-19,007,191.39 $-26,970,808.98 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n19,626,403.14 \r\n \r\n27,515,238.15 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains or Losses \r\n \r\n$ 619,211.75 \r\n \r\n$ 544,429.17 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n3,545,360.53 \r\n \r\nIncrease (Decrease) in Net Assets \r\n \r\n$ 4,164,572.28 \r\n \r\n$ 544,429.17 \r\n \r\nNet Assets at Beginning of Year, as Originally Reported \r\n \r\n$ 35,411,363.62 \r\n \r\n$ 83,412,335.20 \r\n \r\nCumulative Effect of Changes in Accounting Principle \r\n \r\n-48,545,400.75 \r\n \r\nPrior Period Adjustment \r\n \r\n1,879,519.31 \r\n \r\nNet Assets at Beginning of Year Restated \r\n \r\n$ 37,290,882.93 \r\n \r\n$ 34,866,934.45 \r\n \r\nNet Assets at End of Year \r\n \r\n$41,455,455.21 \r\n \r\n$ 35,411,363.62 \r\n \r\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: \r\n \r\n- IV - \r\n \r\n Revenue By Source For The Years Ended June 30, 2003 and June 30, 2002 \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Auxiliary Other \r\nTotal Operating Revenue \r\nNonoperating Revenue State Appropriations Gifts Investment Income Grants and Contracts Other \r\nTotal Nonoperating Revenue \r\nCapital Gifts and Grants State Capital Gifts \r\nTotal Revenues \r\n \r\nJune 30, 2003 \r\n \r\nJune 30, 2002 \r\n \r\n$ 3,252,991.42 11,998,487.36 \r\n154,080.74 6,194,586.79 \r\n334,732.84 \r\n$21,934,879.15 \r\n \r\n$ 2,545,784.68 4,502,737.21 \r\n198,003.00 5,051,520.05 \r\n390,254.73 \r\n$12,688,299.67 \r\n \r\n$17,114,139.87 415,090.13 113,915.61 179.00 \r\n1,983,078.53 \r\n$19,626,403.14 \r\n \r\n$19,763,961.16 192,650.00 162,446.55 \r\n6,568,617.94 827,562.50 \r\n$27,515,238.15 \r\n \r\n$ 3,545,360.53 $45! 106!642.82 \r\n \r\n$40!203!537.82 \r\n \r\n-v- \r\n \r\n Expenses (By Functional Classification) For The Years Ended June 30, 2003 and June 30, 2002 \r\n \r\nJune 30, 2003 \r\n \r\nJune 30, 2002 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Depreciation \r\n \r\n$12,517,064.78 1,679,115.24 2,420,664.11 3,514,748.95 2,535,379.59 6,258,381.19 3,941,641.69 2,050,130.07 6,024,944.92 \r\n \r\n$10,922,761.52 1,688,707.38 2,433,390.63 3,267,020.74 2,431,362.34 5,567,049.40 4,845,685.41 1,525,359.96 5,128,188.66 1,849,582.61 \r\n \r\nTotal Operating Expenses \r\n \r\n$40,942,070.54 \r\n \r\n$39,659,108.65 \r\n \r\nOperating Revenues showed an increase of $9,246,579.48. This increase was primarily caused by increases in revenues associated with the tuition fees, net of scholarship allowances, Federal grants and contracts, and auxiliary enterprises. Revenues associated with tuition and fees increased $707,206.74 during the year. This increase reflects an increase in enrollment. For fiscal year 2003 student enrollment increased by 240 students or 13%. Federal Grants and Contracts revenue showed an increase of $6,990,193.82. Auxiliary Services revenue showed an increase of $1,143,066.74. \r\n \r\nThe compensation and employee benefits category increased by $665,738.74. The increase reflects a pay raise for the employees of the institution of approximately three percent with associated fringe benefits. The increase also reflects an increase in the cost of health insurance for the employees of the institution. \r\n \r\nUtilities decreased by $29,091.60 during the past year. The decrease was primarily associated with a decrease in electricity costs. \r\n \r\nStatement ofCash Flows \r\n \r\nThe final statement presented by the Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The \r\n \r\n- Vl - \r\n \r\n fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets. \r\n \r\nCash Flows for the Years Ended June 30, 2003 and June 30, 2002, Condensed \r\n \r\nJune 30, 2003 \r\n \r\nJune 30, 2002 \r\n \r\nCash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities \r\n \r\n$-18,316,519.06 20,093,990.80 -2, 795,649.43 -422,294.10 \r\n \r\n$-28,367,232.62 27,465,133.27 -893,465.59 152,897.01 \r\n \r\nNet Change in Cash \r\n \r\n$ -1,440,471.79 $ -1,642,667. 93 \r\n \r\nCash - June 30, 2002 Add: Short-Term Investment Pools \r\n \r\n$ 1,750,495.60 266,147.55 \r\n \r\n$ 3,393,163.53 \r\n \r\nCash, Beginning of Year \r\n \r\n$ 2,016,643.15 \r\n \r\n$ 3,393,163.53 \r\n \r\nCash, End of Year \r\n \r\n$ 576,171.36 $ 1,750,495.60 \r\n \r\nCapital Assets \r\n \r\nSavannah State University completed major renovations to the Drew Griffith Academic Building in fiscal year 2003. The $3,545,360.53 for this project was funded by the Georgia State Financing and Investment Commission (GSFIC). \r\n \r\nFor additional information concerning Capital Assets, see Notes 1 and 6 in the Notes to the Financial Statements. \r\n \r\nLong-Term Debt \r\n \r\nSavannah State University had a total Long-Term Debt of $1,087,353.56 of which $539,979.78 was reflected as current liability at June 30, 2003. \r\n \r\nFor additional information concerning Long-Term Debt see Notes 1 and 8 in the Notes to the Financial Statements. \r\n \r\nEconomic Outlook \r\n \r\nDuring fiscal year 2003, the University, as well as most state agencies of Georgia, received notifications of reductions in state appropriations. Those reductions did occur for the University beginning in the fall semester amounting to approximately 5.86% or $963,235.00 from the \r\n \r\n- Vll - \r\n \r\n originally approved annual budget. Subsequent reductions occurred at rates of 3%, excluding the budget for Instruction, and 2% of the total budget, resulting in additional reductions in state appropriations of $212,063.00 and $372,289.00, respectively. Given the reductions in state appropriations, the University is developing several scenarios to cut costs while preserving the ability to deliver mission-critical activities of instruction, research and public service. The University anticipates the next few fiscal years to be much like fiscal year 2003 and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. Carlton E. Brown, President Savannah State University \r\n- Vlll - \r\n \r\n BASIC FINANCIAL STATEMENTS - 1- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30. 2003 \r\nASSETS \r\nCurrent Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories \r\nTotal Current Assets \r\nNoncurrent Assets Cash and Cash Equivalents Short-Term Investments Investments Notes Receivable Capital Assets, Net (See Note 6) \r\nTotal Noncurrent Assets \r\nTotal Assets \r\nLIABILITIES \r\nCurrent Liabilities Salaries Payable Accounts Payable Deferred Revenue Funds Held for Others Compensated Absences Other Liabilities \r\nTotal Current Liabilities \r\nNoncurrent Liabilities Compensated Absences \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for: \r\nNonexpendable Expendable Unrestricted \r\nTotal Net Assets \r\nThe notes to the financial statements are an integral part of this statement. \r\n-3- \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ \r\n \r\n330,489.21 \r\n \r\n411,098.86 \r\n \r\n1,344,167.79 1,540,053.71 \r\n20,039.51 657,721.92 \r\n \r\n$ 4,303,571.00 \r\n \r\n$ \r\n \r\n245,682.15 \r\n \r\n62,023.73 \r\n \r\n1,023,219.20 \r\n \r\n950,193.72 \r\n \r\n37,504,041.24 \r\n \r\n$ 39,785,160.04 \r\n \r\n$ 44,088,731.04 \r\n \r\n$ \r\n \r\n172,260.88 \r\n \r\n387,266.06 \r\n \r\n498,731.23 \r\n \r\n429,769.10 \r\n \r\n539,979.78 \r\n \r\n57,895.00 \r\n \r\n$ 2,085,902.05 \r\n \r\n547 373.78 \r\n$ 2,633,275.83 \r\n \r\n$ 37,504,041.24 \r\n932,495.31 1,135,039.50 1,883,879.16 \r\n \r\n$ 41,455,455.21 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30 2003 \r\nOPERATING REVENUES \r\nStudent Tuition and Fees Less: Scholarship Allowances \r\nGrants and Contracts Federal State Local Nongovernmental \r\nRents and Royalties Sales and Services of Educational Departments Auxiliary Enterprises \r\nResidence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES \r\nSalaries Faculty Staff \r\nEmployee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\nNONOPERATING REVENUES (EXPENSES) \r\nState Appropriations Grants and Contracts \r\nFederal Gifts Interest and Other Investment Income Other Nonoperating Revenues \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains. or Losses \r\nCapital Grants and Gifts State \r\nIncrease (Decrease) in Net Assets \r\nNet Assets Net Assets - Beginning of Year. as Originally Reported Prior Period Adjustment to Reflect Residual Values on Depreciable Capital Assets \r\nNet Assets - Beginning of Year, Restated \r\nNet Assets - End of Year \r\nThe notes to the financial statements are an integral part of this statement. \r\n- 5- \r\n \r\nEXHIBIT\"B\" \r\n \r\n$ 6,671,587.91 -3,418,596.49 \r\n11,492,931.03 79,852.62 75,511.02 \r\n352,692.69 56,684.01 \r\n154,080.74 \r\n966,931.78 1,306,680.91 2,072,937.09 \r\n58,587.29 343,251.60 1,412,558.33 \r\n33,639.79 275 548.83 \r\n$ 21,934,879.15 \r\n \r\n$ 7,513,924.62 10,944,027.81 5,250,887.84 390,082.75 3,555,086.28 1,937,932.99 9,586,633.64 1,763,494.61 \r\n$ 40,942,070.54 \r\n$ -19 007,191.39 \r\n \r\n$ 17,114,139.87 \r\n \r\n179.00 415,090.13 113,915.61 1,983,078.53 \r\n \r\n$ 19,626,403.14 \r\n \r\n$ \r\n \r\n619,211.75 \r\n \r\n3,545,360.53 $ 4,164,572.28 \r\n \r\n$ 35,411,363.62 1 879 519.31 \r\n$ 37,290,882.93 \r\n \r\n$ 41 455 455.21 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2003 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) \r\nNet Cash Provided (Used) by Operating Activities \r\nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts \r\nNet Cash Flows Provided (Used) by Noncapital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Sale of Capital Assets Purchases of Capital Assets \r\nNet Cash Provided (Used) by Capital and Related Financing Activities \r\nCASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments \r\nNet Cash Provided (Used) by Investing Activities \r\nNet Increase (Decrease) in Cash \r\nCash and Cash Equivalents - June 30, 2002 Add: Short-Term Investments Pools \r\nCash and Cash Equivalents - Beginning of Year \r\nCash and Cash Equivalents - End of Year \r\n-6 - \r\n \r\nEXHIBIT\"C\" \r\n \r\n$ \r\n \r\n3,052,579.26 \r\n \r\n11,439,819.62 \r\n \r\n154,080.74 \r\n \r\n-17,417,230.50 \r\n \r\n-18,468,898.32 \r\n \r\n-3,555,086.28 \r\n \r\n-191,529.46 \r\n \r\n94,033.66 \r\n \r\n962,229.86 1,326,364.97 2,072,937.09 \r\n58,587.29 343,251.60 1,412,558.33 \r\n33,639.79 366,143.29 \r\n \r\n$ -18,316,519.06 \r\n \r\n$ 17,114,139.87 \r\n180,579.45 914,738.73 1,884,532.75 \r\n$ 20,093,990.80 \r\n \r\n$ \r\n \r\n641.25 \r\n \r\n-2, 796,290.68 \r\n \r\n$ -2,795,649.43 \r\n \r\n$ \r\n \r\n178,047.09 \r\n \r\n82,987.07 \r\n \r\n-683,328.26 \r\n \r\n$ \r\n \r\n-422,294.10 \r\n \r\n$ -1 440 471.79 \r\n \r\n$ \r\n \r\n1,750,495.60 \r\n \r\n266,147.55 \r\n \r\n$ 2,016,643.15 \r\n \r\n$ ===5=76;;;,,1=7=1=.3=6 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nEXHIBIT\"C\" \r\n \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: \r\nOperating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash \r\nProvided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivables, Net Inventories Prepaid Items Notes Receivable Accounts Payable Salaries Payable Deferred Revenue Other Liabilities Compensated Absences \r\n \r\n$ -19,007,191.39 \r\n1,763,494.61 \r\n-813,691.94 -65,311.63 -14,862.90 -97,495.80 \r\n-178,114.72 -116,699.45 101,004.63 \r\n-1,494.17 113,843.70 \r\n \r\nNet Cash Provided (Used) by Operating Activities \r\n \r\n$ -18,316,519.06 \r\n \r\nNONCASH ACTIVITY NONCAPITAL FINANCING, CAPITAL AND RELATED FINANCING TRANSACTIONS AND INVESTING ACTIVITIES Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts \r\n \r\n$ -3,545,360.53 \r\n \r\nThe notes to the financial statements are an integral part of this statement. -7 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS Savannah 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. \r\nREPORTING ENTITY Savannah State University is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity. \r\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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah 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 Reporting Standards. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia was required to implement GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University is also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statement presentation required by GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38 provides a comprehensive, entity-wide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required. \r\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 \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF ACCOUNTING accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-university transactions have been eliminated. \r\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. \r\nRESTATEMENT OF PRIOR YEAR NET ASSETS - BEGINNING OF YEAR In the initial year of implementation of GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities, the University failed to include residual values on its depreciable capital assets in accordance with asset capitalization policies adopted in the Capital Asset Guide for the University System of Georgia. As the result of the University's inclusion of residual values for depreciable capital assets, net assets at July 1, 2002 were increased by $1,879,519.31 for the effects on accumulated depreciation. \r\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. \r\nSHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 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. \r\nINVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the statements of revenues, expenses and changes in net assets. The Board of Regents Total Return Fund is included under Investments. \r\nACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also include amounts due from the Federal government, state and \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nACCOUNTS RECEIVABLE local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grant and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \r\nPREPAID ITEMS Prepaid items are payments made to vendors in advance of the receipt of goods and services that will benefit periods subsequent to the balance sheet date. \r\nINVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out (\"FIFO\") basis. \r\nResale Inventories are valued at cost using the first-in, first-out method. \r\nNONCURRENT CASH AND INVESTMENTS 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. \r\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 $5,000.00 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000.00 and significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 7 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and 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. \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCAPITAL ASSETS Effective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to Savannah State University when complete. For the year ended June 30, 2003, GSFIC transferred capital additions valued at $3,545,360.53 to Savannah State University. \r\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 received from grant and contract sponsors that have not yet been earned. \r\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 accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses and Changes in Net Assets. Savannah State University had accrued liability for compensated absences in the amount of $973,509.86 as of July 1, 2002. For fiscal year 2003, $776,825.49 was earned in compensated absences and employees were paid $662,981.79, for a net increase of $113,843.70. The ending balance as of June 30, 2003 in accrued liability for compensated absences is $1,087,353.56. Compensated absences include a current liability of $539,979.78. \r\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. \r\nNET ASSETS The University's net assets are classified as follows: \r\nInvested in capital assets, net ofrelated 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. \r\nRestricted net assets - 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, \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nNET ASSETS 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 4415-7 of Annotated Code of Georgia. \r\n \r\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. \r\n \r\nUnrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $2,369.37. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia - Administrative Central Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\n \r\nUnrestricted Net Assets includes the following items which are quasi-restricted by management. \r\n \r\nJune 30, 2003 \r\n \r\nR\u0026 RReserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted \r\n \r\n$ 1,044,177.58 1,519,173.29 665,569.48 -1,345,041.19 \r\n \r\nTotal Unrestricted Net Assets \r\n \r\n$ 1,883,879.16 \r\n \r\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. \r\n \r\nINCOME TAXES Savannah 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. \r\n \r\nCLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria: \r\n \r\n- 12 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. \r\nNonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\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. \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia (and thus Savannah State 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: \r\n1. Bonds, bill, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. \r\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. \r\n \r\n- 13 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\n \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n \r\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, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. \r\n \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\n \r\nAs authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (and thus Savannah State University), the option of exempting demand deposits from the collateral requirements. \r\n \r\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. \r\n \r\nCATEGORIZATION OF DEPOSITS The University's cash deposits are categorized by risk as follows: \r\n \r\nCategory 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name. \r\n \r\nCategory 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name. \r\n \r\nCategory 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized. \r\n \r\nCash Deposits as of June 30, 2003 are as follows: \r\n \r\nCash Deposits \r\n \r\nCarrying Amount \r\n \r\nBank Balances \r\n \r\nRisk Categories \r\n \r\n2 \r\n \r\n3 \r\n \r\n$ 775,050.93 $ 2.831.229.24 $ 122,878.96 $ 373,122.59 $ 2,335 227.69 \r\n \r\n- 14 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS \r\n \r\nCATEGORIZATION OF INVESTMENTS Savannah State University's investments are invested in an investment pool managed by another governmental entity and are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool. \r\n \r\nInvestments Not Subject to Categorizations: Board of Regents \r\nShort-Term Fund Total Return Fund \r\n \r\n$ 272,365.82 1,023,219.20 \r\n \r\nTotal Investments \r\n \r\n$ 1,295,585.02 \r\n \r\nNOTE 3: ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the following at June 30, 2003. \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal, State and Private Funds Other \r\n \r\n$ 899,290.09 97,990.10 \r\n1,547,269.26 367,791.90 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n$ 2,912,341.35 28,119.85 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 2,884,221.50 \r\n \r\nNOTE 4: INVENTORIES \r\n \r\nInventories consisted of the following at June 30, 2003. \r\n \r\nBookstore Central Stores Physical Plant \r\n \r\n$ 604,736.38 5,377.48 \r\n47,608.06 \r\n \r\nTotal \r\n \r\n$ 657,721.92 \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nNotes/Loans receivable primarily consist of student loans made through the Federal Perkins Loan Program (the Program). 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 \r\n \r\n- 15 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 5: NOTES/LOANS RECEIVABLE \r\n \r\nFederal 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. \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nFollowing are the changes in capital assets for the year ended June 30, 2003: \r\n \r\nBeginning Balance July 1, 2002 (Restated) \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30. 2003 \r\n \r\nCapital Assets, Not Being Depreciated: Land Construction Work-In-Progress \r\n \r\n$ 575,975.16 0.00 $ 2,167,169.20 \r\n \r\n$ 575,975.16 2,167,169.20 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n$ 575,975.16 $ 2,167,169.20 \r\n \r\n$ 2,743,144.36 \r\n \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections \r\n \r\n$42,572,957.00 $ 3,553,340.31 \r\n \r\n$46,126,297.31 \r\n \r\n2,520,259.00 \r\n \r\n2,520,259.00 \r\n \r\n5,550,043.97 \r\n \r\n492,767.42 $ 109,202.00 5,933,609.39 \r\n \r\n5,800,592.55 \r\n \r\n128,374.28 \r\n \r\n15,911.40 5,913,055.43 \r\n \r\n55,285.00 \r\n \r\n55,285.00 \r\n \r\nTotal Assets Being Depreciated \r\n \r\n$56,499,137.52 $ 4,174,482.01 $ 125,113.40 $60,548,506.13 \r\n \r\nLess: Accumulated Depreciation: \r\n \r\nBuildings and Building Improvements $16,089,589.30 $ 982,631.88 \r\n \r\nFacilities and Other Improvements \r\n \r\n826,084.56 \r\n \r\n106,108.60 \r\n \r\nEquipment \r\n \r\n3,093,730.94 \r\n \r\n417,212.00 $ \r\n \r\nLibrary Collections \r\n \r\n4,047,377.30 \r\n \r\n256,160.00 \r\n \r\nCapitalized Collections \r\n \r\n1,647.26 \r\n \r\n1,382.13 \r\n \r\n18,403.32 15,911.40 \r\n \r\n$17,072,221.18 932,193.16 \r\n3,492,539.62 4,287,625.90 \r\n3,029.39 \r\n \r\nTotal Accumulated Depreciation \r\n \r\n$24,058,429.36 $ 1.763,494.61 $ 34,314.72 $25,787,609.25 \r\n \r\nTotal Capital Assets, Being Depreciated, \r\n \r\nNet \r\n \r\n$32,440,708.16 $ 2,410,987.40 $ 90,798.68 $34,760,896.88 \r\n \r\nCapital Assets, Net \r\n \r\n$33,016 683 32 $ 4 578 156.60 $ 90 798 68 $37 504 041.24 \r\n \r\nNOTE 7: DEFERRED REVENUE \r\n \r\nDeferred revenue consists of the following at June 30, 2003. \r\n \r\nPrepaid Tuition and Fees Other Deferred Revenue \r\n \r\n$ 101,004.63 397,726.60 \r\n \r\nTotals \r\n \r\n$ 498,731.23 \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 8: LONG-TERM LIABILITIES \r\n \r\nLong-Term liability activity for the year ended June 30, 2003 was as follows: \r\n \r\nOther Liabilities Compensated Absences \r\n \r\nBeginning \r\nBalance \r\nJuly 1. 2002 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2003 \r\n \r\nCurrent Portion \r\n \r\n$ 973.509.86 $ 776,825 49 $ 662 981.79 $ I 087 353.56 $ 539,979.78 \r\n \r\nNOTE 9: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. 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 Georgia Department of Audits and Accounts. \r\n \r\nFunding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah 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 2003, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2003 2002 2001 \r\n \r\n100% 100% 100% \r\n \r\n$ 1,169,740.65 $ 1,112,152.15 $1,404,295.16 \r\n \r\nREGENTS RETIREMENT PLAN \r\n \r\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. 4721-1 et. seq. and is administered by the Board of Regents of the University System of Georgia. \r\n \r\n- 17 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\nPlan Description Under this plan, the Board of Regents may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. \r\nFunding Policy Savannah 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. The employer contributes 10.02% of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \r\nSavannah State University and the covered employees made the required contributions of $424,101.15 (10.02%) and $211,628.34 (5%), respectively. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah 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. \r\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 $ 3,500.00 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. \r\n \r\n- 18 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 9: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nContributions and Vesting 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. \r\nTotal contributions made by employees during fiscal year 2003 amounted to $37,552.67 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nNOTE 10: RISK MANAGEMENT \r\nSavannah State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. Savannah State University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements 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 of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $2,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents. \r\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. Savannah 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. \r\n \r\n- 19 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 10: RISK MANAGEMENT \r\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. \r\nNOTE 11: CONTINGENCIES \r\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 which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Savannah State University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against Savannah 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, 2003. \r\nNOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, 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. \r\nAs of June 30, 2003, there were 169 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2003, Savannah State University recognized as incurred $594,247.34 of expenses, which was net of $233,959.99 of participant contributions. \r\n \r\n- 20 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2003 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 13: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nThe University's operating expenses by functional classification are shown below: \r\n \r\nStatement of Operating Expenses - Natural vs Functional Classifications For the Fiscal Year Ended June 30, 2003 \r\n \r\nFunctional Classification \r\n \r\nNatural Classification \r\n \r\nInstruction \r\n \r\nResearch \r\n \r\nPublic Service \r\n \r\nAcademic Support \r\n \r\nStudent Services \r\n \r\nSalaries Faculty Staff \r\nEmployee Benefits Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\n \r\n$ 7,242,071.72 858,564.74 \r\n1,968,397.33 40,175.74 \r\n189,494.14 104,567.26 \r\n430,028.92 1,683,764.93 \r\n \r\n$ 137,482.00 430,676.17 107,828.80 68,095.69 \r\n256,41 I.SI 15,004.14 \r\n658,243.47 5 373.46 \r\n \r\n$ 44,824.50 1,189,919.27 230,065.68 33,592.38 \r\n179,712.58 17,389.24 \r\n725,160.46 \r\n \r\n$ 81,011.40 2,073,904.97 515,140.40 64,225.00 \r\n7,898.35 78,880.17 \r\n677,670.53 16,018.13 \r\n \r\n$ 5,150.00 1,367,018.52 365,150.88 34,155.97 \r\n39,300.00 39,082.43 \r\n684,141.18 l 380.61 \r\n \r\nTotal Operating Expenses \r\n \r\n$12 517 064.78 $ 1 679 115.24 $ 2 420 664.11 $ 3 514 748 95 $ 2 535 379.59 \r\n \r\nNatural Classification \r\nSalaries Faculty Staff \r\nEmployee Benefits Travel Scholarships and \r\nFellowships Utilities Supplies and Other \r\nServices Depreciation \r\nTotal Operating Expenses \r\n \r\nInstitutional Support \r\n \r\nFunctional Classification \r\n \r\nPlant \r\n \r\nOperations and Scholarships \r\n \r\nAuxiliary \r\n \r\nMaintenance and Fellowships \r\n \r\nEnterprises \r\n \r\nTotal Operating Expenses \r\n \r\n$ 3,000.00 2,761,474.18 1,456,942.86 108,013.44 \r\n346,565.26 61,237.95 \r\n1,498,818.13 22,329.37 \r\n$ 6258381.19 \r\n \r\n$ 1,465,204.53 147,683.50 7,809.54 \r\n1,467,692.29 \r\n832,200.67 21,051.16 \r\n$ 3 941 641 62 \r\n \r\n$ 2,050,130.07 $ 2 050 130.07 \r\n \r\n$ \r\n \r\n385.00 \r\n \r\n805,355.57 \r\n \r\n451,588.25 \r\n \r\n34,014.99 \r\n \r\n485,574.37 154,079.51 \r\n \r\n4,080,370.28 13 576.95 \r\n \r\n$ 6 Q24 94492 \r\n \r\n$ 7,513,924.62 10,952,117.95 5,242,797.70 390,082.75 \r\n3,555,086.28 1,937,932.99 \r\n9,586,633.64 1,763,494.61 \r\n$40 942 Q7Q 54 \r\n \r\n- 21 - \r\n \r\n SUPPLEMENTARY INFORMATION - 23 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO \r\nBUDGET - (NON-GMP BASIS) RESIDENT INSTRUCTION \r\nYEAR ENDED JUNE 30. 2003 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nState Appropriations Other Revenues Retained \r\n \r\nBUDGET \r\n \r\nACTUAL (1) \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ 17,008,054.00 $ 17,008,054.00 $ \r\n \r\n23,692,212.00 \r\n \r\n20,641,844.07 \r\n \r\n0.00 -3,050,367.93 \r\n \r\n$ 40,700,266.00 $ 37,649,898.07 $ - - ~-3,0-50~,36-7.9-3 \r\n \r\nEXPENDITURES \r\nPersonal Services: Education, General and Departmental Services Sponsored Operations \r\nOperating Expenses: Education, General and Departmental Services Sponsored Operations \r\nCapital Outlay Special Funding Initiative \r\n \r\n$ 19,472,326.00 $ 19,211,790.11 $ \r\n \r\n2,168,422.00 \r\n \r\n2,744,530.87 \r\n \r\n3,432,189.00 14,808,298.00 \r\n0.00 819,031.00 \r\n \r\n3,982,793.27 9,299,980.44 1,948,341.54 \r\n719,341.02 \r\n \r\n260,535.89 -576, 108.87 \r\n-550,604.27 5,508,317.56 -1,948,341.54 \r\n99,689.98 \r\n \r\n$ 40,700,266.00 $ 37,906,777.25 $ _ _ _2.:....,7_9.3...,.4. _8_8_.7_5 \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ \r\n \r\n-256,879.18 $ ====-=25=6=,8=79=.1=8 \r\n \r\n(1) Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n \r\nSee notes to the financial statements. \r\n \r\n- 25 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO \r\nBUDGET - (NON-GAAP BASIS) LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 2003 \r\n \r\nSCHEDULE \"2\" \r\n \r\nREVENUES State Appropriations \r\n \r\nBUDGET \r\n \r\nACTUAL (1) \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ \r\n \r\n106.522.00 $ \r\n \r\n106,522.00 $ _ _ _ _ _0._00_ \r\n \r\nEXPENDITURES \r\nEquipment. Technology and Construction Trust Fund \r\n \r\n$ \r\n \r\n106,522.00 $ \r\n \r\n106.522.00 $ _ _ _ _ _o_.o_o \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ \r\n \r\n0.00 $ = = = = =0.= 00 \r\n \r\n(1) Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia. which is a comprehensive basis of accounting other than generally accepted accounting principles. \r\n \r\nSee notes to the financial statements. \r\n \r\n- 26 - \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nSCHEDULE 311 11 \r\n \r\nTotals per Annual Supplement \r\n \r\nAccruals June 30, 2003 June 30, 2002 \r\n \r\nCompensated Absences June 30, 2003 June 30, 2002 \r\n \r\nAdjustments \r\n \r\nShared Services on Jointly Staffed Personnel \r\n \r\nArmstrong Atlantic State University \r\n \r\nAlemayehu, Tsehai \r\n \r\nRichardson, Joseph \r\n \r\nSajwan, \r\n \r\nKenneth \r\n \r\nUnidentified Variance \r\n \r\nSALARIES $ 18,484,452.45 $ \r\n \r\nTRAVEL 390,082.75 \r\n \r\n172,260.88 -288,960.33 \r\n \r\n1,010,082.27 -904,328.71 \r\n \r\n-3,015.00 -6,376.00 -7,470.00 1,306.87 \r\n$ 18,457,952.43 $ ===39=0==,0=8=2.=75= \r\n \r\nSee notes to the financial statements. \r\n \r\n- 27 - \r\n \r\n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-98-02 FS-548-00-02 FS-548-00-10 FS-548-01-01 FS-548-01-02 FS-548-01-08 FS-548-01-09 FS-548-01-10 FS-548-01-14 FS-548-01-15 FS-548-01-17 FS-548-02-01 FS-548-02-02 FS-548-02-03 FS-548-02-04 FS-548-02-05 FS-548-02-06 FS-548-02-07 FS-548-02-08 \r\n \r\nUnresolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Further Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Further Action Not Warranted Partially Resolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balance Finding Control Number: FS-548-98-02 \r\n \r\nThe University will seek internal funding sources to eliminate this deficit by June 30, 2004. \r\n \r\nCASH AND CASH EQUIVALENTS Theft of Funds Finding Control Number: FS-548-01-02 \r\n \r\nWith the reorganization ofthe Office of Student Accounts and Cashiering, the University established and implemented internal controls that will safeguard these assets. Additionally in January of 2003, the University developed and distributed to all University staff involved in the cash handling process, a Cash Operations Manual that addresses the University's stance on this issue. The University is unable to bring closure to this issue as the Georgia Bureau oflnvestigation is handling the investigation. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTION/RESPONSES \r\nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-02-02 \r\nThis exception to policy was based on a verbal understanding between the President and the Chancellor that institutions would be allowed to exceed their limits within reasonable amounts. In the future Savannah State University will request formal written authorization from the Board of Regents to exceed out-of-state tuition fee waivers. \r\nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-02-04 \r\nBy definition, \"agency funds account for resources held by the University as custodian or fiscal agent\". The University has several agencies that provide financial assistance to students that are billed for the amount in which they are awarding the student. Although these agencies do not submit advance funds to the University, they were established as agency funds. It is the position of the University that these accounts should not be classified as agency funds. The University will seek guidance from the Board of Regents on how to account for these types of accounts. However until guidance is received, the University will implement procedures to improve the receipt of these funds. \r\nFor those true agency funds which show a deficit, the University has implemented procedures to eliminate the deficit and monitor the availability of funds. Account holders will be notified in writing of the deficit and asked to remit funds to cover the deficit balance. Staff will monitor and review agency accounts monthly to identify deficit accounts for appropriate action. \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-02-05 \r\nThe University outsourced the bookstore July 7, 2003. \r\nThe University changed its \"Voided Check\" Policy in June 2003. The new policy, which is located in the Office of the Comptroller Accounting Policies and Procedures Manual, requires checks to be voided in a timely manner after they become stale dated, 6 months. \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-02-08 \r\n \r\nThe University reconciles the property records to the capitals ledger. The referenced capital assets variance was the result of a systematic problem. The capital ledger reports (Footnote 6, capital ledger trial balance, etc...) are returning incorrect numbers for three separate accounts. The ending balances for fiscal year 2002 are not reflected as the beginning balance for period 1 of fiscal year 2003. Therefore, the ending balances reflected by the capital ledger reports are reporting incorrect numbers. The discrepancies between the ending balance at 2002 and the beginning balance of 2003 totals the referenced variance. The University submitted a ticket to OIIT regarding the problem in late June or early July 2003. OIIT instructed the University to use queries to get final figures during the year-end closing process. To date the ticket is unresolved and classified as a non-priority ticket by OIIT. \r\n \r\nThe University was able to provide a listing of equipment, which included all of the referenced attributes for all equipment acquired since the conversion to the PeopleSoft Financial System. Detailed information related to equipment acquired prior to the conversion to PeopleSoft has been archived in the University's legacy system. The University no longer has access to this information. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-01-02 FA-548-01-04 FA-548-01-05 FA-548-01-06 FA-548-01-07 FA-548-02-01 FA-548-02-02 F A-548-02-03 F A-548-02-04 F A-548-02-05 \r\n \r\nPreviously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Further Action Not Warranted Unresolved - See Corrective Action/Responses \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTION/RESPONSES \r\nPERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07 \r\nThe University is continuing the reconciliation process to identify those students that reimbursement can be requested for. The reconciliation is anticipated to be completed by June 30, 2004. Upon the completion ofthe reconciliation, the University will request from the Department of Education that it be allowed to certify the validity ofthese payments and submit reimbursement for these expenditures. In the future the University will implement procedures to ensure that funds are available to cover valid expenditures. \r\nACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $7,185.07 Finding Control Number: FA-548-02-01 \r\nThe University is waiting on audit resolution from the U.S. Department of Education. \r\nALLOWABLE COSTS/COST PRINCIPLES Deficiencies in Internal Controls Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-02-02 \r\nThe University has established a procedure to ensure the faxed invoices have not been previously paid. The procedure includes stamping the invoice with the following wording, \"This is to certify that this invoice was not paid previously, that the Original Invoice has been lost, misplaced, or retained by the Vendor and that a Duplicate invoice was issued\". The verification is dated and signed by the respective Accounts Payable staff person. \r\n-4- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $1,112.00 Finding Control Number: FA-548-02-03 The University is waiting on audit resolution from the U.S. Department of Education. EQUIPMENT AND REAL PROPERTY MANAGEMENT Failure to Maintain a Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-02-05 The University has updated its equipment records to ensure compliance as stated in 0MB Circular A-110, Subpart c.34. The Office ofCentral Receiving and Records Management has revised the University's procedures for property and equipment management. The Title III Inventory List for years prior to conversion to PeopleSoft is being maintained on a spreadsheet. The Title III Inventory List for years after PeopleSoft conversion is being maintained in PeopleSoft. Although the University has the Inventory List, it was inadvertently not presented to the State Auditors. Upon this discovery the State Auditors would not accept the Inventory List. \r\n-5- \r\n \r\n SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUESIRECEIV ABLES/RECEIPTS Failure to Monitor Out-of-State Tuition Fee Waivers Finding Control Number: FS-548-03-01 \r\n \r\nCriteria: \r\n \r\nThe Board of Regents Policy Manual, Section 704.0302 concerning fee waivers states, \"the number of such waivers in effect at any time does not exceed two-percent of the equivalent full-time students enrolled at the institution in the fall semester immediately preceding the semester for which the out-of-state tuition is to be waived\". \r\n \r\nCondition: \r\n \r\nOur examination of fee waivers for the year under review, revealed that management failed to monitor out-of-state tuition fee waivers. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nWaivers for out-of-state tuition granted by the University exceeded the amount allowable per Board of Regents policy by $407,290.75. \r\n \r\nEffect: \r\n \r\nThe University granted out-of-state tuition waivers in excess of amount allowable by Board of Regents policy. \r\n \r\nCause: \r\n \r\nManagement did not comply with the Board of Regents policy. \r\n \r\nRecommendation: The University should follow established policies and procedures to ensure that out-of-state tuition fee waivers are within the allowable limits. \r\n \r\nREVENUESIRECEIV ABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-03-02 \r\n \r\nCriteria: \r\n \r\nThere is no provision in the policies ofthe Board of Regents for deferments of student accounts without the student having approved financial aid at the time of registration. \r\n \r\nCondition: \r\n \r\nAt June 30, 2003, Savannah State University had $865,575.00 in student accounts receivable which were over one year old and not supported by approved financial aid. \r\n \r\nQuestioned Cost: NIA \r\n \r\nEffect: \r\n \r\nBy allowing students to enroll and remain in school without approved financial aid, the University has incurred student accounts receivable which were not in accordance with Board of Regents Policy. \r\n \r\n- 1- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-03-02 \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that only students with approved financial aid would receive tuition and fee deferments. \r\n \r\nRecommendation: \r\n \r\nCollections of student accounts receivable should be made on at least a quarterly basis, and no student should be granted a deferment without having approved financial aid. It is recommended that the University use all appropriate means to collect student accounts receivable. \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Employee Travel Procedures Finding Control Number: FS-548-03-03 \r\n \r\nCriteria: \r\n \r\nThe University should establish adequate internal controls to ensure that transactions associated with employee travel are processed and posted to the financial records correctly. \r\n \r\nCondition: \r\n \r\nFor the year under review, an examination of employee travel revealed that management failed to monitor prepaid travel, charge expenses to the appropriate account, and correctly report travel information. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following deficiencies were noted during a review of thirteen vouchers charged to employee travel. \r\n \r\n1.) Five vouchers charged to employee travel expense should have been charged to prepaid travel. The University could not provide documentation to support one of the prepaid travel vouchers. Also, the advance for one of these vouchers was never expended. In the subsequent year this amount was shown as being refunded to the University but was posted to non-employee travel rather than employee travel. There was no documentation provided to support this reimbursement. \r\n \r\n2.) One voucher for $2,500.00 was not for employee travel. This voucher was for student stipends. The University made a voucher payable to an employee. The employee was to cash the check and pay various students their stipend amount in cash. \r\n \r\n-2- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Employee Travel Procedures Finding Control Number: FS-548-03-03 \r\n \r\n3.) One voucher for employee travel was incorrectly charged to nonemployee travel. \r\n \r\n4.) One employee received a travel advance in order to pay for his travel expenses and others who traveled with him. This resulted in the entire amount of the travel expense being associated with this one employee. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could incorrectly reimburse employee travel expense and incorrectly report travel information to the State Auditor for inclusion in the Salary and Travel Supplement. \r\n \r\nCause: \r\n \r\nThese deficiencies occurred because management failed to establish procedures to ensure that transactions associated with employee travel were appropriately posted to the financial statements. In addition, management failed to follow established guidelines and procedures for travel advances. \r\n \r\nRecommendation: \r\n \r\nThe University should establish procedures to ensure that employee travel expenses are charged to the appropriate accounts and that travel information is correctly reported to the State Auditor. The University should follow established procedures for providing travel advances. \r\n \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-03-04 \r\n \r\nCriteria: \r\n \r\nAccording to the Board of Regents Summer School Employment Contract, \"This {pay} rate is contingent upon a minimum of twenty-one students per course in your College or Division. Should enrollment in your course(s) fall below fifteen, you will be paid pro-rata for the courses based upon the paid head count. (Twelve students in a class, for example, would generate twelve twenty one of the full pay of the class.)\" The College of Graduate Studies requires nine students per course in order to receive full pay. \r\n \r\nCondition: \r\n \r\nSummer employees were not paid in accordance with their Summer School Employment Contracts. \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-03-04 \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe University used \"average\" enrollment numbers to determine summer faculty compensation instead ofbasing compensation on a per course basis as stipulated in the Board of Regents Summer School Employment Contract. Per University officials, ifthe \"average\" enrollment in a College or Division exceeded the required minimums of twenty-one students for undergraduate courses or nine students for graduate courses, then the entire College or Division was deemed eligible to receive full compensation. University officials also stated that ifthe \"average\" enrollment for undergraduate courses did not exceed the minimum but the Vice President for Academic Affairs determined that the course(s) were necessary, then the faculty would still be deemed eligible to receive full compensation. The following deficiencies were noted related to summer 2003 faculty compensation based on the University's application of \"average\" enrollment criteria: \r\n \r\n1.) For the College of Graduate Studies, all professors received full pay for courses taught because the \"average\" enrollment per course in Graduate Studies exceeded nine students. \r\n \r\n2.) All professors for the College of Business Administration received full pay based on approval by the Vice President of Academic Affairs. This approval was based on two factors: a. The division's \"average\" enrollment was twenty students per course. b. Vice President of Academic Affairs determined that revenue collected for summer tuition for the College of Business Administration would be sufficient to pay full salaries for all Business professors. \r\n \r\nEffect: \r\n \r\nThe University did not compensate summer employees correctly based upon their contracts. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of the University's failure to have procedures in place to ensure that summer employees were compensated according to the signed Summer School Employment Contract. \r\n \r\n-4- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-03-04 \r\n \r\nRecommendation: \r\n \r\nThe University should implement policies and procedures to ensure that summer employees are compensated according to their signed Summer School Employment Contracts. \r\n \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-03-05 \r\n \r\nCriteria: \r\n \r\nNCGA Statement 1, paragraph 1, which 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. Administrative requirements contained in the University System of Georgia, Board of Regents Business Manual and pertinent sections of the Official Code of Georgia Annotated (O.C.G.A). \r\n \r\nCondition: \r\n \r\nThe University failed to have adequate accounting policies and procedures in place to ensure that vendor credits are properly applied to bookstore inventories; old outstanding checks are properly voided; accounts payable are recorded in the proper accounting period; student loan receivable records are properly maintained; and uncollectible accounts receivable are identified and recorded in accordance with Board of Regents policies. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nOur examination and testing for the year under review revealed the following deficiencies in accounting for financial transactions by Savannah State University. \r\n \r\n1.) An adjustment of $78,008.02 was necessary to correctly record bookstore inventory. Vendor issued credits were not maintained within the formal accounting records. The credits and/or refund checks were reviewed, maintained and/or receipted by bookstore personnel. \r\n2.) Checks outstanding for more than six months were not voided in a timely manner. \r\n \r\n-5 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-03-05 \r\n \r\n3.) A review of encumbrance documentation for the Unexpended Plant Fund revealed that three items totaling $51,829.00 were actually valid payables at June 30, 2003. \r\n4.) An examination of subsequent period accounts payable activity revealed that there were $37,141.48 in valid payables that should have been recorded in fiscal year 2003. \r\n5.) A complete listing of Student Loan Receivables could not be obtained. \r\n6.) The University did not record the allowance for uncollectible accounts receivable in accordance with Board ofRegents Policy. An audit adjustment of $10,078.34 was made to correctly report the allowance. \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, the University could place itselfin a position where potential misappropriation of assets could occur. In addition, the lack ofcontrols could impact reporting of its financial position and results of operations. \r\n \r\nCause: \r\n \r\nThese conditions occurred because the University failed to have adequate accounting policies and procedures in place. \r\n \r\nRecommendation: \r\n \r\nThe University should review current accounting policies and procedures, identify weaknesses, and implement procedures to ensure that vendor credits are maintained within the formal accounting records, checks outstanding for more than six months are voided, accounts payable are recorded in the proper period, a complete student listing of loans receivable is maintained, and the allowance for uncollectible accounts receivable is recorded in accordance with Board of Regents Policy. \r\n \r\nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-03-06 \r\n \r\nCriteria: \r\n \r\nAccording to Section 1 ofthe Board ofRegents Business Procedures Manual, \"Before establishing an agency account, each institution should determine that its relationship with the third party is that of custodian or fiscal agent. When this relationship has been determined, the institution should obtain, where practicable, complete information on the terms and conditions ofthe \r\n \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-03-06 \r\n \r\nagency relationship, the purpose ofthe funds being placed, and their ultimate disposition. Complete files should be maintained for all agreements, letters, or other documents, for guidance in the proper handling of the funds\". \r\n \r\nCondition: \r\n \r\nAt June 30, 2003, the University had twelve agency funds that had deficit balances totaling $233,701.21. In addition, the University failed to provide purpose statements for five of the individual agency funds. \r\n \r\nQuestioned Cost: NIA \r\n \r\nEffect: \r\n \r\nThe University disbursed funds in excess of receipts. Without purpose statements, the University could disburse funds which are not in compliance with agency agreements. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result ofthe University disbursing funds prior to or in excess of the receipt of funds and the result of management's failure to establish agency funds in accordance with Board of Regents policies and procedures. \r\n \r\nRecommendation: \r\n \r\nThe University should implement procedures to ensure that all funds are received prior to the disbursement and new accounts are supported by required purpose statements. The University should seek reimbursement for the deficit balances from the organizations involved. \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-03-07 \r\n \r\nCriteria: \r\n \r\nGuidelines for accounting for capital assets are contained in the Capital Asset Guide for the University System of Georgia. Included in this guide are asset category definitions, capitalization thresholds, depreciation methodologies, and examples of expenditures for each class of assets. Additionally, guidelines for leasehold improvements and construction in progress have been included. \r\n \r\n- 7- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-03-07 \r\n \r\nCondition: \r\n \r\nThe University's procedures were insufficient to provide adequate control over the University's capital assets. The University failed to comply with capitalization and depreciation procedures as listed in the Capital Asset Guide for the University System of Georgia. The University failed to reconcile the property records to the Capital Asset Ledger. \r\n \r\nQuestioned Cost: NIA \r\n \r\nInformation: \r\n \r\nThe following weaknesses/deficiencies relating to Capital Assets were noted. \r\n \r\n1.) During a test of equipment additions, it was noted that one equipment item purchased by the University met capitalization thresholds but was not capitalized. \r\n2.) The University failed to capitalize amounts associated with construction in progress. An audit adjustment of $2,167,169.20 was made to record construction in progress. \r\n3.) The University restated prior period accumulated depreciation and adjusted current year depreciation expense to reflect residual values for Library Collections and Capitalized Collections. Per the Capital Asset Guide for the University System of Georgia, these asset categories do not have residual values. Therefore, audit adjustments of$404,902.48 and $140.99 respectively were made to correctly report asset values for Library Collections and Capitalized Collections. \r\n4.) The University did not reconcile the property records to the Capital Asset Ledger. Extensive procedures were performed in an attempt to determine the variances. Variances were identified in accumulated depreciation, equipment, and capitalized collections. Net adjustments of $449,679.37 were made to obtain per audit figures for capital assets. \r\n5.) The University was unable to provide a listing ofequipment which included all of the following attributes: property description including serial number and decal number, source offunds used to purchase item, acquisition date and cost, reference to originating invoices and reference to physical location of the equipment item. \r\n \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Inadequate Capital Assets Records Finding Control Number: FS-548-03-07 \r\n \r\nEffect: \r\n \r\nWithout satisfactory accounting controls and procedures in place, capital purchases could be expensed and not recorded on the Asset Management module; depreciation expenses could be recorded on a basis not consistent with provisions of the Capital Asset Guide for the University System of Georgia; and capital assets could be misappropriated if a complete record of capital assets is not maintained. \r\n \r\nCause: \r\n \r\nUniversity's management failed to implement adequate policies and procedures to ensure that the University's capital assets were properly maintained. \r\n \r\nRecommendation: The University should establish appropriate procedures and controls to ensure that: \r\n \r\n1.) Expenses which meet capitalization thresholds are added to the Asset Management module. \r\n2.) Assets are depreciated in accordance with guidelines contained in the Capital Asset Guide for the University System of Georgia. \r\n3.) Property records are reconciled to the Capital Asset Ledger. 4.) Equipment records are properly maintained containing all the \r\nrequired attributes. \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Deficiencies in Internal Controls Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-03-01 \r\n \r\nCriteria: \r\n \r\nProvisions set forth in 0MB Circular A-21 Section C and J reqmre expenditures to be supported by appropriate documentation. \r\n \r\nCondition: \r\n \r\nThe University paid vouchers without adequate supporting documentation. \r\n \r\nQuestioned Cost: NIA \r\n \r\n-9- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Deficiencies in Internal Controls Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-03-01 \r\n \r\nInformation: \r\n \r\nDuring the year under review, a sample of forty-six Title III expenditures revealed the following: \r\n \r\n1.) One voucher could not be located. 2.) Five vouchers were paid from duplicated invoices rather than \r\nfrom the original invoices. \r\n \r\nEffect: \r\n \r\nWithout adequate documentation to support payments, the University could incorrectly pay invoices. \r\n \r\nCause: \r\n \r\nThese conditions were the result of management's failure to have adequate internal controls in place to ensure compliance with 0MB Circular A-21. \r\n \r\nRecommendation: \r\n \r\nThe University should develop and implement policies and procedures to ensure that program expenditures are supported by adequate documentation. In addition, the University should develop a monitoring process to ensure that controls are being followed. \r\n \r\nELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $3,618.05 Finding Control Number: FA-548-03-02 \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 668 provide general provisions for administering Student Financial Aid (SFA) programs. Provisions included in 34 CFR 685 and 34 CFR 690 provide eligibility and other related program requirements that are specific to William D. Ford Direct Student Loan Program and Federal Pell Grant Program, respectively. \r\n \r\nCondition: \r\n \r\nThe SFA office was not properly performing the refund process. \r\n \r\nQuestioned Cost: \r\n \r\nQuestioned Costs of $3,618.05 were identified for officially withdrawn students. The projection ofquestioned costs could not be readily determined for students who unofficially withdrew. However, the likely questioned costs are believed to exceed $10,000.00. \r\n \r\n- 10 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $3,618.05 Finding Control Number: FA-548-03-02 \r\n \r\nInformation: \r\n \r\nTwenty student financial aid refunds were selected to determine if refunds were calculated and returned in the correct amount to the proper funding agency and/or student. The items tested contained financial aid disbursements of $38,487.00 out of a population of $15,943,984.27. Our examination revealed the following deficiencies: \r\n \r\n1.) Five student refunds were not calculated correctly. 2.) Unearned Title IV funds were not applied by the University to the \r\nappropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244 for two students. 3.) University refunded incorrect amount ofTitle IV and/or HOPE funds for eight students resulting in a questioned cost of $1,518.96. 4.) University returned funds without approval for three students. 5.) Five students did not receive notification of HOPE refunds as required. 6.) Four students received financial aid after withdrawing from classes causing overaward of financial aid resulting in a questioned cost of $1,905.59. 7.) One student received an overaward of Pell resulting in a questioned cost of$193.50. \r\n \r\nIn addition, the University failed to calculate refunds for students that received all failing grades due to unofficially withdrawing from school. \r\n \r\nEffect: \r\n \r\nSFA office awarded and/or refunded SFA funds to students incorrectly. \r\n \r\nCause: \r\n \r\nThese deficiencies were the result of management's failure to properly process student financial aid awards and refunds in accordance with Federal regulations. \r\n \r\nRecommendation: \r\n \r\nThe University should develop and implement procedures to ensure that student financial aid awards and refunds are properly calculated and that unearned funds are correctly returned to the appropriate accounts in a timely \r\n \r\n- 11 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2003 \r\n \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $3,618.05 Finding Control Number: FA-548-03-02 \r\n \r\nmanner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. University officials should also ensure that students who received failing grades for unofficially withdrawing from school are properly included in the SFA refund process. The University should contact the U.S. Department of Education regarding resolution of this finding. \r\n \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Failure to Maintain a Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-03-03 \r\n \r\nCriteria: \r\n \r\nProvisions included in 34 CFR 74 and 0MB Circular A-110, Subpart c.34 set forth Federal requirements for equipment. \r\n \r\nCondition: \r\n \r\nThe University failed to provide a complete Title III equipment report. Audit procedures relating to equipment could not be performed. \r\n \r\nQuestioned Cost: NIA \r\n \r\nEffect: \r\n \r\nDue to the lack of an appropriate inventory control system, the University is unable to adequately maintain and safeguard equipment inventory. \r\n \r\nCause: \r\n \r\nDuring the year under review, the University failed to have adequate internal controls in place to ensure compliance with Federal equipment requirements. \r\n \r\nRecommendation: \r\n \r\nThe University should establish policies and procedures to ensure that equipment purchases are identified by fund sources and grant award numbers, property records are maintained in accordance with Federal requirements, and physical inventories are conducted every two years. The U.S. Department of Education should review this matter to determine that appropriate policies and procedures are established by the University to adequately maintain and report Title III equipment. \r\n \r\n- 12 - \r\n \r\n "},{"id":"dlg_ggpd_1416979757-2001-12-13","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended 2001 June 30","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2001-12-13"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : State of Georgia Department of Audits and Accounts, [2000-2009?]"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures--Periodicals.","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended 2001 June 30"],"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_1416979757-2001-12-13"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1416979757-2001-12-13"],"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":". i \n \n. ' \n \n,-,.,,f' \n \n,J \n \nSTATE OF GEORGIA \n \nu DEPARTMENT OF AUDITS AND ACCOUNTS \n \nu U U \n \nGAABoo \n \n. R\\ \n \nu \ntd \nbJ \n \n- S;;i.s \n \nI \nSAVANNAH STATE UNIVERSITY \nSA VANNAH, GEORGIA \n \nREPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2001 \n \nRECEIVED. \n \n1:J \n \nMARO 4 2002 \n \n~ \nbJ \n \nOO~M~~ \nRussell W~R\\~ro~ES \n \nhJ \n \n~ \n \nState Auditor \n \n~ \n \nllJ \n \nIL.4 \n \n  SAVANNAH STATE UNIVERSITY -TABLE OF CONTENTS- \n \nPage \n \nSECTION I \n \nFINANCIAL \n \nINDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \n \nEXHIBITS \n \nFINANCIAL STATEMENTS \n \nA COMBINED BALANCE SHEET \n \nALL FUND GROUPS \n \n2 \n \nB COMBINED STATEMENT OF CHANGES IN FUND BALANCES \n \nALL FUND GROUPS \n \n4 \n \nC STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \n \nAND OTHER CHANGES \n \n6 \n \nD NOTES TO THE FINANCIAL STATEMENTS \n \n7 \n \nSUPPLEMENTARY INFORMATION \n \nE COMBINING BALANCE SHEET \n \nCURRENT FUNDS - UNRESTRICTED \n \n20 \n \nF COMBINING STATEMENT OF CHANGES IN FUND BALANCES \n \nCURRENT FUNDS-UNRESTRICTED \n \n22 \n \nG COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \n \nAND OTHER CHANGES \n \nUNRESTRICTED \n \n24 \n \nSCHEDULES \n \nSCHEDULESOFREVENUESANDEXPENDITURESCOMPAREDTOBUDGET \n \n1 \n \nRESIDENT INSTRUCTION \n \n26 \n \n2 \n \nLOTTERY FOR EDUCATION \n \n29 \n \n3 CHANGES IN INVESTMENT IN PLANT \n \n30 \n \n4 SCHEDULE OF FUND BALANCES \n \nCURRENTFUNDSANDPLANTFUNDS \n \n32 \n \n5 RECONCILIATION OF SALARIES AND TRAVEL \n \n34 \n \n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS SECTION II \nAUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS .SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \nSECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nc{ \n8 \nCi \n \n SECTION I FINANCIAL \n \n w. RUSSELL \n \nHINTON \n \nSTATE AUDITOR \n \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n254 Washington Street. S.W., Suite 214 Atlanta, Georgia 30334-8400 \nDecember 13, 2001 \n \nHonorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \nand Honorable Carlton E. Brown, President Savannah State University \nINDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \nLadies and Gentlemen: \nWe have audited the accompanying financial statements (Exhibits A through D) of Savannah State University as of and for the year ended June 30, 2001. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \nExcept as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the Unit~d States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon. \nAs more fully discussed in Section III, Current Year Findings and Questioned Costs, the University could not provide adequate subsidiary records or other evidence supporting the student accounts receivable which are a part of Accounts Receivable as reported on the Combined Balance Sheet. Accordingly, we were unable to satisfy ourselves as to the accuracy of the amount reported as accounts receivable on the Combined Balance Sheet as of June 30, 2001. Additionally, we were unable to determine the effects this matter may have on the financial statements. \n \n01ARL-63X \n \n As described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with accounting princi --~s generally accepted in the United States of America with respect to the recording of encun1orances as expenditures and liabilities. To conform with accounting principles generally accepted in the United States of America, encumbrances should be recorded as a reservation offund balance. The effects on the financial statements of this departure from accounting principles generally accepted in the United States of America were not reasonably determinable, but are believed to be material. \nAs disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by accounting principles generally accepted in the United States of America. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $1 ,022,492.91 as of June 30, 2001, and the net change in fund balance for the year ended June 30, 2001, would be decreased by $119,658.76. \nIn our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence supporting student accounts receivable, and except for the effects on the financial statements of the matters discussed in the fourth and fifth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 2001, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with accounting principles generally accepted in the United States of America. \nOur audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 5) are presented for purposes ofadditional analysis and are not a required part ofthe financial statements of Savannah State University. Such information has been subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, except for the effects of such adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence supporting student accounts receivable, and except for the effects of the matters discussed in the fourth and fifth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole. \nRespectfully submitted, \n-..;:\u003e.,. OQ.. ~~~ \n~sell W. Hinton State Auditor \nRWH:gp 01ARL-63X \n \n FINANCIAL STATEMENTS - 1- \n \n SAVANNAH STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30. 2001 \n \nASSETS \nCash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant \nTotal Assets \nLIABILITIES AND FUND BALANCES \nLiabilities Accounts Payable Salaries Payable Student Deposits Deposits Held in Custody for Others Due to Other Fund Groups \nTotal Liabilities \nFund Balances U.S. Government Grants Refundable Institutional Loans - Restricted Endowment Term Endowment Net Investment in Plant Restricted Unrestricted \nTotal Fund Balances \nTotal Liabilities and Fund Balances \n \nCURRENT FUNDS UNRESTRICTED RESTRICTED \n \nLOAN FUNDS \n \n$ \n \n1,146,602.29 $ 392,281.45 $ 49,280.59 \n \n1,034,978.29 \n \n582,193.08 \n \n869,014.76 \n \n593,125.15 \n \n14,574.79 \n \n1,105,967.50 \n \n$ \n \n3,895,248.02 $ 974,474.53 $ 918,295.35 \n \n$ \n \n2,707,424.85 \n \n164,963.97 \n \n60,575.00 \n \n$ 1,105,967.50 \n \n$ 2,932,963.82 $ 1,105,967.50 \n \n$ 839,861.21 78,434.14 \n \n$ -131,492.97 \n \n$ \n \n962,284.20 \n \n$ \n \n962,284.20 $ -131,492.97 $ 918,295.35 \n \n$ 3,895,248.02 $ 974,474.53 $ 918,295.35 \n \nThe notes to the financial statements are an integral part of this statement. -2- \n \n EXHIBIT\"A\" \n \nENDOWMENT AND SIMILAR \nFUNDS \n \nUNEXPENDED \n \nPLANT FUNDS RENEWALS AND REPLACEMENTS \n \nINVESTMENT IN PLANT \n \nAGENCY FUNDS \n \nTOTAL (Memorandum \nOnly) \n \n$ 1,002,214.88 $ \n \n382,648.68 $ 531 ,661 .54 \n \n1,046,183.77 \n \n------ $ \n \n$ 79,446,012.77 \n \n590,682.16 $ 6,267.00 \n \n4,609,893.82 3,024,114.67 \n593,125.15 14,574.79 \n1,105,967.50 79,446,012.77 \n \n$ 1,002,214.88 $ 914,310.22 $ \n \n1,046,183.77 $ 79,446,012.77 $ 596,949.16 $ 88,793,688.70 \n \n$ 745,473.02 $ 745,473.02 \n \n$ 107,212.36 $ 489,736.80 \n \n3,560,110.23 164,963.97 60,575.00 489,736.80 \n1,105,967.50 \n \n$ 5961949.16 $ 5,3811353.50 \n \n$ 771,224.61 230,990.27 \n \n$ $ 1,002,214.88 $ \n \n168,837.20 $ 168,837.20 $ \n \n$ 79,446,012.77 1,046,183.77 1,046,183.77 $ 79,446,012.77 \n \n$ 839,861 .21 78,434.14 \n771,224.61 230,990.27 79,446,012.77 -131,492.97 2,177,305.17 \n$ 83,412,335.20 \n \n$ 1,002,214.88 $ 914,310.22 $ \n \n1,046,183.77 $ 79,446,012.77 $ 596,949.16 $ 88,793,688.70 \n \n-3- \n \n SAVANNAH STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES \nALL FUND GROUPS YEAR ENDED JUNE 30. 2001 \n \nREVENUES AND OTHER ADDITIONS \nUnrestricted Current Fund Revenues State Appropriations \nRegular Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income \nEndowment Other Net Increase in Fair Value of Investments Interest on Loans Receivable Adjustments Prior Years\" Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds \nUnexpended Georgia State Financing and Investment Commission Other Additions Recovery of Prior Years\" Cancelled Loans \nTotal Revenues and Other Additions \nEXPENDITURES AND OTHER DEDUCTIONS \nEducational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Refunded to Granters Remittances to the Board of Regents of the \nUniversity System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \nAdjustments Prior Years' Revenues/Accounts Receivable \nLoan Cancellations and Write-Offs Administrative and Collection Costs Expended for Plant Facilities \nCapitalized Noncapitalized Disposals/Deletions/Adjustments \nTotal Expenditures and Other Deductions \nTRANSFERS BETWEEN FUNDS \nMandatory Investment Income for Principal \nNon mandatory Renewals and Replacements Capital Projects \nTotal Transfers Between Funds \nNet lncrease/(Decrease) for the Year \nFUND BALANCES JULY 1. 2000 \n \nCURRENT FUNDS \n \nUNRESTRICTED \n \nRESTRICTED \n \nLOAN FUNDS \n \n$ 28,960,086 .76 \n \n$ 18,331 ,820.78 1,282,817.02 7,785.10 $ 296 ,173.26 \n45,005.09 \n1,429.91 \n175,920.69 36,438.05 \n \n3,582.97 3,230.00 \n16,602.01 \n \n5 486.00 $ 29,172,445.50 $ 19,965,031 .16 $ 28,900.98 \n \n$ 24,866,437.21 $ 19,499,682.20 3,889,989.81 282,054.34 142,112.00 \n \n107,673 .61 10,917.23 \n \n$ 9,887.51 -1,425.47 \n \n$ 28,875,017.86 $ 19,923,848.54 $ \n \n8,462.04 \n \n$ \n \n-10,977.35 \n \n$ \n \n-190,791 .19 \n \n-15,534.52 \n \n$ \n \n-206,325.71 $ \n \n-10,977.35 \n \n$ \n \n91,101 .93 $ \n \n30,205.27 $ 20,438.94 \n \n871,182.27 \n \n-161,698.24 \n \n897,856.41 \n \nFUND BALANCES JUNE 30. 2001 \n \n$ \n \nThe notes to the financial statements are an integral part of this statement. \n \n-4 - \n \n962,284.20 $ -131,492.97 $ 918,295.35 \n \n EXHIBIT \"B\" \n \nENDOWMENT AND SIMILAR \nFUNDS \n \nUNEXPENDED \n \nPLANT FUNDS RENEWALS AND REPLACEMENTS \n \nINVESTMENT IN PLANT \n \nTOTAL (Memorandum \nOnly) \n \n$ 1,479,535.00 27,019.34 \n \n$ \n \n31,914.47 \n \n273,325 .00 \n \n17,824.25 \n \n33,428.53 $ \n \n22,033.49 \n \n$ \n \n49,738.72 $ 1,835,341.36 $ \n \n$ 28,960,086.76 \n \n1,479,535.00 18,358,840.12 \n1,282,817.02 11,368.07 \n604,642.73 \n \n22,400 .00 \n \n45,005 .09 55,828.53 19,254.16 16,602.01 \n \n197,954.18 36,438 .05 \n \n$ 2,296 ,245.68 \n \n2,296,245.68 \n \n1,582,529.02 2,086,427.79 \n \n1,582,529.02 2,086,427.79 \n \n5 486.00 \n \n22,400.00 $ 5,965,202 .49 $ 57,039,060.21 \n \n$ \n \n0 .00 \n \n$ \n \n$ \n \n1,964.69 \n \n1,582,529.02 99,509.66 \n \n$ \n \n0.00 $ 1,684,003.37 $ \n \n0.00 \n \n$ 44,366,119.41 \n \n3,889,989.81 \n \n282,054 .34 \n \n142,112.00 \n \n$ 0.00 $ \n \n109,638.30 \n \n10,917.23 9,887.51 -1,425.47 \n \n615,113 .38 \n \n1,582,529.02 99,509.66 \n615 ,113.38 \n \n615,113.38 $ 51,106,445.19 \n \n$ \n \n10,977.35 \n \n$ \n \n$ \n \n15,534.52 \n \n$ \n \n10 977.35 $ \n \n15,534.52 $ \n \n$ \n \n60,716.07 $ 166,872.51 $ \n \n941 498.81 \n \n1,964.69 \n \n$ \n \n0.00 \n \n190,791 .19 \n \n0 .0 0 \n \n0 .00 \n \n190,791.19 \n \n$ \n \n0.00 \n \n213,191.19 $ 5,350,089.11 $ 5,932,615.02 \n \n832,992 .58 \n \n74,095,923 .66 \n \n77.479,720.18 \n \n$ 1,002,214.88 $ 168,837.20 $ \n \n1,046,183.77 $ 79,446,012.77 $ 83,412,335.20 \n \n-5- \n \n SAVANNAH STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \nAND OTHER CHANGES YEAR ENDED JUNE 30, 2001 \n \nEXHIBIT\"C\" \n \nREVENUES \nState Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Endowment Income Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources \nTotal Revenues \nEXPENDITURES AND MANDATORY TRANSFERS \nEducational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships Mandatory Transfers for: Investment Income for Endowment Principal \nAuxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units \nTotal Expenditures and Mandatory Transfers \nOTHER TRANSFERS AND ADDITIONS/\u003cDEDUCTIONS) \nExcess of Restricted Receipts over Transfers to Revenues \nRefunded to Granters Transfers for Renewals and Replacements Transfers for Capital Projects Prior Period Adjustments (Net) Remittances to the Board of Regents \nof the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \nTotal Other Transfers and Additions/(Deductions) \n \nUNRESTRICTED \n \nRESTRICTED \n \nTOTAL (Memorandum \nOnly) \n \n$ 18,299,248.00 \n \n$ 18,299,248.00 \n \n5 ,673,718 .01 \n \n5,673,718.01 \n \n279,137.19 $ 17,927,625.85 \n \n18,206,763.04 \n \n2,917 .15 \n \n1,227,608.89 \n \n1,230,526.04 \n \n9,460.49 \n \n9,460.49 \n \n256,453.97 \n \n256,453.97 \n \n78,533.00 \n \n78,533.00 \n \n176,349.54 \n \n176,349.54 \n \n4,109,118.81  \n \n4,109,118.81 \n \n419 ,598.06 \n \n419,598 .06 \n \n$ 28,960,086 .76 $ 19,499,682.20 $ 48,459,768.96 \n \n$ 10,541,669.42 $ \n \n271,907.82 $ 10,813,577.24 \n \n28.95 \n \n1,648,473.22 \n \n1,648,502.17 \n \n380,460.31 \n \n2,027,183.28 \n \n2,407,643.59 \n \n3,174,082.60 \n \n348,361.55 \n \n3,522,444 . 15 \n \n2,317,872.12 \n \n190,903.47 \n \n2,508,775.59 \n \n4,246,784.89 \n \n1,252,455.42 \n \n5,499,240.31 \n \n3,691,045.32 \n \n3,691,045.32 \n \n514,493 .60 \n \n13,760,397.44 \n \n14,274,891.04 \n \n10,977.35 \n \n10,977.35 \n \n920,784 .90 1,742.24 \n1,260,665.56 194,714.90 \n1,169,102.39 342,979.82 \n \n920,784.90 1,742.24 \n1,260,665.56 194,714.90 \n1,169,102.39 342,979.82 \n \n$ 28,756,427.02 $ 19,510,659.55 $ 48,267,086.57 \n \n$ \n \n183,294.62 $ \n \n183,294.62 \n \n-142, 112.00 \n \n-142,112.00 \n \n$ \n \n-190,791 .19 \n \n-190,791.19 \n \n-15,534 .52 \n \n-15,534.52 \n \n201,441.51 \n \n201,441.51 \n \n-107,673.61 \n \n-107 673.61 \n \n$ \n \n-112 557.81 $ \n \n41,182.62 $ \n \n-71 375.19 \n \nNet lncrease/(Decrease) in Fund Balances \n \n$ \n \nThe notes to the financial statements are an integral part of this statement. \n \n-6- \n \n91,101.93 $ \n \n30,205.27 $==12_1.._,3.,.0=7.=20= \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nREPORTING ENTITY Savannah State University is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System ofGeorgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Savannah 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. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit ofthe Board ofRegents of the University System of Georgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. \nFUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group. \nWithin each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies. \nFund groups and funds presented in the accompanying financial statements are as follows: \nCURRENT FUNDS \nUNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, research, public service, etc. \nRESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes. \n-7- \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nFUND ACCOUNTING \nLOAN FUNDS \nThe fund used to account for resources which have been made available for financial loans to students. \nENDOWMENT AND SIMILAR FUNDS \nThe fund used to account for endowment funds and term endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized. Term endowment funds are similar to endowment funds except that upon the passage of a stated period of time or the occurrence of a particular event, all or part of the principal may be expended. \nPLANT FUNDS \nUNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes. \nRENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties. \nINVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others. \nAGENCY FUNDS \nThe fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations. \nBASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis of accounting is defined as that method of accounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period. \n-8- \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nBASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with accounting principles generally accepted in the United States ofAmerica, which provide for the recording ofencumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with accounting principles generally accepted in the United States of America. \nCompensated absences represent obligations ofthe University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $1,022,492.91 and a related net current year expenditure of $119,658.76 have not been reported in the current funds as required by accounting principles generally accepted in the United States of America. \nPrior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but differs from accounting principles generally accepted in the United States ofAmerica in that immaterial adjustments should be reported as current period revenues and expenditures. The effect ofthis departure is deemed to be immaterial to the fair presentation ofthe financial statements. \nTo the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment. \nThe Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses. \n \n-9- \n \n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \n \nBUDGET The Board ofRegents ofthe University System ofGeorgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of2000-2001. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office. \n \nA comparison of anticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below: \n \nResident Instruction Personal Services: Education, General and Departmental Services Operating Expenses: Education, General and Departmental Services Capital Outlay \n \n$ 182,944.05 \n$ 64,206.14 $ 202,503.68 \n \nThese overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the Board object class level. \n \nCASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. \n \nACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Board ofRegents ofthe University System of Georgia -Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements. \n \nINVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method. \n \nInventories of goods for resale are valued at cost using the first-in, first-out method. \n \n- 10 - \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nPREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt ofgoods and services that will benefit periods subsequent to the balance sheet date. \nMEMORANDUM ONLY -TOTAL COLUMNS The total columns on the financial statements are captioned \"Memorandum Only\" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data. \nNOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS \nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: \n(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia. \n(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. \n(3) 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(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia. \n(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan' Mortgage Association, and the Federal National Mortgage Association. \n(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \n- 11 - \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS \n \nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements. \n \nThe treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. \n \nCATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2001, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk: \n \nCategory 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name. \n \nCategory 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name. \n \nCategory 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized. \n \nCash Deposits \n \nCarrying Amount \n \nBank Balances \n \nRisk Categories \n \n2 \n \n3 \n \n$ 3 383 838.34 $ 5 459 )37 03 $ 320 752 5) $ 372 )77.94 $ 4 766 206.58 \n \nCATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as of June 30, 2001, are shown below: \n \nBoard of Regents Short-Term Fund Total Return Fund \n \n$ 263,932.63 952,797.66 \n \nTotal Investments \n \n$ 1,216,730.29 \n \nFunds invested in an investment pool managed by another governmental entity are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool. \n \n- 12 - \n \n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 3: INVESTMENT IN PLANT \n \nThe following is a summary of Investment in Plant fixed assets as of June 30, 2001: \n \nLand Buildings Improvements Other Than Buildings Equipment Library Books and Collections \n \n$ 575,975.16 51,247,485.42 8,172,869.42 13,956,791.54 5,492,891.23 \n \nTotal Investment in Plant \n \n$79.446.012.77 \n \nNOTE 4: RISK MANAGEMENT \n \nSavannah State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements of the Board of Regents of the University System ofGeorgia - Administrative Central Office. All units ofthe University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $2,000,000.00 per person and dental coverage up to an annual maximum of$1,000.00 per person. Blue Cross Blue Shield ofGeorgia processes medical and dental claims in accordance with the Health Benefits Plan as established by the Board of Regents. As of January 1, 2001, Express Scripts, Incorporated was contracted with to process pharmacy drug claims in accordance with the Pharmacy Benefit Program portion of the Health Benefits Plan. \n \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 ofaccidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe 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. \n \n- 13 - \n \n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 4: RISK MANAGEMENT \n \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 SelfInsurance Fund. \n \nNOTES: RETIREMENTPLANS \n \nTEACHERS RETIREMENT SYSTEM OF GEORGIA \n \nPlan Description Savannah State University participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \n \nFunding Policy Employees of the University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2001, the employer contribution rate was 11.29% for covered employees. In addition, the University contributed 2.33% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. 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 \n2001 2000 1999 \n \n100% 100% 100% \n \n$1,404,295.16 $ 1,462,846.34 $ 1,462,909.44 \n \nREGENTS RETIREMENT PLAN \n \nPlan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death \n \n- 14 - \n \n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTES: RETIREMENTPLANS \nREGENTS RETIREMENT PLAN \nPlan Description benefits for eligible faculty and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. \nFunding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly of the State ofGeorgia. The employer contributes 8.81 % ofthe participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. \nThe University and the covered employees made the required contributions of $316,943 .16 (8.81 %) and $180,390.18 (5%), respectively. \nGEORGIA DEFINED CONTRIBUTION PLAN \nPlan Description Savannah State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. \nBenefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. If a member has less than$ 3,500.00 credited to his/her account, the Board ofTrustees has the option of requiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. \nContributions and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. \n \n- 15 - \n \n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE5: RETIREMENTPLANS \nGEORGIA DEFINED CONTRIBUTION PLAN \nContributions and Vesting Total contributions made by employees during fiscal year 2001 amounted to $30,717.76 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \nNOTE 6: LEAVE POLICIES \nEmployees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences) \nEmployees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph. \nCertain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia. \nNOTE7: 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 which are disallowed under grant terms. The amount ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position. \nLitigation, claims and assessments filed against Savannah 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, 2001. \nNOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life \n- 16 - \n \n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \nJUNE 30, 2001 \n \nEXHIBIT \"D\" \n \nNOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \n \ninsurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the University System of Georgia are eligible for these postemployment 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. \n \nAs ofJune 30, 2001, there were 163 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2001, Savannah State University recognized as incurred $412,188.88 of expenditures, which was net of $141,549.88 of participant contributions. \n \nNOTE9: ENROLLMENT \n \nThe equivalent full-time student enrollment of Savannah State University was as follows: \n \nRegular Term Fall Semester, 2000 Spring Semester, 2001 \n \n1,728 1.647 \n \nAverage \n \nSummer School, 2000 \n \n- 17 - \n \n SUPPLEMENTARY INFORMATION - 19 - \n \n SAVANNAH STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED \nJUNE 30, 2001 \n \nASSETS \nCash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups \n \nRESIDENT INSTRUCTION \n \nLOTTERY FOR EDUCATION \n \n$ \n \n965,369.87 $ \n \n656,602.77 \n \n75,388.80 \n \n14,574.79 \n \n1,277,907.34 \n \n61,988.80 \n \nTotal Assets \n \n$ 2,989,843.57 $ ==6==1=,9==8=8.=80= \n \nLIABILITIES AND FUND BALANCES \nLiabilities Accounts Payable Salaries Payable Student Deposits Due to Other Fund Groups \nTotal Liabilities \nFund Balances Unrestricted \n \n$ 2,644,005.47 $ 162,015.65 \n \n58,650.00 \n \n$ 2,806,021.12 $ \n \n58,650.00 \n \n183,822.45 \n \n3,338.80 \n \nTotal Liabilities and Fund Balances \n \n$ 2,989,843.57 $ ===6=1,=9=88==80= \n \nSee notes to the financial statements. \n \n- 20 - \n \n EXHIBIT \"E\" \n \nAUXILIARY ENTERPRISES \n \nSTUDENT ACTIVITIES \n \nTOTAL \n \n$ \n \n800.00 $ 118,443.62 $ 1,146,602.29 \n \n369,128.87 \n \n9,246.65 \n \n1,034,978.29 \n \n517,736.35 \n \n593,125.15 \n \n14,574.79 \n \n1,277,907.34 \n \n$ \n \n887,665.22 $ 127,690.27 $ 4,067,187.86 \n \n$ \n \n4,769.38 \n \n2,948.32 \n \n60,575.00 \n \n171 939.84 \n \n$ \n \n240 ,232.54 \n \n$ 2,707,424.85 164,963.97 60,575.00 171,939.84 \n$ 3,104,903.66 \n \n647,432.68 $ 127,690.27 \n \n962,284.20 \n \n$ \n \n887,665.22 $ 127,690.27 $ 4,067,187.86 \n \n- 21 - \n \n SAVANNAH $TATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES \nCURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 2001 \n \nREVENUES AND OTHER ADDITIONS \nUnrestricted Current Fund Revenues Adjustments \nPrior Years' Expenditures/Accounts Payable Prior Years' Checks Voided \nTotal Revenues and Other Additions \nEXPENDITURES AND OTHER DEDUCTIONS \nEducational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the \nUniversity System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \nAdjustments Prior Years' Revenues/Accounts Receivable \nTotal Expenditures and Other Deductions \nTRANSFERS BETWEEN FUNDS \nNonmandatory Renewals and Replacements Capital Projects \nTotal Transfers Between Funds \nNet lncrease/(Decrease) for the Year \nFUND BALANCES JULY 1, 2000 \nFUND BALANCES JUNE 30, 2001 \n \nRESIDENT \n \nLOTTERY FOR \n \nINSTRUCTION  EDUCATION \n \n$ 24,252,541.48 $ 131,517.05 \n \n258,940 .00 3,338.80 \n \n$ 24,384,058.53 $ \n \n262,278 .80 \n \n$ 24,326,240.79 $ \n \n258,940.00 \n \n105,008.41 14 509.97 \n \n2,665.20 \n \n$ 24,445,759.17 $ \n \n261,605.20 \n \n$ \n \n-61,700.64 $ \n \n245,523.09 \n \n673.60 2,665.20 \n \n$ \n \n183,822.45 $ ======3,=33=8=.8=0= \n \nSee notes to the financial statements. \n \n- 22 - \n \n EXHIBIT \"F\" \n \nAUXILIARY ENTERPRISES \n \nSTUDENT ACTIVITIES \n \nTOTAL \n \n$ 4,168,342.33 $ 280,262.95 $ 28,960,086.76 \n \n38,733 .82 36,345.05 \n \n2,331.02 93.00 \n \n175,920.69 36,438.05 \n \n$ 4,243,421.20 $ 282,686.97 $ 29 ,172,445.50 \n \n$ 281,256.42 $ 24,866,437.21 \n \n$ 3,889,989.81 \n \n3,889 ,989.81 \n \n-4 180.56 \n \n587.82 \n \n107,673.61 10 917.23 \n \n$ 3,885,809.25 $ 281,844.24 $ 28,875,017.86 \n \n$ -190,791.19 -15,534.52 \n \n$ -190,791.19 -15,534.52 \n \n$ -206,325.71 \n \n$ -206,325.71 \n \n$ \n \n151,286.24 $ \n \n842.73 $ \n \n91,101.93 \n \n496 146.44 \n \n126,847.54 \n \n871,182.27 \n \n$ \n \n647,432.68 $ 127,690.27 $ \n \n962,284.20 \n \n- 23 - \n \n SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \nAND OTHER CHANGES UNRESTRICTED \nYEAR ENDED JUNE 30, 2001 \n \nREVENUES \nState Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources \nTotal Revenues \nEXPENDITURES \nEducational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships \nAuxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units \nTotal Expenditures \nOTHER TRANSFERS AND ADDITIONS/{DEDUCTIONS) \nTransfers for Renewals and Replacements Transfers for Capital Projects Prior Period Adjustments (Net) Remittances to the Board of Regents \nof the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \nTotal Other Transfers and Additions/(Deductions) \n \nNet lncrease/(Decrease) in Fund Balances \nSee notes to the financial statements. \n \n- 24 - \n \nRESIDENT INSTRUCTION \n \nLOTTERY FOR EDUCATION \n \n$ 18,040,308.00 $ \n5,468,068.10 279,137.19 2,917.15 176,349.54 \n285,761.50 \n$ 24,252,541.48 $ \n \n258,940.00 258,940.00 \n \n$ 10,344,519.22 $ \n28.95 380,460.31 3,112,292.80 2,036,615.70 4,246,784.89 3,691,045.32 514,493.60 \n \n197,150.20 61,789.80 \n \n$ 24,326,240.79 $ \n \n258,940 .00 \n \n$ \n \n117,007.08 $ \n \n3,338.80 \n \n-105 008.41 \n \n$ \n \n11 998.67 $ \n \n-2,665.20 673.60 \n \n$ \n \n-61,700.64 $ ====67=3=.6=0= \n \n EXHIBIT \"G\" \n \nAUXILIARY ENTERPRISES \n \nSTUDENT ACTIVITIES \n \nTOTAL \n \n$ 18,299,248.00 \n \n$ 205,649.91 \n \n5 ,673 ,718 .01 \n \n279 ,137.19 \n \n2,917.15 \n \n176,349.54 \n \n$ 4 ,109,118.81 \n \n4,109,118.81 \n \n59,223 .52 \n \n74,613 .04 \n \n419,598 .06 \n \n$ 4,168,342.33 $ 280,262.95 $ 28,960,086.76 \n \n$ $ 281,256.42 \n \n10,541,669.42 28.95 \n380,460.31 3,174 ,082.60 2,317,872.12 4,246,784 .89 3,691,045.32 \n514,493.60 \n \n$ \n \n920,784.90 \n \n1,742.24 \n \n1,260,665.56 \n \n194,714.90 \n \n1,169,102.39 \n \n342,979.82 \n \n920 ,784.90 1,742.24 \n1,260,665.56 194,714.90 \n1,169,102.39 342,979.82 \n \n$ 3,889,989.81 $ 281,256.42 $ 28,756,427.02 \n \n$ \n \n- 190,791.19 \n \n$ \n \n-190 ,791.19 \n \n-15,534 .52 \n \n-15,534.52 \n \n79,259.43 $ 1,836.20 \n \n201,441.51 \n \n-107 673.61 \n \n$ \n \n1,836.20 $ _ _-1;..1.;;_2,\u003c.;;.5.;.;57.;_.8;_;1_ \n \n$ \n \n151,286.24 $ \n \n842.73 $ ===9=1 ,=10:1=.93= \n \n- 25- \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET \nRESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2001 \n \nREVENUES \nState Appropriations Other Revenues Retained \n \nCURRENT FUNDS UNRESTRICTED RESTRICTED \n \nPLANT FUNDS RENEWALS AND \nUNEXPENDED REPLACEMENTS \n \n$ 18,040,308.00 \n \n$ 1,479,535.00 \n \n6,212,233.48 $ 19,499,682.20 \n \n333,772 .87 $ \n \n22,400.00 \n \n$ 24,252,541.48 $ 19,499,682.20 $ 1,813,307.87 $ _ _ _2....;2,'\"\"\"40_0_.o_o_ \n \nEXPENDITURES \n \nPersonal Services: \n \nEducation, General and Departmental Services $ 17,274,023.05 \n \nSponsored Operations \n \n$ 2,649,438.22 \n \nOperating Expenses: \n \nEducation, General and Departmental Services \n \n6,198,523 .74 \n \nSponsored Operations \n \n16,850,243.98 \n \nCapital Outlay Special Funding Initiative \n \n853 ,694.00 \n \n$ 1,682,038.68 $ \n \n0.00 \n \nExcess of Revenues over Expenditures \n \n- - - - - - - $ 24,326,240.79 $ 19,499,682.20 $ 1,682,038.68 $ \n \n0.00 \n \n$ \n \n-73,699.31 $ \n \n0.00 $ \n \n131,269.19 $ ======2=2=,4=0=0.=00== \n \n(1) To eliminate tuition waivers not budgeted and to reclassify current year transfers budgeted as Revenues. \n \nSee notes to the financial statements . \n \n- 26 - \n \n SCHEDULE \"1 \" \n \nTOTAL \n \nADJUSTMENTS (1) \n \nTOTAL (Budget Basis) \n \nBUDGET \n \nVARIANCE FAVORABLE (UNFAVORABLE) \n \n$ 19,519,843.00 26 ,068,088.55 $ \n \n$ 19,519,843.00 $ 19,519 ,843 .00 $ \n \n-498,959.08 \n \n25 ,569 ,129.47 \n \n27 ,816,178 .00 \n \n0.00 -2,247,048.53 \n \n$ 45,587,931 .55 $ \n \n-498,959.08 $ 45,088,972.47 $ 47,336,021 .00 $ _ _-2-'-,2_4_7'--,0_48_.5_3_ \n \n$ 17,274,023 .05 2,649,438 .22 \n6,198,523.74 $ 16,850,243.98 \n1,682,038.68 853,694 .00 \n \n$ 17,274,023.05 $ 17,091,079.00 $ \n \n2,649,438.22 \n \n3 ,986,643 .00 \n \n-514,493 .60 \n \n5,684,030.14 16,850,243 .98 \n1,682,038.68 853,694.00 \n \n5,619,824 .00 18 ,305 ,246.00 \n1,479,535.00 853,694 .00 \n \n-182,944 .05 1,337,204.78 \n-64 ,206 . 14 1,455,002.02 -202 ,503 .68 \n0.00 \n \n$ 45,507 ,961 .67 $ \n \n-514,493.60 $ 44,993,468.07 $ 47,336,021 .00 $ _ _2-,'-3_4_2,'--5_52._9_3_ \n \n$ \n \n79,969.88 $ \n \n15,534.52 $ \n \n95,504.40 \n \n$ ====9=5 =50-4~.40~ \n \n- 27 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET \nLOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 200 1 \n \nSCHEDULE \"2\" \n \nREVENUES State Appropriations \n \nCURRENT FUNDS UNRESTRICTED \n \nBUDGET \n \nVARIANCEFAVORABLE (UNFAVORABLE) \n \n$ \n \n258 ,940 .00 $ 258,940.00 $ - - - - - -0.0-0 \n \nEXPENDITURES \n \nEquipment, Technology and Construction \n \nTrust Fund \n \n$ \n \nSpecial Funding Initiatives \n \n138,940.00 $ 138,940.00 $ \n \n120,000.00 \n \n120,000.00 \n \n0.00 0.00 \n \n$ \n \n_ _ _ _ 258,940.00 $ 258,940.00 $ \n \n__;0,_.00_ \n \nExcess of Revenues over Expenditures \n \n$ =====o==oo= \n \n$ =====O=.O=O= \n \nSee notes to the financial statements. \n \n- 29 - \n \n SAVANNAH STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT \nYEAR ENDED JUNE 30, 2001 \n \nLand Buildings Improvements Other Than Buildings Equipment Library Books and Collections \n \nBALANCE JULY 1, 2000 \n \nCURRENT FUNDS UNRESTRICTED RESTRICTED \n \n$ \n \n325,975.16 \n \n48,592,996.34 \n \n7,963,515.26 \n \n12,276,148.71 $ 1,245,230.23 $ 489,412.41 \n \n4,937,288.19 \n \n561!603.04 \n \n$ 74,095,923.66 $ 1!806,833.27 $ 489,412.41 \n \nSee notes to the financial statements. \n \n- 30 - \n \n SCHEDULE \"3\" \n \nADDITIONS \nPLANT FUND UNEXPENDED \n \nGEORGIA STATE FINANCING AND \nINVESTMENT COMMISSION \n \nDEDUCTIONS DISPOSALS/ DELETIONS/ ADJUSTMENTS \n \nBALANCE JUNE 30, 2001 \n \n$ \n \n250,000.00 \n \n$ \n \n575 ,975.16 \n \n1,030,547.65 $ \n \n1,623 ,941.43 \n \n51 ,247,485.42 \n \n209,354 .16 \n \n8,172 ,869.42 \n \n92,627 .21 \n \n462,486.36 $ \n \n609,113 .38 \n \n13,956,791 .54 \n \n6 000.00 \n \n5 1492,891.23 \n \n$ 1,582,529.02 $ \n \n2,086,427.79 $ \n \n615,113.38 $ 79,446,012.77 \n \n- 31 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS \nJUNE 30, 2001 \n \nNET INVESTMENT IN PLANT Investment in Plant Facilities \nRESTRICTED Deficit \nUNRESTRICTED Designated For Bus Replacement Reserve For Intercollegiate Athletics For Inventory Reserve For Renewals and Replacements Reserve For Subsequent Years' Expenditures For Uncollectible Accounts Surplus Regular Lottery for Education \n \nRESIDENT INSTRUCTION \n \nCURRENT FUNDS \n \nUNRESTRICTED \n \nLOTTERY. FOR \n \nAUXILIARY \n \nEDUCATION \n \nENTERPRISES \n \n$ \n \n91,735.19 \n \n$ \n \n-145,783.23 \n \n517,736.35 \n \n41,560.42 \n \n232,309.18 43,170.38 \n \n50,526.84 \n \n$ \n \n$ \n \n183!822.45 $ \n \n3,338.80 3,338.80 $ \n \n6471432.68 \n \n$ 183,822.45 $ \n \n3,338.80 $ ==64=7=,4=32=.6=8= \n \nSee notes to the financial statements. \n \n- 32 - \n \n SCHEDULE \"4\" \n \nSTUDENT ACTIVITIES \n \nRESTRICTED \n \nUNEXPENDED \n \nPLANT FUNDS RENEWALS AND REPLACEMENTS \n \nINVESTMENT IN PLANT \n \nTOTAL \n \n$ 79,446,012.77 $ 79,446,012.77 \n \n$ -131,492.97 \n \n$ -131,492.97 \n \n$ 127,345.27 345.00 \n \n$ \n \n58 ,123.61 \n \n988,060.16 \n \n$ \n \n58,123.61 \n \n-145,783.23 \n \n609,471.54 \n \n988,060.16 \n \n359,654.45 \n \n85,075.80 \n \n$ 127,690.27 \n \n$ 168,837.20 \n \n$ \n \n168,837.20 $ _ _1..._,0_4-'\"6,.._18\"-'3'-'-7. '--'-7- \n \n219,364.04 3,338.80 \n$ 2,177,305.17 \n \n$ 127,690.27 $ -131,492.97 $ 168,837.20 $ \n \n1,046,183.77 $ 79,446,012.77 $ 81,491,824.97 \n \n- 33 - \n \n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \nYEAR ENDED JUNE 30, 2001 \n \nSCHEDULE \"5\" \n \nTotals per Annual Supplement \n \nAccruals June 30, 2000 June 30 , 2001 \n \nAdjustments \n \nShared Services on Jointly Staffed Personnel \n \nArmstrong Atlantic State University \n \nJohnson, \n \nOtis \n \nPierre-Clark, Martine \n \nShavers, \n \nSonja \n \nGeorgia Southern University \n \nDavies, \n \nDavid \n \nSALARIES $ 17,292,716.58 $ \n \nTRAVEL 405,277.03 \n \n-204,947.00 164,963.97 \n \n-3 ,767.75 -1,679.34 -1,679.34 \n-250.00 \n$ 17,245,357.12 $======40=5=,2=7=7=.0=3 \n \nSee notes to the financial statements. \n \n- 34 - \n \n SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \n \n SAYANNAH STATE UNNERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \n \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \n \nFINDING CONTROL NUMBER AND STATUS \n \nFS-548-98-02 FS-548-98-04 FS-548-99-02 FS-548-99-03 FS-548-99-04 FS-548-99-05 FS-548-99-06 FS-548-99-08 FS-548-99-09 FS-548-00-01 FS-548-00-02 FS-548-00-03 FS-548-00-04 FS-548-00-05 FS-548-00-06 FS-548-00-07 FS-548-00-08 FS-548-00-09 FS-548-00-10 FS-548-00-11 FS-548-00-12 \n \nUnresolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses \n \nCORRECTIVE ACTION/RESPONSES \n \nEXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balance Finding Control Number: FS-548-98-02 \n \nAs of June 30, 2001, the NROTC deficit stands at $131,072.25. The administration has asked the Board ofRegents to assist the institution in finding ways to eliminate the deficit. The Office of Institutional Advancement is also working towards eliminating the deficit. \n \nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03 \n \n1) Leave accrual often month employees: Identified finding was addressed and corrective action taken as of February 28, 2001. \n \n- 1- \n \n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Questioned Cost: $3,926.75 Finding Control Number: FS-548-99-03 \n2) Employees were charged in error. This error has been corrected. \n3) Documentation in file: Documentation has been secured and placed in the employee's file. \n4) We are still investigating this finding. This finding will be resolved in subsequent years. \n5) Employees' time sheets and overtime: The Office of Human Resources has implemented a campus-wide procedure to address the signing of timesheets. This procedure requires the identification ofa designee authorized to sign timesheets in the absence ofthe supervisor. Further, Human Resources has designed a document which requires the approval of the supervisor (per policy) to request overtime for qualifying staff. This procedure is in compliance with Employee Handbook. \n6) The University has stressed the importance of safeguarding confidential documents. This is believed to be an isolated incident and procedures have been implemented to correct this problem. \n7) A receivable was set up for the employee, but has not yet been collected. A journal entry for the benefits portion is being prepared for posting. \nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05 \n1) This problem has been corrected. \n2) This problem has been corrected. \n3) An account receivable was set up for the garnishment of$ l ,054.50. The receivable has not been collected yet. Efforts will be made to locate the employee. \n-2 - \n \n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05 \n4)- The University has contacted the Georgia Department ofRevenue about the receivable. They have requested additional information, which the University is working on providing. \n5) The corrections to travel and salary were related to incorrect social security numbers used in the CUFA System. Once a number is used in CUFA, it becomes difficult to change the historical records. During the year under review, University staff communicated the adjustments to the Georgia Department of Audits. \n6) Expenditure vouchers were placed in locked cabinets. The department is working on strategies to make a sign-out process more effective. \nCASH AND CASH EQUIVALENTS REVENUES/RECENABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-548-00-01 \nThe University is in the process of hiring and training additional personnel to address the issue ofinternal controls. The controller has been removed from certain :functions such as cash collecting, receipting and invoice preparations. The department is undergoing major re-organization ofduties and responsibilities. The scheduled completion is January 2002. \nREVENUESIRECENABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-00-02 \nStudents are only allowed to complete registration without full payment of fees in two circumstances. Each occurrence is supported by the expectation of receiving Financial Aid. The Cashier's Office is presented with a Deferment authorized by the Vice President for Business and Finance or the Vice President for Academic Affairs. There are situations where a student is awarded Financial Aid and it is subsequently removed from the student's account. \n-3- \n \n SAYANNAH STATE UNNERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nEXPENDITURES/LIABILITIES1DISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-00-03 \nWith the re-organization will be the re-training and possible re-assignment of staff. Monitoring of Accounts Payable and Purchase Orders will be at the top of this year's agenda. \nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-00-04 \n1) Accumulation of sick leave by summer faculty: Beginning with year 1997, the University conducted an audit of leave balances for all faculty employed over the summer months. Ending balances were compared to beginning balances. The findings confirmed that these identified faculty members inadvertently accrued sick leave time when employed during the summer months. These faculty members were advised and their account balances were adjusted in February, 2001. \n2) Vacation and sick leave report: (a) All impacted employees were identified. A process was established through the Peoplesoft Payroll/HR System to allow the HRIS Coordinator to log on to the Leave Accrual Adjustment panel, go to the adjustment history screen and make the necessary corrections. (b) Copies of identified staff members have been obtained. Further, an internal procedure will be enforced to return any time sheet which is not accompanied by the appropriate leave form. (c) The identified employee's leave balance has been adjusted to correctly reflect vacation time using the method outlined above. \n3) Personnel file documentation: Beginning with year 2000, Human Resources required all documentation supporting summer salaries/stipends to be provided on an individual basis. \n4) Employees' time sheets and overtime: The procedure will be enforced to address the signing of time sheets. Direct contact (written and verbal) has been made to supervisory personnel by the Office of Human Resources to reinforce the policy/procedure relating to overtime approvals. \n-4 - \n \n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-00-05 \nThe University is in the process of bringing in a consultant from another institution in the system to assist staff in this process. \nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-00-06 \n1) The task of filing check vouchers has been assigned to an employee instead of the students. \n2) This problem has been corrected. \n3) A procedure will be enforced to review the cash summaries on a daily basis by the controller to ensure deposits submitted were made timely and recorded accurately. \n4) The Office ofBudget, Contracts and Grants will review revenues and expenditures and make sure that it balances before we close the books for the year. \nGENERAL LEDGER Failure to Correctly Maintain Payroll Agency Funds Finding Control Number: FS-548-00-07 \nUniversity staff worked at reconciling several agency accounts during the year under review. Those accounts with remaining balances were consolidated and posted to one account in the following fiscal year. \nGENERAL LEDGER Inadequate Documentation of Journal Entries Finding Control Number: FS-548-00-08 \nThe University will file all journal entries in binders to help to alleviate the problem of missing entries. Beginning the next year, an employee, instead of students, was assigned the task of filing the entries. \n-5- \n \n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nGENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-00-09 \nThe balances in these dormant restricted funds were expended with permission from the grantors. \nGENERAL LEDGER Failure to Monitor Travel Advances Finding Control Number: FS-548-00-10 \nDuring the year under review, the University actively pursued employees with outstanding advances. Letters were sent to those individuals reminding them of their debt and funds were collected from employees leaving the University. We are working towards stricter enforcement of the travel advance policy. \nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-00-11 \nThe University has a policy to secure a completed Private Trust Agreement before establishing new accounts. Letters and calls were made to donors to secure letters ofintent on all new scholarship accounts. The University is working towards stricter enforcement of this policy. \nFUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-00-12 \nAn effort is made to draw down funds on a timely basis. Has shown great progress. Will continue to improve. \n-6- \n \n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \n \nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \n \nFINDING CONTROL NUMBER AND STATUS \n \nF A-548-98-02 F A-548-98-04 F A-548-98-05 F A-548-98-07 F A-548-99-01 F A-548-99-02 F A-548-99-03 F A-548-99-05 F A-548-99-07 F A-548-99-10 FA-548-00-01 F A-548-00-02 FA-548-00-03 F A-548-00-04 F A-548-00-05 F A-548-00-06 FA-548-00-07 \n \nFurther Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/ Responses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented \n \nCORRECTIVE ACTION/RESPONSES \n \nREPORTING Expenditures in Excess of Authorization Federal Pell Grant Program (CFDA 84.063) Finding Control Number: FA-548-99-07 \n \nThe Office of Budgets, Contracts and Grants and the Office ofFinancial Aid are working together to resolve the issue of prior year balances. The Federal program has closed its books for fiscal year 1999. As such, the outstanding balance for this fiscal year has became institutional loan. We will analyze this account, identify the loan by student and assign this loan to accounts receivable for collection. Hopefully, this will be done in fiscal year 2002. \n \n-7- \n \n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 \nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nCORRECTIVE ACTION/RESPONSES \nALLOWABLE COSTS/COST PRINCIPLES Time and Effort Report Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-01 \nThe Office of Research and Sponsored Programs is charged to take the lead role to make sure that time and effort reports for all Federal programs are submitted to the Office of Business and Finance. \nELIGIBILITY Overpayment of Student Financial Aid Weakness in Internal Control Structure Student Financial Aid Cluster Program Finding Control Number: FA-548-00-03 \nThe finding is only partially corrected. Planned corrective action has been implemented to correct noted deficiency, however the institution is waiting for a more definitive ruling from the Department ofEducation Case Management Division regarding one ofthe stated conditions. \nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-04 \nThe new software, Peoplesoft, will be able to handle grant award numbers after October 1, 2001. An inventory was conducted in June 1999 and is scheduled for every two years. Project directors have been charged to inform Federal agencies ofdisposals before calling surplus management. The University has policies and procedures to ensure that Title ill program purchases are utilized for the Title ill program. \nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-00-06 \nRequested information was sent to the Case -Management Specialist ofthe Department of Education on October 19, 2001, however the University is still awaiting their response regarding the finding and final resolution. \n-8- \n \n SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-548-01-01 \nOur examination of the internal accounting control procedures revealed that the University did not provide for adequate separation of duties in the performance of the following accounting functions and related procedures: \n1) Cash custody and receipting functions were not separated from cash disbursement and general ledger functions. \n2) Cash collection functions and maintenance ofdetail accounts receivables records were not separated from general ledger functions. \n3) Deposit preparation functions were not separated from cash receipts functions. \n4) Banner receivable and accounts receivable functions were not separated from the check disbursement functions. \n5) Miscellaneous invoice preparation and accounts receivable functions were not separated from cash receipts and general ledger functions. \n6) Accounts payable and disbursement functions were not separated from general ledger functions. \n7) Check signing functions were not separated from voucher preparation and approval for payment functions. \nThese conditions were the result of management not assigning employee duties in a manner to adequately safeguard assets and/or promote efficiency and accuracy in key accounting functions. The University should review the accounting procedures in place, design procedures that would enhance segregation of duties relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions. \nCASH AND CASH EQUIVALENTS Theft of Funds Finding Control Number: FS-548-01-02 \nDuring the year under review, the University discovered that a theft of funds had occurred. An employee in the Cashier's office cashed student financial aid refund checks without proper \n- 1- \n \n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nCASH AND CASH EQUIVALENTS Theft of Funds Finding Control Number: FS-548-01-02 \nendorsement. In addition, manual receipts were issued to students without properly receipting the funds in the general accounting receipting system. \nThis condition occurred because management failed to provide adequate internal controls over the cash collections and check disbursements functions. Procedures should be implemented to ensure that internal controls adequately safeguard cash and cash equivalents of the University. \nREVENUES/RECEIVABLES/RECEIPTS Failure to Monitor Out of State Tuition Fee Waivers Finding Control Number: FS-548-01-03 \nOur examination of fee waivers for the year under review, revealed that management failed to monitor out of state tuition fee waivers. As a result, waivers for out-of-state tuition granted by the University exceeded the amount allowable per Board of Regents policy by $147,484.52. \nThis deficiency occurred because management did not comply with the Board of Regents Policy Manual, Section 704.0302 which states, \"the number of such waivers in effect at any time does not exceed two-percent ofthe equivalent full-time students enrolled at the institution in the fall semester immediately preceding the semester for which the out-of-state tuition is to be waived\". The University should follow policies and procedures to ensure that out-of-state tuition fee waivers are within the allowable limit. \nREVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Record Expenditures and Accounts Receivable Finding Control Number: FS-548-01-04 \nFor the year under review, the University failed to record expenditures totaling $196,875.72 which consisted of the employer's portion of health and life insurance for six months. In addition, six months of retiree's portion of health and life insurance in the amount of $84,771.02 were not recorded as accounts receivable. This situation occurred because ofmanagement's failure to properly monitor general ledger account balances throughout the year. The University should develop and implement policies and procedures to ensure that expenditures and accounts receivable are properly recorded on an ongoing basis. \n-2- \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nEXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-01-05 \n_An examination of the accounts payable subsidiary records was performed to test transactions for validity and accuracy. The following deficiencies were disclosed: \n1) Payments ofaccounts payable were incorrectly charged to expenditure accounts rather than as liquidation of accounts payable. \n2) Residual accounts payable balances were not transferred to the University's surplus account after final payment of all associated invoices. \nThese deficiencies occurred because the University did not have procedures in place to adequately monitor accounts payable. The University should develop and implement policies and procedures to ensure that accounts payable are adequately monitored and adjusted as necessary on a timely basis. \nEXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Accounting of Extra Compensation Paid to Employees Finding Control Number: FS-548-01-06 \nThe University recorded extra compensation paid to three employees as Per Diem and Fees. This practice resulted in employees receiving compensation without appropriate payroll deductions being made. The Board ofRegents Policy Manual, Paragraph 803 .1404 states, \"employees receiving extra compensation shall be paid said extra compensation through the institutional payroll\". \nThis deficiency was the result of the University's failure to adhere to established policies and procedures concerning accounting for employee compensation. The University should follow policies and procedures to ensure that employee compensation is paid through the University's payroll. \nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-01-07 \nOur examination of employee compensation records for fifty employees revealed the following deficiencies: \n-3-  \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-01-07 \n1) The vacation and sick leave report revealed that: \na) Eleven employees had leave slips in their personnel files but the leave was not posted to the leave report. \nb) Five employees were charged for leave taken, however, no documentation was available to indicate leave taken. \n2) Documentation in one employee's personnel file indicated that the employee was on leave for an extended illness; however, this documentation did not indicate specific dates the employee was on leave. \n3) A review of three employees' weekly time sheets revealed that approval for overtime is obtained after being worked. According to the University's Employees Handbook, overtime must have prior approval by the Vice President of Business and Finance before being worked. \n4) For the pay period tested, the University was unable to locate three cancelled checks issued to employees not on direct deposit. \nThese deficiencies were the result ofthe University's failure to have policies and procedures in place to determine that personnel files contained adequate documentation, annual and sick leave was correctly calculated and recorded and canceled checks were properly maintained. The University should implement policies and procedures to ensure that personnel files and canceled checks are properly maintained. In addition, the University should adhere to the overtime approval policy. \nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-01-08 \nAt June 30, 2001, the University had nineteen agency funds that had deficit balances totaling $137,344.49. In addition, the University failed to provide purpose statements for nine new individual agency funds established during the fiscal year. \n-4 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nGENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number: FS-548-01-08 \nThese deficiencies were the result of the University disbursing funds prior to or in excess of the receipt of funds and from management's failure to establish agency funds in accordance with Board ofRegents policies and procedures. The University should implement procedures to ensure that all funds are received prior to disbursement and new accounts are supported by required purpose statements. The University should seek reimbursement for the deficit balances from the organizations involved. \nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-01-09 \nFor the year under review, the University failed to reconcile the Banner System to the general ledger and could not provide adequate supporting documentation for balance sheet clearing accounts at June 30, 2001. These clearing accounts consisted ofan accounts payable balance of(-)$67,568.53, a financial aid balance of(-)$134,267.17, a returned checkbalanceof$3,587.74 and an unapplied cash balance of (-)$148,325.81. \nThese account balances resulted primarily from interfaces between the University's Banner Student Registration System and the University's accounting system. Management was unable to produce subsidiary records from the Banner Student Registration System to support the balances recorded on the accounting system's general ledger. \nThe University should investigate the balances in the Balance Sheet clearing accounts, determine the cause and make appropriate adjustments to the accounting records to ensure that assets and liabilities are accurately represented on the accounting records. Procedures should be implemented to ensure that detailed subsidiary records are generated from the Banner Student Registration System that support the balances on the general ledger. \nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-01-10 \nOur examination and testing for the year under review revealed the following deficiencies in accounting for financial transactions by Savannah State University: \n-5- \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-01-10 \n1) Twelve exceptions were noted in our expenditure sample of seventy-five vouchers. One voucher could not be located, two vouchers did not have adequate documentation, three travel vouchers were incorrectly calculated and six vouchers were not properly approved. \n2) Numerous expenditure vouchers could not be located and therefore were not available for examination. \n3) Petty cash counts were performed and revealed a cash shortage of $966.67. \n4) Checks outstanding for more than ninety days were not voided in a timely manner. \n5) Numerous audit adjustments were necessary to rec~ncile salary and travel amounts reported to the Georgia Department of Audits with the amounts recorded as salaries and travel in the general ledger. \n6) Manual receipts issued by the University's Cashier's office were not pre-numbered. \n7) Restricted Fund revenues were not recognized in an amount equivalent to the Restricted Fund expenditures. Variances were identified and adjustments were made. \n8) Student Activities Fund expenditures were not properly approved by the Vice President of Student Affairs. \n9) Agency Fund receipts were not recorded in a timely manner. \n10) Salaries for two employees were redistributed from Auxiliary Enterprises Fund to Resident Instruction Fund without proper authorization and adequate documentation. \nThese deficiencies occurred because the University failed to have adequate accounting policies and procedures in place. The University should review current accounting policies and procedures, identify weaknesses and implement procedures to ensure that expenditure vouchers are maintained with adequate documentation, revenue and expenditures are properly approved and recorded, salaries and travel are properly reconciled and the accounting records are monitored. \n-6- \n \n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nGENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-01-11 \nTwo restricted fund projects had no activity during the year under review. It was noted that the grant period had ended on both projects; however, fund balances remained on these projects at June 30, 2001. \nThese dormant accounts are a result ofmanagement's failure to monitor the activity occurring in the Restricted Funds and return excess funds promptly to the granter when the project is complete. The University should implement procedures that will provide proper monitoring ofthe Restricted Fund and grant periods to ensure that funds are returned to the granter when the project is complete. The University should contact the granters to determine ifthe dormant account funds should be returned. \nGENERAL LEDGER Excessive Journal Entries/Lack of Documentation Finding Control Number: FS-548-01-12 \nAn excessive number ofjournal entries were recorded during the year under review. Numerous of these journal entries were not available for examination and others lacked adequate documentation. This situation occurred because ofthe University's failure to properly review and ensure thatjournal entries were adequately documented and maintained. The University should develop procedures to ensure that all journal entry transactions are properly maintained and supported by adequate documentation. \nGENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-01-13 \nDuring the year under review, management failed to correctly maintain the payroll deductions and employer liability accounts as follows: \n1) Variances existed between monthly receipts and disbursements for many of the payroll agency accounts. Management failed to perform monthly reconciliations and to identify vanances. \n2) The employee payroll deduction (health, life and dental) accounts had a net deficit of $265,635.41. Also, the U.S. savings bond, Federal withholding tax, state withholding tax and credit union accounts had deficit balances totaling $68,519.83. \n3) The employer liability (health and life) accounts had a net balance of$327,264.41 which management could not determine the proper disposition. \n-7- \n \n SAYANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nGENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-01-13 \nThe deficiencies were the result of the management's failure to properly monitor and reconcile the payroll agency funds. Management should implement policies and procedures to ensure payroll changes and adjustments are made timely and monthly reconciliations ofreceiptsand disbursements are performed. \nGENERAL LEDGER Failure to Monitor Travel Advances Finding Control Number: FS-548-01-14 \nAn examination ofemployee travel advances revealed that management failed to monitor employee travel advances. As a result, travel advances were not cleared in a timely manner and were cleared without adequate documentation. These deficiencies occurred because of management's noncompliance with the University's travel policy which states \"advances must be cleared within three days subsequent to returning to campus or the conclusion ofthe event\". The University should follow policies and procedures to ensure that travel advances are monitored and properly cleared in a timely manner. \nGENERAL LEDGER Subsidiary Ledger of Students Accounts Receivable not Reconciled with General Ledger Finding Control Number: FS-548-01-15 \nFor the year under review, the Banner System subsidiary ledger for student accounts receivable was not reconciled with the general ledger. The receivables reflected were not supported by adequate documentation nor could the University determine ifthe accounts receivable recorded on the general ledger or Banner System subsidiary ledger were accurate. This condition occurred because management failed to ensure that the subsidiary ledger agreed to the general ledger. Procedures should be implemented by the University to ensure that subsidiary records are reconciled to the general ledger. \nFUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-01-16 \nAt June 30, 2001, the University's Restricted Funds had an overall deficit balance of$132,161.14. This deficit is a result of the University's lack of sufficient funds to meet obligations on a current basis. The Board ofRegents' Policy Manual Section 703.02 states that \"when any situation develops which would create a deficit at an institution, the president shall take the appropriate corrective action\". \n-8- \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nFUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-01-17 \nAt June 30, 2001, the University's Intercollegiate Athletics, a sub-fund ofAuxiliary Enterprises, had a deficit balance of $145,783.23. The deficit was a result ofthe University's lack of sufficient funds to meet obligations on a current basis. The Board of Regents Policy Manual Section 702.02 states that auxiliary enterprises \"will be placed on a self-supporting basis, .and the State will not make an appropriation to finance its operations\". The University should take appropriate action to ensure the deficit is funded. \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-01 \nAt June 30, 2001, the University's accounting records reflected $565.00 of expenditures for \"University's Image Building\". In a letter dated June 27, 2001, based on their review, the U. S. Department of Education (USDOE) determined these types of expenditures to be unallowable according to Federal Regulation (34 CFR 608.10). No refund ofthis unallowable cost was requested by USDOE. In the subsequent fiscal period, the University incurred additional expenditures of $45,605.86 for \"University's Image Building\", which also appear unallowable. The University's failure to adhere to the Federal regulations governing allowable activities will result in questioned cost in the audit report for the subsequent year. \nALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02 \nFor the year under review, our examination of67 expenditure vouchers revealed the University failed to comply with the general provision for allowable cost according to 0MB Circular A-21, Sections C and J. The following were excessive and/or improper expenditures: \n1) Eight vouchers failed to meet the criteria necessary to be considered an allowable advertising and/or public relations cost resulting in questioned cost of $76,814.89. The unallowable expenditures included and were not limited to payments for University logo design, radio advertisement and University memorabilia. \n-9- \n \n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02 \n2) Two vouchers, totaling $2,268.61, were for costs to frame student artwork. These expenditures failed to meet the requirements for activities that may be carried out under the grant. \n3) Four vouchers for receptions and meals totaling $4,927.54 were unallowable entertainment expenditures. \n4) One voucher included excessive rental cost of $3,985.10. \n5) One voucher included unallowable meal costs of $13.00. This amount was approved in error as part of an employee's travel reimbursement. \nAdditional instances of noncompliance were noted while performing other audit procedures. \n1) One travel voucher was considered excessive in the amount of $72.00. 2) Two vouchers exceeded the U. S. Department ofEducation specific budget allowances for \nan international trip resulting in questioned cost of $1,810.40. 3) An examination of seven journal entries disclosed an instance of duplicate program \nexpenditures being recorded, resulting in questioned cost of $4,899.54. An on-site review performed by the U. S. Department of Education's Program Monitoring and Information Technology Services revealed the following: \n1) International student travel and program costs in the amount of$15,912.00 were incurred after failing to obtain approval from the U.S. Department of Education. \n2) Local travel for a 14-member delegation to attend the University's International Education Symposium was deemed to be excessive in the amount of$6,476.00. \n- 10 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $117,179.08 Finding Control Number: FA-548-01-02 \nThese conditions were the result of management's failure to comply with 0MB Circular A-21 and failure to adhere to restricted budget allowances mandated by the U'. S. Department of Education. The University should develop and implement policies and procedures to ensure that program expenditures are allowable according to Federal regulations and according to restricted approved budgets issued by the U. S. Department of Education. In addition, the University should develop a monitoring process to ensure that controls are being followed. The University should contact the U.S. Department of Education for resolution of this finding. \nALLOWABLE COSTS/COST PRINCIPLES Time and Effort Report Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-03 \nFor the year under review, our examination of sixty time and effort reports for five employees revealed the following deficiencies: \n1) Twelve time and effort reports for one employee lacked date of supervisory approval. \n2) One time and effort report lacked supervisory appr~:\u003eVal. \nThese conditions occurred because ofmanagement's failure to ensure all time and effort reports were properly prepared by employees. \n0MB Circular A-21, requires that activity reports or other payroll documents used as original documentation for payroll and payroll charges be prepared and signed by the employee and responsible official when salaries are charged to a Federal program. Management should ensure that complete time and effort reports are prepared by all employees whose salaries are charged to a Federal program. Time and effort reports should contain all required elements so that management can rely on the reports to support accounting and payroll records. \n- 11 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Internal Controls Student Financial Aid Cluster Program Finding Control Number: FA-548-01-04 \nDuring the year under review, the University failed to provide adequate internal controls for monitoring, recording and safeguarding student financial aid funds. The following deficiencies were noted: \n1) Numerous University issued student financial aid checks were not distributed and were voided before determining if students were eligible to receive the funds. Procedures were not in place and operational to monitor the check voiding process and to ascertain if resulting funds should be disbursed to the student or returned to the proper grantor agency. The lack ofcontrols resulted in the University having unreconciled balances on the general accounting records relating to voided student financial aid checks. \n2) Management failed to properly monitor the disbursement of student financial aid checks resulting in the theft of funds. An employee in the University's Cashier's Office cashed student financial aid checks issued to students without proper endorsements. \nThese deficiencies were the result of management not assigning duties in a manner to adequately safeguard assets and not having written policies and procedures for the voiding of student financial aid checks. The University should review the accounting procedures in place, design procedures that would enhance segregation of duties relative to the above control categories. In addition, management should determine if refunds are due to students and/or grantor agencies. \nFederal Programs/Awards Affected: \nStudent Financial Aid Cluster Programs U.S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \n- 12 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-01-05 \nOur examination included a review ofthe internal accounting controls utilized by the University in maintaining their property management system and also included testing the system for compliance with Federal laws and regulations. The following conditions existed: \n1) The University failed to maintain a property management system that identified Federal equipment purchases by Federal grant award number. This deficiency is system-wide and affects all Federal awards. \n2) The University was unable to ensure appropriate Federal agencies were notified when disposing of equipment due to inadequacies in the property management records. \n3) The Title III Equipment Inventory Report, as presented for audit purposes by the University's Title III office, contained numerous errors and omissions. The report listed numerous incorrect locations; incorrect, missing or duplicated University decal numbers; and various omissions ofFederal Share percentage, dates ofpurchase, purchase prices and manufacturer's serial numbers. \n4) Eight computers, one printer and one scanner, were not being utilized by the Title III program for which they were acquired. This deficiency was previously noted in the audit report for June 30, 1998, June 30, 1999 and June 30, 2000, for two ofthe aforementioned computers. University personnel assert that the computers were being used in the Title III program as required. However, our examination noted that the computers were not being used in the Title III program as indicated by the University. \nThe University failed to have internal controls in place and operational to ensure compliance with Federal requirements for equipment as set forth in 34 CFR 74 and 0MB Circular A-110, Subpart C.34. The University should establish policies and procedures to ensure that equipment purchases are identified by fund sources and grant award numbers, property records are maintained in accordance with Federal requirements and physical inventories are conducted every two years. Also, the University should establish policies and procedures to ensure equipment purchases are utilized for the Title III program. The U. S. Department of Education should review these matters and determine appropriate action by the University to resolve this finding. \n- 13 - \n \n SAYANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Costs: $10,809.60 Finding Control Number: FA-548-01-06 \nFor the year under review, an examination ofthe University's student financial aid refund process for student withdrawals revealed the following deficiencies: \n1) Unearned Title N funds were not applied by the University to the appropriate student financial aid programs for six out of ten students selected for refund testing, resulting in questioned cost of $4,898.76. In addition, four of the students were disbursed Title N funds greater than the amounts earned resulting in additional questioned cost of$5,668.60. \n2) One student received funds from the H.O.P.E. Scholarship Program and the University failed to return unearned funds in the amount of $242.24. \nThese deficiencies were the result of management's failure to complete the refund process in accordance with Federal regulations. The University should develop and implement procedures to ensure that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should contact the U.S. Department of Education regarding resolution of this finding. \nFederal Programs/Awards Affected: \nStudent Financial Aid Cluster Programs U.S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \nPERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07 \nAt June 30, 2001, the University's Federal Pell Grant Program had deficit fund balances of $112,135.28 for the fiscal year 1999 grant and $52,518.00 for the fiscal year 2001 grant. Also, the Federal Direct Loan Program maintained deficit fund balances of$18,674.96 for the fiscal year 1998 program and $83,967.00 for the fiscal year 1999 program. These deficit fund balances were the \n- 14 - \n \n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2001 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS PERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-01-07 result of management's failure to establish controls to ensure that funds are disbursed only upon proper authorization. The University should implement procedures to ensure that funds are available to cover valid expenditures. In order to be reimbursed for these excess expenditures, the University, in conformity with Federal statutes, must certify the validity of these payments to the U. S. Department of Education. Federal Programs/Awards Affected: Student Financial Aid Cluster Programs \nU.S. Department of Education Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \n- 15 - \n \n  1 \n1111111~111~r1I1m~,1~~[mll~rni1~11[11111111 \n3 2108 04002 3387 \n \n  "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2001-h2002","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2001/2002"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002"],"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-bs25-b2001-h2002"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b2001-h2002"],"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":"3A \r\n \r\n~,8oo \r\n \r\n~\\ , \r\n \r\ni \r\n \r\n\" \r\n \r\n::s':;lS \r\n \r\n~OOI. \r\n \r\n- '- \r\n \r\n,,I \r\n \r\n,I ;, \" \r\n \r\n/ \r\n \r\n,, \r\n \r\n\" \r\n \r\n,, \r\n \r\n SAVANNAH STATE UNNERSITY - TABLE OF CONTENTS- \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENTS DISCUSSION AND ANALYSIS \r\n \r\n3 \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET ASSETS \r\n \r\nII \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS \r\n \r\n12 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n13 \r\n \r\nD NOTESTOTHEFINANCIALSTATEMENTS \r\n \r\n14 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\nSCHEDULES OF REVENUES AND EXPENDITIJRES COMPARED TO \r\n \r\nBUDGET - (NON-GAAP BASIS) \r\n \r\nI \r\n \r\nRESIDENT INSTRUCTION \r\n \r\n31 \r\n \r\n2 \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\n32 \r\n \r\n3 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n33 \r\n \r\nSECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY -TABLE OF CONTENTS- \r\nSECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n R,'o,SEU W. H, ......\" \r\nSTATE AUDITOR \r\nf.lOA; 656 217.: \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n254 WJ ...hlngLOn Street S W, SUJlC ::! 14 Allanta, Georgld 30J34-R400 \r\nMarch 3, 2003 \r\n \r\nHonorable Sonny Perdue, Governor Members of the General Assembly of GeorgIa Members of the Board of Regents of the Uruverslty System of Georgia \r\nand Honorable Carlton E. Brown, PresIdent Savannah State UruVerslty \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen \r\nWe have audIted the accompanymg basiC financial statements (ExhIbIts A through D) ofSavannah State Umverslty, an orgaruzatlOnal umt of the State of GeorgIa, as of and for the year ended June 30, 2002 These finanCIal statements are the responsiblhty of the Umverslty's management Our responslblhty IS to express an opinion on these finanCial statements based on our audIt. \r\nExcept as dIscussed m the followmg paragraph, we conducted our audJt m accordance WIth audJtmg standards generally accepted m the Uruted States of Amenca Those standards reqUITe that we plan and perform the audIt to obtam reasonable assurance about whether the finanCIal statements are free of matenal rmsstatement. An audit mcludes examIning, on a test basIS, eVidence supportmg the amounts and diSclosures m the finanCIal statements An audJt also mcludes assessmg the accountmg pnnclples used and slgruficant estimates made by management, as well as evaluatmg the overall financIal statement presentaoon We beheve that our audit proVides a reasonable basIS for our 0plruon \r\nWe were unable to obtam suffiCIent documentation to support all accounts receIvable reported by the Umverslty In addloon, the UniversIty could not provide suffiCIent documentation for a major pornon ofAccounts Payable Accordmgly, we were unable to saosfy ourselves as to the accuracy of the amounts reported as accounts receivable and accounts payable on the Statement ofNet Assets as of June 30, 2002 AddJtlonally, we were unable to determme the effects these matters may have on the basIC finanCial statements \r\n \r\n02ARL-62X \r\n \r\n As discussed In Note I, the financial statements ofSavannah State UruvefSlty are Intended to present the financial posItion and changes In financial posltlon (including cash flows) ofonly that portion of the bUSiness-type actIVIties ofthe State of Georgia that IS attnbutable to the transactions ofSavannah State Umverslty They do not purport to, and do not, present fauly the finanCial positIon and changes In financial positIOn (including cash flows) of the State of Georgia, In conformity With accounting pnnclples generally accepted In the Umted States of Amenca. \r\nAs descnbed In Note I to the finanCial statements, the Umverslty did not recognize June 30, 2001, encumbrances as expenses In the June 30, 2002, basiC finanCial statements To conform to generally accepted accounting pnnclples, encumbrances should be recogmzed as expenses and habIlJtles In the penod that goods and Services are received. The effects on the basiC finanCial statements of thiS departure from generally accepted accountmg pnnclples were not reasonably determinable. \r\nIn our oplmon, except for the effects of such adjustments, If any, as might have been determined to be necessary had we been able to examine documentation supporting accounts receivable and accounts payable and, except for the effects on the basiC financial statements ofthe matter discussed In the fifth paragraph, the basiC financial statements referred to above present faJrly, In all matenal respects, the financial posItion ofSavannah State Umverslty as ofJune 30, 2002, and Its changes In financial pOSItion (mcludrng cash flows) for the year then ended In conformity With accountmg pnnclples generally accepted m the Umted States of Amenca. \r\nAs descnbed In Note I, Savannah State Umverslty adopted the provISIOns of Governmental Accounting Standards Board (GASB) Statements No 35, BasiC Financial Statements - and Management's DISCUSSion and Ana~vsls - for Public Colleges and Universities, as amended by GASB Statement No. 37, BasiC Financial Statements - and Management's DISCUSSIOn and Ana~vslS for State and Local Governments, and GASB Statement No. 38, Certain Financial Statements Note Disclosures, as of July 1,2001, to IIDplement a new fmanclal reportmg model \r\nManagement's DISCUSSion and AnalYSiS IS not a required part ofthe basiC finanCial statements but IS supplementary information reqwred by the GASB. We have apphed certam hmlted procedures, which consisted pnnclpally ofInqumes ofmanagement regarding the methods ofmeasurement and presentation of thJs supplementary information However, we did not audit thJs mformatlOn and express no opinIOn on It. \r\nOur audit was conducted for the purpose of forming an 0plllion on the basiC financial statements taken as a whole The accompanYing supplementary informatIOn (Schedules I through 3) IS presented for purposes of additional analYSis and IS not a required part of the basiC finanCial \r\n02ARL-62X \r\n \r\n statements of Savannah State UnIversity Such mfonnalion has been subjected to the auditing procedures applied by us In the audit of the basiC financial statements and, In our OpinIOn, based on our audit, IS fairly stated In all rnatenal respects In relatIOn to the basiC finanClaJ statements taken as a whole. \r\n \r\nRespectfully submitted, \r\n \r\n \r\n \r\nRWH:gp 02ARL-62X \r\n \r\nRus 11 W Hinton State Auditor \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION - 1- \r\n \r\n SAVANNAH STATE UNIVERSITY \r\nManagement's Discussion and Analysis \r\n \r\nIntroduction \r\n \r\nSavannah State Umverslty IS one of the 34 InStitutIOns of the Umverslty System of GeorgIa The Umverslty, located In Savannah, GeorgIa, was founded In 1890 as a department of the State UmversIty for the education and tralmng of Negro students. Savannah State UmvefSltynow serves a diverse student population as a sernor umverslty of the Umverslty System of GeorgIa The Umverslty serves a pnmanly Afncan-Arnencan student population, ennched by a dIVersIty of tradItional and nontrachtlonal students from other countries, cultures, and races The educational goal IS realIzed through program offenngs In the College ofBusmess Admlmstratlon, the College of LIberal Arts and SOCIal SCIences, and the College of SCIences and Technology, whIch lead to baccalaureate and master's degrees Tlus WIde range of educational OPPOrtunIties attracts a highly quahfied faculty and a student body ofaround 2,300 students each year The Institution continues to grow as shown by the companson numbers that follows. \r\n \r\nFaculty \r\n \r\nStudents \r\n \r\nFY2002 FY2001 FY2000 \r\n \r\n135 \r\n \r\n1,831 \r\n \r\n116 \r\n \r\n1,688 \r\n \r\n144 \r\n \r\n1,747 \r\n \r\nOverview ofthe Financial Statements and Financiill Analysis \r\n \r\nSavannah State Umverslty IS proud to present Its finanCIal statements for fiscal year 2002. The emphasiS ofdiSCUSSIons 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 m Net Assets, and, the Statement of Cash Flows. Tlus dISCUSSIon and analYSiS of the Umverslty's financial statements proVIdes an OVerview of its finanCIal actIVIties for the year Savannah State Umverslty has elected to not restate pnor penods for purposes of proVldmg the comparative data for thIS Management's DISCUSSIon and AnalysIS However, In future years, when pnor penod Information IS aVaIlable, a comparatIve analYSis WIll be presented \r\n \r\nStatement ofNet Assets \r\n \r\nThe Statement ofNet Assets presents the assets, hablhtles, and net assets ofthe Umverslty as ofthe end of the fiscal year. The Statement of Net Assets IS a pomt of time finanCial statement. The purpose ofthe Statement ofNet Assets IS to present to the readers ofthe finanCIal statements a fiscal snapshot of Savannah State Umverslty. The Statement of Net Assets presents end-of-year data concermng Assets (current and non-current), Llablhtles (current and non-current), and Net Assets (assets mmus hablhtles). The dIfference between current and non-current assets WIll be chscussed m the notes to the finanCIal statements \r\n \r\n-3- \r\n \r\n - - - - - - - - - - - - - - - - - -- --- \r\n \r\nFrom the data presented, readers of the Statement of Net Assets are able to detenrnne the assets avaliable to contmue the operatIOns ofthe Institution They are also able to detenrnne how much the Institution owes vendors, Investors and lendmg Institutions \r\n \r\nFmally, the Statement ofNet Assets provides a picture of the net assets (assets mmus habliltles) and their aVaIlablhty for expenditure by the mstltUtlon Net assets are divided Into three major categones. The first category, mvested In capital assets, net ofdebt, provides the Institution's eqwty In property, plant and equipment owned by the IDStltutlOn. The next asset category IS restncted net assets, wluch IS dIvIded mto two categones, nonexpendable and expendable. The corpus of nonexpendable restncted resources IS only aVBllable for Investment purposes Expendable restncted net assets are aVBllable for expenditure by the InstitutIon but must be spent for purposes as determmed by donors and/or external entIties that have placed tIme or purpose restnctions on the use of the assets The fmal category IS unrestricted net assets Unrestncted assets are aVaIlable to the Institution for any lawful purpose of the InstitutIon. \r\n \r\nStatement ofNet Assets, Condensed (thousands of dollars) \r\n \r\nAssets Current Assets Capttal Assets, Net Other Assets \r\n \r\n$ 4,561 31,137 1.957 \r\n \r\nTotal Assets \r\n \r\n$ 37,655 \r\n \r\nLiabilities Current LIabtlttles Non-Current LlablhtIes \r\n \r\n$ 1,749 495 \r\n \r\nTotal Liabilities \r\n \r\n$ 2,244 \r\n \r\nNet Assets Invested In Capital Assets, Net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestncted \r\n \r\n$ 31,137 1,105 916 2.253 \r\n \r\nTotal Net Assets \r\n \r\n$ 35.411 \r\n \r\nStatement ofRevenues. Expenses and Changes in Net Assets \r\n \r\nChanges m 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 m Net Assets The purpose of the statement is to present the revenues received by the mstitution, 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 operatmg revenues are receIVed for provldmg goods and seI\"Vlces to the varIOus customers and constltuencles of the \r\n \r\n-4- \r\n \r\n mstltutIon Operatmg expenses are those expenses paid to acqUIre or produce the goods and seTV1ces provided m return for the operatIng revenues, and to carry out the miSSion of the InstitutIOn Nonoperatmg revenues are revenues receIved for which goods and services are not provIded For example state appropnatlons are nonoperatmg because they are provided by the LegIslature to the mstltutlon Without the LegIslature duectly receIVIng commensurate goods and services for those revenues \r\n \r\nStatement ofRevenues, Expenses and Changes m Net Assets, Condensed (thousands of dollars) \r\n \r\nOperatIng Revenues OperatIng Expenses \r\n \r\n$ 12,688 39,659 \r\n \r\nOperatIng Loss \r\n \r\n$ -26,971 \r\n \r\nNonoperatIng Revenues \r\n \r\n27,515 \r\n \r\nIncrease m Net Assets \r\n \r\n$ 544 \r\n \r\nNet Assets at BegInnIng of Year, as OngInally Reported \r\n \r\n$ 83,412 \r\n \r\nCumulative Effect of Changes m Accountmg Pnnclple \r\n \r\n-48,545 \r\n \r\nNet Assets at Beginnmg ofYear Restated \r\n \r\n$ 34,867 \r\n \r\nNet Assets at End of Year \r\n \r\n$ 35,111 \r\n \r\nThe Statement of Revenues, Expenses and Changes In Net Assets reflects a posItIve year WIth an mcrease In the net assets at the end ofthe year. Some lughbghts ofthe mformatlon presented on the Statement of Revenues, Expenses and Changes m Net Assets are as follows: \r\n \r\n-5- \r\n \r\n Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002 \r\nOperating Revenue TUitIon and Fees Grants and Contracts Rents and Royalties Sales and Services ofEducational Departments AuxIliary Other \r\nTotal OperatIng Revenue \r\nNonoperatIng Revenue State AppropnatIons Grants and Contracts Gifts Investment Income Other \r\nTotal Nonoperatmg Revenue \r\nTotal Revenues \r\nExpenses (thousands of dollars) For The Year Ended June 30, 2002 \r\nOperatmg Expenses InstructIon Research Public Service AcademiC Support Student ServiCes InstItutIonal Support Plant Operations and M3.1ntenance Scholarships and Fellowslnps AUXIliary Enterpnses Unallocated DepreciatIon \r\nTotal OperatIng Expenses \r\n \r\n$ 2,545 4,503 26 198 5,052 364 \r\n$ 12,688 \r\n$ 19,764 6,569 192 162 828 \r\n$ 27.515 \r\n$ 40,203 \r\n$ 10,923 1,689 2,433 3,267 2,431 5,567 4,846 1,525 5,128 1.850 \r\n$ 39659 \r\n \r\n-6- \r\n \r\n Statement ofCash Flows \r\n. \r\nThe final statement presented by the Savannah State Umverslty IS the Statement ofCash Flows The Statement of Cash Flows presents detailed mformatlon about the cash actiVIty of the mstltutlon dunng the year The statement IS diVIded mto five parts The first part deals WIth operatmg cash flows and shows the net cash used by the operatmg actlVllJes of the mstltutlon The second section reflects cash flows from non-capital financmg activIties ThIs sectIOn reflects the cash received and spent for nonoperatmg, non-mvestmg, and non-eapltal financmg p11I]\u003eOses The t1urd section reflects the cash flows from mvestmg actiVIties and shows the purchases, proceeds, and mterest received from mvestlng actiVitIes The fourth section deals WIth cash flows from Capital and related financmg actlVltles ThIs sectIon deals WIth the cash used for the acqUIsItIOn and constructIon of capItal and related Items The fifth section reconCIles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets \r\n \r\nCash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars) \r\n \r\nCash PrOVided (Used) By. Operating ActlVltles Non-CapItal Fmancmg ActiVIties Investing ActiVIties Capital and Related Fmancmg ActiVIties \r\n \r\n$ -28,367 27,465 152 -893 \r\n \r\nNet Change m Cash Cash, Begmnmg of Year \r\n \r\n$ -1,643 3.393 \r\n \r\nCash, End of Year \r\n \r\n$ ],750 \r\n \r\nCapital Assets \r\n \r\nThe Umverslty had no slgmficant capItal asset addJtlons for facllitles m fiscal year 2002 \r\n \r\nFor addltlonalmformatlOn concermng CapItal Assets, see Notes 1 and 6 m the notes to the financial statements. \r\n \r\nEconomic Oudook \r\n \r\nThe Umverslty IS not aware of any currently known facts, decISIOns, or conditions that are expected to have a slgl1lficant effect on the finanCIal pOSItion or results of operations dunng this fiscal year beyond those unknown vanatlons havmg a global effect on VIrtually all types ofbusmess operations. The UI1IVerslty's overall finanCIal position IS strong. Even With a relatively flat funded year, the Umverslty was able to generate a modest mcrease m Net Assets The Umverslty anticipates the current fiscal year WIll be much like last and WIll mamtam a close watch over resources to mamtam the Ul1Iverslty's ability to react to unknown mtemal and extemallssues. \r\n \r\nCarlton E Brown, President Savannah State Ul1Iverslty \r\n \r\n-7- \r\n \r\n BASIC FINANCIAL STATEMENTS -9- \r\n \r\n SAVANNAH SJAIE UNWERSITY \r\nSTATEMENT OF NET ASSETS JUNE 30, 2002 \r\nASSETS \r\nCurrent Assets Cash and Cash EquIValents Short-Term Investments Accounts ReceiVable, Net Federal Flnanoal Assistance Other Prepaid Items Inventones \r\nT01aI Current Assets \r\nNoncurrent Assets Cash and Caah EqulVlllents Investments Note. RecelVllble, Net Capl\\el Assets, Net (See NoIs 5) \r\nT01aI Noncurrent Assets \r\nTotal Assets \r\nLIABILmES \r\nCurrent liabilities saJanes Payable Payroll Wlthholdll'llS Accounts Payable Deferred Revenue \r\nFunds Held lor Others \r\nCompensated Absences Other lIabllllJes \r\nTotal Current LJabIIlbea \r\nNoncurrent lJab,lrbeB Compensated AbBene:ea \r\nTotal Uabllrbes \r\nNET ASSETS \r\nInvested ,n Cepolal Assets, Net of Relaled DellI Restneted lor \r\nExpendable Nonexpendable Unrestrk:led \r\nTotal Net Assets \r\nth,. The notes to the financial statements ara an Integral part of statement \r\n- 11 - \r\n \r\nEXHIBIT\"A\" \r\n \r\n$ 1,460,75889 411.41115 \r\n986.10152 1,105,100 80 \r\n5,17661 592,41029 \r\n$ 4.560,95926 \r\n \r\n$ \r\n \r\n289,736 71 \r\n \r\n814.868 48 \r\n \r\n852,69792 \r\n \r\n31 ,137.164 01 \r\n \r\n$ 33,094,467 12 \r\n \r\nS 37,655,426 38 \r\n \r\n$ \r\n \r\n288,960 33 \r\n \r\n7.29619 \r\n \r\n558,084 59 \r\n \r\n255,36754 \r\n \r\n101.45508 \r\n \r\n478,08390 \r\n \r\n59.38917 \r\n \r\nS 1.748,636 80 \r\n \r\n495,42596 $ 2.244.062 76 \r\n \r\n$ 31.137,184 01 \r\n916,738 19 1,104.605 19 2,252.856 23 \r\n \r\n$ 35,411.38362 \r\n \r\n SAVANNAH STATE UNI'JERSrry \r\nSTATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS \r\nYEAR ENDED JUNE 30 2002 \r\n \r\nEXHIBIT-e\" \r\n \r\nOPERATING REVENUES \r\nStudent Turtron and F_ Less SCholarship Allowances \r\nGrants and Contracts Federal \r\nRents and Royalbes \r\nsales and 80MceS of Educabonal Departments \r\nAuxIliary Enterprises Residence Halls Bookston! Food Services Health 8oMCOS InI8ra\u003eUegl8te Athlebca \r\nOther Operallng Revenues \r\nTolal Operating RlMlnues \r\nOPEBAT!NG EXPENSES \r\nSalanes Faculty Staff \r\nEITllloyee Benefits Travel Schola~hlpsand Fellowships U11lrbes Supplies and Other Services Depreciation \r\nTotel Qperatlng Expenses \r\nOperating Income (Lou) \r\nNQNOPEBAT!NG REVENUES (EXPENSES) \r\nSte18 ApplOPnabonS Grants and Contracts \r\nFederal Slate GIftII Interest and Other Investment Income Qthet' Nonoperating Revenues \r\nNeI Nonoperating Revenues \r\nNel_ InaeaseJ(DecrBa..) In \r\nNetAssela Net Aaaets - Beglnn,ng of Year, as Originally Reported Cumula_ Effect of Cl\\anges In Acx:oun1tng Pnndple \r\nNet Assets . Beglnntng of YearI Restated \r\nNet Assets  End of Year \r\n \r\nS 5.585,400 21 \r\n-3.039.61553 \r\n4.502.73721 25.83942 \r\n198,00300 \r\n586.46970 1,116,20258 1,713,78508 \r\n303,221 92 1,331,840n \r\n364,41531 \r\nS 12.888.299 67 \r\n \r\nS 7,n6,604 21 \r\n10,248,098 96 5,018,398 36 \r\n397,n569 2,703,02337 1,967,024 59 9,698,600 86 1.849,582 61 \r\nS 39.659.108 85 \r\nS -28,970,808 98 \r\n \r\nS 19,783,96116 \r\n \r\n6,372.796 74 195,821 20 192.650 00 182,446 55 827,562 50 \r\n \r\nS 27.515.23815 \r\n \r\nS \r\n \r\n544.42917 \r\n \r\nS 83,412,33520 \r\n-48,545,400 75 \r\nS 34,866,934 45 \r\n \r\nThe notes to the finanCialltatementa are an Integral part of thIS statBmenl - 12 \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF GASH FLOWS \r\nYEAR ENDED JUNE 30 2002 \r\nCASH FLOWS FROM OPERATING ACTMTIES Tulbon and Fees \r\nGrants and Contracts \r\nSales end SeMCeS of Educabonal Departments Payments to Supplte~ Payments to Employees Payments for SCI1ola~h,ps and Fellowships boan. Issued to Students and Employees ColIedlon of Loans to Sludanta and Employees AuxJ~ary Enterpnse CIlafges \r\nReSIdence HaDs Bookstore Food ServIces Health 5elVlces Inte\u003ccollaglBte All1IeIK:s Other Rece,pts (Payments) \r\nNet caoh ProvIded (lJsed) by Operadng AdMbas \r\nCASH FLOWS FROM NONCAPITAl FINANCING ACTMTIES State Appropriadons Agency Funds Transacbono GIfts and Grants ReeelYOd for Other than Capllal Purpose. Other No~ Recelplo \r\nNet caeh Aows Provided (Used) by Noncapllal FIIlIIIlQIlg AdIvrtNlo \r\nCASH FLOWS FROM CAPITAl AND RELATED FINANCING ACTIVITIES Purchases of CoprtaI Assets \r\nCASH FLOWS FROM INVESTING ACTMTIES Interest on Invesbnenls \r\nNet Increa,,\",(Deaease) In caoh \r\nCosh and Cash EqUMIIanIs - June 30. 2001 Leoo Short-Term Inwotmento \r\nCosh and cash Equ.....1anIs - Beg,nnlng of Year \r\nCash and ca.h Equlva_ - End of Year \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTMTIES \r\nOperatlng Income (Loss) Adjustments to Reconcile Net Income (boss) to Ne1 caeh \r\nProvlded (Used) by Operadng AdivIbes Depreaa\\JOn Change m Assets and LJabiJibes Accounts Receovables. Net Inventories Prepaid hemo Not.. Receivables. Net Accounts Payable Salarleo Payable Payroll Whhholding and Employer Matching Benefits Other uabIhtleS Compensated Absences \r\nNet Caoh ProvIded (Used) by Operabng AclMbeo \r\nThe noteo to the finanCial atatements are an ,ntegral part of lhls Btelement \r\n- 13 - \r\n \r\nEXHIBIT \"C. \r\n \r\n$ 2,721,088 92 3709,61527 198,00300 \r\n-19922,43222 -17,949,68986 \r\n-2,703,02337 -58,740 40 75,05724 \r\n577.31410 1.211.97049 1.713.78508 \r\n303.221 92 1.331.84077 \r\n424,75644 \r\n$ -28,367,232 62 \r\n \r\n$ 19,763.96116 -492.240 86 7.292.627 93 900,78504 \r\n$ 27.465.133 27 \r\n \r\n$ \r\n \r\n-1193,465 59 \r\n \r\n$ \r\n \r\n152,89701 \r\n \r\n$ -1,842.667 93 \r\n \r\n$ 4.609.893 82 -1,216.730.29 \r\n \r\n$ 3.393.163 53 \r\n \r\n$ 1,750:495 60 \r\n \r\n$ -26.970.80898 \r\n1,849.582 61 \r\n-495.51785 71486 \r\n9.398 18 16.31684 -2.858.041 95 123.996 36 7,296 19 -1.18583 -48,98305 \r\n$ -28,367,23262 \r\n \r\n SAVANNAH STATE UNNERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE l' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nNATURE OF OPERATIONS \r\nSavannah State UruVerslty serves the state, and national commurntles by provllhng Its students With academic Instruction that advances fundamental knowledge, and by dlssetDJnatIng knowledge to the people of Georgia and throughout the country. \r\nREPORTING ENTITY \r\nSavannah State University IS one of thirty-four (34) State supported member institutions ofJugher education In Georgia winch compnse the University System ofGeorgia, an organizational urnt ofthe State of Georgia The accompanymg finanCial statements reflect the operations of Savannah State UniVersity as a separate repOrting entity. \r\nThe Board of Regents has constitutional authority to govern, control and manage the UruVerslty System of Georgia TIns authonty Includes but IS not liIDIted to the power to designate management, the abilIty to SIgnificantly Influence operations, the authonty to control institutiOns' budgets, the power to deterIDIne allotments of State funds to member mstItutions and the authonty to prescnbe accounting systems and admImstrative poliCies for member mstItutions. Savannah State UruVerslty does not have authonty to retain unexpended State appropnatIons (SurplllS) for any given fiscal year. Accordingly, Savannah State Uruverslty IS considered an orgaruzatIonal urnt ofthe Board ofRegents of the Uruverslty System of Georgia reporting entity for finanCial reporting purposes because ofthe Significance of its legal, operatIonal, and finanCial relationslnps With the Board ofRegents as defined In Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial ReportIng Standards. \r\nFINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, BasiC Fmanclal Statements and Management DISCUSSion and AnalysISfor State and Local Governments. TIns was followed In November 1999 by GASB Statement No 35, BasiC FmanClaI Statements and Management's DISCUSSIOn and AnalysIS for Public Colleges and Universities. The State of Georgia IS reqUIred to Implement GASB \r\nStatement No 34 as ofand for the year ended June 30,2002. As an orgaruzatIonal urnt ofthe State ofGeorgia, the University IS also reqwred to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statement presentation reqUired by GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38 proVIdes a comprehensive, entity-Wide perspective of the UruVerslty'S assets, liabilities, net assets, revenues, expenses, changes In net assets, cash flows, and replaces the fund group perspective preVIOllSly reqUired \r\nThe University has elected to not restate Its 200 I finanCial statements to conform With the new finanCial statement presentation, therefore comparative finanCial Information Will not be presented for fiscal year 2002 Sigmficant accounting changes made In order to comply With the new requirements Include (1) adoption of depreciation on capital assets, and (2) recognitiOn of compensated absences Generally Accepted Accounting Pnnclples (GAAP) reqUIreS that the \r\n- 14 - \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFINANCIAL STATEMENT PRESENTATION reporting of summer school revenues and expenses be between fiscal years rather than In one fiscal year. Due to the lack ofmatenalIty, Institutions ofthe Uruverslty System ofGeorgta WIll continue to report summer revenues and expenses In the year In wluch the predominate activity takes place \r\nAt June 30, 2001, encumbrances (contractual obhganons for goods and setVlces not receIved at fiscal year end) were recorded as expenditures by the UruVerslty Instead ofreservations offund balance as reqwred by generally accepted accounting pnnclples For fiscal year 2002, the Umverslty changed Its method ofrecordmg encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses. T1us change IS In accordance WIth generally accepted accounting prmclples. \r\nNo adjustments however, have been made on the finanCIal statements to restate the fund balance at July 1,2001 for the June 30, 2001 encumbrances recorded as expenditures In fiscal year 2001. The net effect of the above aecountlng treatment resulted In an understatement of expenses on the accompanymg finanCIal statements for pnor year encumbrances which should have been reflected as expenses In the penod when goods and servtces were received \r\nBASIS OF ACCOUNTING For finanCial reportmg purposes, the UmveISIty IS considered a specIal-purpose government engaged only In bUSiness-type actiVIties. Accordmgly, the Uruverslty'S fmanclal statements have been presented using the econormc resources measurement focus and the accrual basIS of accounting, except as noted In the precedmg paragraphs. Under the accrual basIS, revenues are recogrnzed when earned, and expenses are recorded when an obhganon has been inCurred All slgmficant IntraumVerslty transactiOns have been elImmated. \r\nThe Umverslty has the option to apply all FInanCIal Accounting Standards Board (FASB) pronouncements ISSUed after November 30, 1989, unless FASB COnflICts WIth GASB The Umverslty has elected to not apply FASB pronouncements ISSUed after the applIcable date \r\nRESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption of GASB Statement No. 34, the Umverslty was also reqwred to make certam changes In accounting pnnclples, specifically (1) adoption of deprecIatIon on CapItal assets, and (2) recordmg of compensated absences GASB Statement No. 34 reqUITes certam summer semester revenues be recogrnzed between fiscal years rather than the fiscal year 10 which the semester was predommantly conducted The Uruverstty System ofGeorgta has chosen to continue to record summer revenue m the year m wluch the semester was predormnantly conducted. Net assets at July 1,2001 were reduced by $48,545,400 75 for the cumulatlve effect of these changes. \r\n \r\n- 15 - \r\n \r\n SAVANNAB STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash EqUIvalents consist of petty cash, demand deposits and time deposits m authonzed financIal msl1tutIons, and cash management pools that have the general charactensl1cs of demand deposIt accounts \r\nINVESTMENTS The UniVersity accounts for ItS mvestments at fau value m accordance with GASH Statement No 31, Accounting and Financial Reportlngfor Certain Investments andfor External Investment Pools. Changes m unrealiZed gam (loss) on the carrying value of mvestments are reported as a component ofmvestment mcome m the statements of revenues, expenses, and changes m net assets \r\nACCOUNTS RECEIVABLE Accounts receIvable COnsISts of tuitIOn and fee charges to students and auxihary enterpnse ServiCes provided to students, faculty and staff, the maJonty of each residing m the State of Georgia. Accounts receIvable also mclude amounts due from the Federal government, state and local governments, or pnvate sources, m connection With reImbursement of allowable expenditures made pursuant to the UniVersIty'S grant and contracts. Accounts receIvable are recorded net of esl1mated uncollecl1ble amounts \r\nPREPAID ITEMS Prepwd Items are payments made to vendors m advance ofthe receIpt ofgoods and SeJVIces that WIll benefit periods subsequent to the balance sheet date \r\nINVENTORIES Consumable supplIes are carned at the lower of cost or market on the fIrst-m, first-out (\"FIFO\") basiS. \r\nResale Inventones are valued at cost usmg the fIrst-m, first-out method. \r\nNON-CURRENT CASH AND INVESTMENTS Cash and Investments that are externally restncted and CWInOt be used to pay current lIabllitles are clasSified as non-current assets m the statements of net assets \r\nCAPITAL ASSETS CapItal assets are recorded at cost at the date of acqwsIlJon, or fwr market value at the date of donatIon In the case of gifts For eqUIpment, the Umverslty's capltallzanon polIcy mcludes all Items with a umt cost of $5,000.00 or more, and an esnmated useful lIfe of greater than one year. Renovatlons to bUlldmgs, mfrastructure, and land Improvements that exceed $100,00000 and slgmficantly mcrease the value or extend the useful lIfe of the structure are capitalIzed. Routine \r\n \r\n- 16 - \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30. 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCAPITAL ASSETS replllrs and maintenance are charged to operatmg expense In the year In which the expense was Incurred DepreciatIon IS computed using the strlllght-iine method over the estImated useful lIves of the assets, generally 10 to 40 years for bUlldmgs, 10 to 25 years for Infrastructure and land IDIprovements, 10 years for lIbrary books, and 3 to 15 years for eqUIpment \r\nTo obtam the total picture of plant additIons in the Umverslty System, It IS necessary to look at the actIVItIes ofthe GeorgIa State Financmg and Investment Comnussion (GSFIC) - an orgamzatIon 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 ofthe State ofGeorgJ.a and the Act creating the GSFIC. The bonds so ISSUed constItute dJrect and general oblIgatIons of the State of GeorgIa, to the payment of which the full flllth, credit and taxing power of the State are pledged. \r\nEffectIve July 1, 2001, the GSFIC retains construction m progress on their books throughout the constructIon penod and transfers the entIre project to Savannah State UniVersity when complete. \r\nDEFERRED REVENUES Deferred revenues Include amounts received from grant and contract sponsors that have not yet been earned \r\nCOMPENSATED ABSENCES Employee vacation pay is accrued at year-end for finanCial statement purposes The liahllity and experlSe Incurred are recorded at year-end as accrued vacatIon payable In the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, ExperlSes, and Changes In Net Assets. Savannah State Umverslty had accrued liability for comperlSated absences m the amount 0$1,022,492.91 as of July 1,2001. For Fiscal Year 2002, $429,100.85 was earned m compensated absences and employees were pllld $478,083 90, for a net decrease of$48,983.05 \r\nNON-CURRENT LIABILITIES Non-current lIabilItIes Include (1) liahilitles that Will not be pllld Within the next fiscal year; (2) capital lease obligatIOns with contractual matunlJes greater than one year; and (3) other liabllilIes that, although payable wIthIn one year, are to be paid from funds that are classified as non-current assets. \r\n \r\n- 17- \r\n \r\n SAVANNAHSTATE~RSITY \r\nNOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE I SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES \r\nNET ASSETS The UruVerslty'S net assets are classified as follows \r\nInvested In capital assets, net ofrelated debt Tlus represents the UniVersity'S total mvestment m capital assets, net ofoutstandIng debt obligations related to those Capital assets. To the extent debt has been mcurred but not yet expended for Capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt. (The term \"debt obhgatlOns\" as used m thIs defirutlon does not mclude debt of the GSFIC as dIscussed above.) \r\nRestricted net assets - nonexpendable. Nonexpendable restncted net assets COnsiSt of endowment and sunilar type funds m wluch donors or other outside sources have stipulated, as a condluon ofthe gift mstrument, that the pnnclpalls to be mamtamed mVIolate and in perpetuity, and mvested for the purpose of producmg present and future mcome, wluch may either be expended or added to pnnclpal The University may accumulate as much ofthe annual net mcome ofan mstltutional fund as IS prudent under the standard established by Code Secuon 44-15-7 ofAnnotated Code ofGeoTgia \r\nRestricted net assets - expendable Restncted expendable net assets mclude resources m which the Uruverslty IS legally or contnlctually obhgated to spend resources m accordance With restnctlons Imposed by external thIrd parnes \r\nUnrestricted net assets Unrestncted net assets represent resources derIved from student twuon and fees, state appropnatlons, and sales and SerVIces of educatIOnal departments and auxIhary enterpnses. These resources are used for transactions relatmg to the educational and general operations of the UruVersIty, and may be used at the wscretJon of the governmg board to meet current expenses for those purposes, except for unexpended state appropnatlons (surplus) of $436.13 Unexpended state appropnanons must be refunded to the Board of Regents of the UniVersIty System of GeoTgia - AdmmIstratlve Central Office for remittance to the Office of Treasury and FIscal SerVICes. These resources also mclude auxlhary enterpnses, wluch are substantially self-suppomng acuVIues that proVide SerVIces for students, faculty and staff. \r\nWhen an expense IS mcurred that can be paId usmg either restncted or unrestncted resources, the UniversIty'S pohcy IS to first apply the expense towards unrestncted resources, and then towards restricted resources. \r\nINCOME TAXES Savannah State UruVerslty, as a pohtlcal subdivision of the State of Georgta, IS excluded from Federal mcome taxes under Section 115(1) ofthe Internal Revenue Code, as aInended. \r\nCLASSIFICATION OF REVENUES The University has clasSified ItS revenues as either operating or non-operatmg revenues m the Statement ofRevenues, Expenses, and Changes m Net Assets accordmg to the followmg cnterIa \r\n- 18 - \r\n \r\n SAVANNAHSTATE~RSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE I' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nCLASSIFICATION OF REVENUES Operatmg revenues Operatmg revenues mclude actlvll1es that have the charactenStlcs ofexchange transacl1ons, such as (I) student tuIl10n and fees, net ofscholarslnp allowances, (2) sales and ServICes of aUXiliary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnal1ons, and (4) mterest on mstJtutlonal student loans, \r\nNon-operatmg revenues Non-operating revenues mclude actlVlUes that have the charactensUcs of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operatmg revenues by GASB No, 9, Reportmg Cash Flows of Propnetary and Nonexpendable Trust Funds and Governmental Entities That Use Propnetary Fund Accountmg, and GASB No. 34, such as state appropnatlons and mvestment mcome \r\nSCHOLARSHIP ALLOWANCES \r\nStudent tuItion and fee revenues, and certain other revenues from students, are reported at gross WIth \r\na contra revenue account ofscholarslnp allowances m the Statement of Revenues, Expenses and Changes in Net Assets. Scholarslnp allowances are the dIfference between the stated charge for goods and services proVlded by the Umvers1ty, and the amotmt that 1S pald by students and/or tlnrd parttes maktng payments on the students' behalf. Cerlaln governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operal1ng or nonoperatmg revenues m the Umversity's financial statements To the extent that revenues from such programs are used to sausfY tuItion and fees and other student charges, the Umverslty has recorded contra revenue for scholarship allowances. \r\nNOTE 2 CASH AND CASH EOillVALENTS; OTHER DEPOSITS, AND INVESTMENTS \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Ftmds belonging to the State ofGeorgra (and thus Savannah State Umvers1ty) cannot be placed m a depoSitory paytng mterest longer than ten days WIthout the depOSitory proVldmg a surety bond to the State In lieu of a surety bond, the depOSitory may pledge as collateral anyone or more of the followmg secuntles as enumerated m the OffiCial Code of Georgra Annotated Section 50-17-59. \r\nI Bonds, bill, certtficates ofmdebtedness, notes, or other dIrect obligalions ofthe Umted Stales or of the State of Georgra. \r\n2. Bonds, bills, certificates of mdebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia \r\n3 Bonds ofany public authonty created by the laws ofthe State ofGeorgia, provldmg that the statute that created the authonty authonzed the use of the bonds for thiS purpose. \r\n4 Industnal revenue bonds and bonds of development authonties created by the laws of the State ofGeorgia \r\n- 19 - \r\n \r\n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 2 CASH AND CASH EOONALENTS, OTHER DEPOSITS: AND INVESTMENTS \r\n \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5. Bonds, bills, certIficates of Indebtedness, notes, or other obhgatlons of a SUbSidIary corporatIon ofthe Umted States government, winch are fully guaranteed by the Umted States government both as to pnnclpal and Interest, or debt obhgatlons ISSUed by the Federal Land Bank, the Federal Home Loan Bank, The Federallntermed.tate CredIt Bank, the Central Bank for CooperatiVes, the Farm Credit Banks, the Federal Home Loan Mortgage AssocIation, and the Federal National Mortgage AssociatiOn. \r\n \r\n6, Guarantee or InsUrance ofaccounts proVIded by the Federal DepOSIt Insurance Corporation \r\n \r\nAs authonzed In the OffiCIal Code of GeorgIa Annotated Section 50-17-53, the State DepOSitOry Board has adopted pohcies winch allow agencIes of the State ofGeorgIa (and thus Savannah State Umverslty), the option of exempting demand depOSits from the collateral reqwrements \r\n \r\nThe Treasurer ofthe Board ofRegents is responsible for all details relative to furmslung the reqwred depository protection for all umts of the Umverslty System of GeorgIa. \r\n \r\nCATEGORIZATION OF DEPOSITS The Umverslty's cash depoSIts are categonzed by nsk as follows' \r\n \r\nCategory 1 - Amounts covered by depository InsUrance or collateralized WIth secuntles (at fau value) held by the Umversity or by its agent in the Umvemty's name \r\n \r\nCategory 2 - Amounts collateralized WIth secunties (at fair value) held by the pledging financial InstJtutlOn's trust department or agent In the UmversJty's name \r\n \r\nCategory 3 - Amounts collateralIzed WIth secuntles (at faIr value) held by the pledgmg finanCIal InstitutiOn, or by Its trust department or agent but not in the Umverslty's name, and amounts uncollateralized. \r\n \r\nCash DepOSIts as of June 30, 2002 are as follows \r\n \r\nCash DepoSIts \r\n \r\nCarrymg \r\nAmoUDt \r\n \r\nBank \r\nBalances \r\n \r\nRisk CBte\u0026OOes \r\n \r\n2 \r\n \r\n3 \r\n \r\nS I 74785840 S 492764872 S 322 44680 S 17284842 S 4212 35 3 50 \r\n \r\nCATEGORIZATION OF INVESTMENTS Savannah State Umverslty's Investments are Invested In an Investment pool managed by another governmental entity and are not reqwred to be categonzed since the Umverslty did not own any specIfic, Identifiable Investment securities of the pool. \r\n \r\n- 20- \r\n \r\n SAVANNAHSTATE~RSITY \r\nNOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT \"0\" \r\n \r\nNOTE 2 CASH AND CASH EOUNALENTS: OTHER DEPOSITS; AND INVESTMENTS \r\n \r\nCATEGORIZATION OF INVESTMENTS \r\n \r\nInvestments Not Subject to Categonzatlons Board ofRegents \r\nShort-Term Fund Total Return Fund \r\n \r\n$ 266,147.55 960,132.08 \r\n \r\nTotal Investments \r\n \r\n$ 1.226,279 63 \r\n \r\nNOTE 3 ACCOUNTS RECEIVABLE \r\n \r\nAccounts receivable consisted of the follOWing at June 30, 2002. \r\n \r\nStudent TUItion and Fees AwnIJary Enterpnses and Other Operatmg ActiVIties Federal, State, and Pnvate Funds Other \r\n \r\n$ 634,604,85 112,97224 \r\n1,343,21206 65,264,57 \r\n \r\n$ 2, I 56,053,72 \r\n \r\nLess Allowance for Doubtful Accounts \r\n \r\n64,851,40 \r\n \r\nNet Accounts Receivable \r\n \r\n$ 2,091,202 32 \r\n \r\nNOTE 4 INVENTORIES \r\n \r\nInventories COnsisted of the follOWing at June 30, 2002: \r\n \r\nBookstore Central Stores PhYSical Plant \r\n \r\n$ 508,86275 18,73484 64,81270 \r\n \r\nTotal \r\n \r\n$ 522,410.29 \r\n \r\nNOTE 5 NOTESILOANS RECEIVABLE \r\n \r\nNoteslLoans receIVable at June 30, 2002, pnmanlycollSlst ofstudent loans made through the Federal Perkms Loan Program (the Program). The Program proVIdes for cancellation of a loan at rates of 10% to 30010 per year up to a maximum of 1000/. Ifthe participant comphes WIth certam proVISIOns, The Federal government reimburses the Umverslty for amounts cancelled under these proVISIOns As the Umvemty determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are wntten offand assigned to the U, S, Department of Education, \r\n \r\n- 21 - \r\n \r\n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 6 CAPITAL ASSETS \r\n \r\nThe balance at July 1,2001 was adjusted for accountmg changes requIred m Implementmg GASB Statements 34 and 35 as dtsclosed m Note I Followmg are the changes m capltaJ assets for the year ended June 30, 2002 \r\n \r\nAdjusted Balance July I. 2001 \r\n \r\nAddthns \r\n \r\nReductions \r\n \r\nBalance June 30, 2002 \r\n \r\nCapital Assets, Not Being Deprectated \r\n \r\nLand and Land Improvements \r\n \r\nS 575,975 16 \r\n \r\nS 575975,16 \r\n \r\nCapItal Assets, Being DeprecIated BUIlding and BuoIding Improvements FacIlIties and Other Improvements \r\nEqUIpment LIbrary Collections CapItalIzed Colleellons \r\n \r\nS 42,572,957 00 2,520.259 00 5,037,50224 S 5,492,891 23 55,28500 \r\n \r\n573,49834 S 319,96725 \r\n \r\nS 42,572,957 00 \r\n2,520.259 00 60,95661 5,550,043 97 12,26593 5,800,592 55 \r\n55.285,00 \r\n \r\nS 55,67889447 S 89346559 S 73.22254 S 56499 13752 \r\n \r\nLess Accumulated Oeprec1atlon \r\n \r\nBUIldings and BUIlding Improvements S 16,794.24934 S \r\n \r\nFacilIties and Other Improvemems \r\n \r\n799,973 29 \r\n \r\nEqUIpment \r\n \r\n2,685,075 99 \r\n \r\nLIbrary Colleellons \r\n \r\n3,807,90230 \r\n \r\nCapItalIzed Colleellons \r\n \r\nI 165,14 \r\n \r\n1,083,072 lOS \\ 17,898 44 408,654 95 239,47500 482 12 \r\n \r\n000 S 17,877,321 44 917,87\\ 73 \r\n3,093,73094 4,047,377 30 \r\n164726 \r\n \r\nS 24 088 366 06 S I 849582,61 S \r\n \r\n000 S 25 937248 67 \r\n \r\nTotal Capital Assets, Being DeprecIated, \r\n \r\nNet \r\n \r\nS 31,590,S28 41 S -956 117 02 S \r\n \r\nCapital Assets, Net \r\n \r\n$ 32 166 S93 57 S .256 JJ792 S \r\n \r\n7322254 S 30561,188 85 \r\ns 73272 54 31 )3716401 \r\n \r\nNOTE 7 DEFERRED REVENUE \r\n \r\nDeferred revenue COnsIsted of the followmg at June 30, 2002, \r\n \r\nResearch Gifts and Grants \r\nFederal \r\n \r\n$ 184,869,44 70A98,IO \r\n \r\nTotaJs \r\n \r\n$ 255367,54 \r\n \r\nNOTE 8 LONG-TERM LIABILITIES \r\n \r\nLong-term hablhty actlVlty for the year ended June 30, 2002, was as follows \r\n \r\nOther LiabilItIes Compensated Absences \r\n \r\nBalance July I. 2001 \r\n \r\nAdditions \r\n \r\nRedUCtlDS \r\n \r\nBalance JUDe 30 2002 \r\n \r\nCurrent \r\nPortion \r\n \r\n$ 102249291 $ 429 '00 85 S 47808390 $ 973 S09 86 $ 478083 9Q \r\n \r\n- 22- \r\n \r\n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 9 RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nPlan Description Savannah State UruveISlty partiCipates m the Teachers Retirement System ofGeorgIa (TRS), a costshanng multiple-employer defined benefit pension plan establIshed by the General Assembly of Georgia for the purpose of provIChng retirement allowances and other benefits for teachers of the State ofGeorgia TRS provides service retirement, dIsabihtyretJrement, and SurviVOr'S benefits for its members m accordance WIth State statute The Teachers Retirement System ofGeorgIa Issues a separate stand alone financial audit report and a copy can be obtaIned from the Georgia Department of Audits and Accounts \r\n \r\nfunding Polley Employees of Savannah State University who are covered by TRS are reqUIred by State statute to contribute 5% oftheIr gross earnings to TRS Savannah State UniVeISJty makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance WIth State statute and as adVlSed by theIr mdependent actuary. For fiscal year 2002, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the precedmg two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2002 2001 2000 \r\n \r\n100% 100% 100% \r\n \r\n$ 1,112,152.15 $ 1,404,295 16 $ 1,462,846.34 \r\n \r\nREGENTS RETIREMENT PLAN \r\n \r\nPlan Description The Regents Retirement Plan, a smgle-employer defined contribution plan, IS an optional retirement plan establIshed and admIrustered by the Board of Regents of the UruVerslty System of Georgia, under wlnch It may purchase annwty contracts for the purpose ofproVldIng retIrement and death benefits for eligible faculty and pnnclpal admInistrators. Benefits depend solely on amounts contributed to the plan plus mvestment earrungs. Benefits are payable to partJclpatmg employees or theIr beneficlanes m accordance With the tenus of the annwty contracts. \r\n \r\nFunding Policy Member contribution requirements are establIshed by the Board of Trustees of the Teachers Retirement System Employer contributions are estabhshed by statute and may be amended only by the General Assembly ofthe State ofGeorgia. The employer contnbutes 9.62% ofthe partlclpatmg employee's earnable compensation Employees contribute 5% of theIr earnable compensation Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. \r\n \r\n- 23- \r\n \r\n SAVANNAHSTATEUNNCRSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30. 2002 \r\n \r\nEXHffiIT\"D\" \r\n \r\nNOTE 9 RETIREMENT PLANS \r\nREGENTS RETIREMENT PLAN \r\nFunding Policy Savannah State UniversIty and the covered employees made the reqwred contributIons of $397,487.66 (9 62%) and $211,542.88 (5%), respectively. \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nPlan Description Savannah State Umversltypartlclpates m the Georgia Defined Contnbutlon Plan (GDCP) whIch IS a smgle-employer defined contnbutIon plan estabhshed by the General Assembly of Georgia for the purpose ofproVldmg retIrement coverage for State employees who are temporary, seasonal, and parttIme and are not members of a pubhc retirement or pensIon system. GDCP is adrmmstered by the Board of Trustees of the Employees' Retirement SYSlem of GeorgJa. \r\nBenefits A member may retIre and elect to receive penodic payments after attamrnent ofage 65. The payment Will be based upon mortality tables and mterest assumptions to be adopted by the Board ofTrustees Ifa member 1Jas less than $ 3,500.00 credited to lus/her account, the Board ofTrustees 1Jas the option \r\nof requmng a lump sum dIstributIon to the member in lieu of makmg penodIc payments. Upon the \r\ndeath ofa member, a lump sum dtstrlbution equahng the amount credited to lus/her account will be \r\npaid to the member's deSIgnated benefiCIary. Benefit proVISIOns are estabhshed by State statute. \r\nContributions and Vesting Member contnbutIons are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contnbutlOns. Contnbutlon rates are estabhshed by State statute Earnmgs are crcdtted to each member's account m a manner estabhshed by the Board of Trustees Upon termmatIon of employment, the amount of the member's account IS refundable upon request by the member. \r\nTotal contnbutlOns made by employees dunng fiscal year 2002 amounted to $40,284.50 wluch represents 7.5% of covered payroll These contributIons met the reqwrements of the plan \r\nNOTE 10 RISK MANAGEMENT \r\nSavannah State Umverslty IS a particIpant m the Board of Regents of the UniVersIty System of GeoTgJa Health Benefits Plan, wluch IS a self-insurance program of health and dental benefits for employees and retIrees of the UniversIty System of Georgia. Savannall State Umversity and partlclpatmg employees and retirees pay premIUms to the Health Benefits Plan for t1us health msurance coverage The Health Benefits Plan IS mcluded m the finanCIal statements ofthe Board of Regents of the Umverslty System of Georgta - Admlmstra1Jve Central Office. All umts of the Umverslty System of Georgia share the risk of loss for clatrnS of the Health Benefits Plan The \r\n- 24- \r\n \r\n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2002 \r\n \r\nEXHlBIT\"D\" \r\n \r\nNOTE 10' RISK MANAGEMENT \r\nHealth Benefits Plan IS consIdered a self-sustammg nsk fund that proVIdes health coverage for ItS members up to a maxImum iJfetIme benefit of$2,OOO,000 00 per person and dental coverage up to an annual maxImum of $1 ,000.00 per person. The Board of Regents has contracted WIth Blue Cross Blue Slueld ofGeorgIa to process claIms m accordance WIth the Health Benefits Plan as establIshed by the Board of Regents \r\nThe Department of AdnunistratIve SerVIceS (DOAS) has the responsIbIlIty for the State of GeorgIa of making and carrymg out decISIOns that WIll mlmmlze 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. Accordmgly, DOAS processes clauns for nsk of loss to which the State IS exposed, mcludmg general lIabilIty, property and casualty, workers' compensatIon, unemployment compensauon, and law enforcement officers' mdemmfication. LImited amounts of commercIal Insurance are purchased applIcable to property, employee and automobile lIabliJty, fideiJty and certam other risks. Savannah State Umverslty, as an orgamzatIonai unit of the Board of Regents of the UmvCTSlty System of GeorgIa, IS part of the State of GeorgIa reportIng entIty, and as such, IS covered by the State of GeorgIa nsk management program admInistered by DOAS PremIums for the nsk management program are charged to the vanous stale organizatIons by DOAS to proVIde claIms serVIcmg and clauns payment \r\nA self-InsUred program ofprofesslOnaliJabIlity for its employees was establIshed by the Board of Regents of the Umverslty System of GeorgIa under powers authonzed 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 iJabIlity agaInst personaliJabllity for damages ansmg out of the perfonnance of theIr dutIes or m any way COmIected thereWIth The program IS admrrustered by DOAS as a SelfInsurance Fund \r\nNOTE II: CONTINGENCIES \r\nAmounts receIved or receIvable from grantor agencIes are subject to audIt and adJusUnent by grantor agencies. Tlus could result m refunds to the grantor agency for any expendItures whIch are disallowed under grant terms. The amount ofexpendItures wluch may be dIsallowed by the grantor camIOt be determmed at this tIme although Savannah State Umverslty expects such amounts, Ifany, to be Immatenal to its overall finanCIal posItIon \r\nLitIgatIon, claIms and assessments filed agaIDSt Savannah Stale UmversIty (an orgamzatIonai umt of the Board of Regents of the UmvCTSlty System of Georgia), If any, are generally consIdered to be actIons against the Stale of GeorgIa AccordIngly, slgmficant iJtIgatIon, claIms and assessments pendIng agaIDSt the State of GeorgIa are dIsclosed m the Stale of GeorgIa Comprehensive Annual Financial Report for the fiscal year ended June 3D, 2002. \r\n \r\n- 25- \r\n \r\n SAVANNAH STATE l!NNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nruNE 30, 2002 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 12 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\nPursuant to the general powers conferred by the Official Code ofGeorgJa Annotated SectIOn 20-331, the Board of Regents of the Umverslty System of GeorgIa has establIshed group health and lIfe insurance programs for regular employees ofthe Umverslty System ofGeorgIa It IS the polIcy ofthe Board ofRegents to permIt employees ofthe Umverslty System ofGeorgJa elIgIble for retIrement or that become permanently and totally dIsabled to contmue as members of the group health and lIfe msurance programs. Employees who are elIgIble for retirement or disabIlIty under the cntena establIshed by the Teachers Rel1rement System ofGeorgIa and who have at least ten years ofservIce with the Umverslty System of GeorgIa are elIgible for these post-employment health and lIfe insurance benefits Organiz.atlonal umts of the Board of Regents of the UniVersIty System of GeorgIa pay the employer portion for group msurance for affected mdlVlduals. \r\nAs ofJune 30, 2002, there were 169 employees who had retrred or were disabled that were receIving these post-employment health and life msurance benefits. For the year ended June 30, 2002, Savannah State Umverslty recognized as incurred $482,052.88 of expenditures, winch was net of $174,207.12 ofparhclpant contributIons \r\n \r\n- 26- \r\n \r\n SAVANNAHSTATE~RSITY \r\nNOTES TO TIIE FINANCIAL STATEME1\\'TS JUNE 30. 2002 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 13 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS \r\n \r\nThe Umverslty's operatmg expenses by functIonal classificatIOn are shown below. \r\n \r\nStatement of Operanng Expenses - Nawral V5 Funct.Jonal ClasslficabCll5 For the f-lscal Year Ended June 30. 2002 \r\n \r\nFuncnOllAI aaudjcahon \r\n \r\nHaw! Clawficanon \r\n5.olanes 1-aculty \r\ns\",tr \r\nEmplo)'ee Benefits Travel 5\u003c:boIonb1J1' and \r\nFellOW!Iups Vbllnes Supplies and Other \r\nServices Deprec\"\"'011 \r\nToLal Opera\\Ulg bpcmes \r\n \r\ninstructl OD \r\n \r\nRegan;b \r\n \r\nPublic SeMce \r\n \r\nAcodemJc \r\nSupport \r\n \r\nStudent SgyJ'\u0026S \r\n \r\nbtsbtutlonaJ Support \r\n \r\nS 7.179,206 57 S 819,73125 \r\n1.948,07841 35,04301 \r\n115,11083 96,025 81 \r\n729,56564 \r\n \r\n359.02905 S \r\n \r\n89,52300 S 129.84559 S \r\n \r\n10.00000 S \r\n \r\n9.00000 \r\n \r\n328..38609 \r\n \r\n1,211,40108 \r\n \r\n1,911,297 86 \r\n \r\n1..362..337 05 \r\n \r\n2.so5,448 65 \r\n \r\n135.45201 \r\n \r\n221,26893 \r\n \r\n458.900 00 \r\n \r\n358,35381 \r\n \r\n1..320.659 65 \r\n \r\n63.13391 \r\n \r\n37,40600 \r\n \r\n77,894 12 \r\n \r\n49,490 04 \r\n \r\n113,18386 \r\n \r\n175.17926 12,429 30 \r\n \r\n96,20224 17,950 51 \r\n \r\n48000 91.746 78 \r\n \r\n21,49350 49,51208 \r\n \r\n319.486 07 80..33912 \r\n \r\n615,097 76 \r\n \r\n759.63887 \r\n \r\n596.85639 \r\n \r\n580,17586 \r\n \r\n1,218,93205 \r\n \r\n$ 19221 761 52 S 1 fiBS 797 } S 2 ill}90 f?} S 3 rt67 920 74 S 1431 361 M S S,567 {}42 49 \r\n \r\nNabmlJ Cla.mflClbon \r\nSalanes Faculty Stalf \r\nEmplo)'ee Benefits Travel 5\u003c:boIanb,po and \r\nFellowships Utthbes SupplIeS and Other \r\nSemces DeprecIBIIon \r\nTotal OpenIUlg Expenses \r\n \r\nPlant \r\nOpenbOl1S and MamtmlDClj \r\n \r\nFUDCbmaJ ClgslflCihon \r\n \r\n5\u003c:bolmbtpS \r\nand Fellowsbms \r\n \r\nAwuhary fn!CWIJ\u0026g \r\n \r\nUnallocated [)qw;ganon \r\n \r\nTotal Open\\Ulg Expeoses \r\n \r\nS 1..391,51340 138,11544 \r\n8,537,52 \r\n \r\nS 717.98358 437,570 II \r\n13,087 23 \r\n \r\nS 7.776,604 21 10,248.098 96 \r\n5.018..398 36 397,77569 \r\n \r\nS 1,525..359 96 1,486,94714 \r\n \r\n449,711 51 132,07385 \r\n \r\n2,703,02337 1,967,02459 \r\n \r\n1,820,57191 \r\nS 4 M;i 685 41 \r\n \r\nS I 8535996 \r\n \r\n3,377,76238 \r\nS :i !2R IRS 66 \r\n \r\nS 1,849.582 61 S 181958261 \r\n \r\n9.698.600 86 1849.58261 \r\n$ 39659 '98 65 \r\n \r\n- 27- \r\n \r\n SUPPLEMENTARY INFORMAnON - 29- \r\n \r\n SAVANNAH STATE UNWERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO \r\nBUDGET INON-QMP BASIS) RESIDENT INSTRUCTION \r\nYEAR ENDED JUNE 30, 2002 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nState Appropnatlons Other Revenues Retained \r\n \r\nBUDGET \r\n \r\nACTUAL (1) \r\n \r\nVARIANCE FAVORABLE (UNFAVORABLE) \r\n \r\n$ 19,762.586 00 $ 19,762,586 00 $ \r\n \r\n28,759,701 00 \r\n \r\n17,839,52906 \r\n \r\n000 10,920,171 94 \r\n \r\n$ 48,522,28700 $ 37,602,11506 $ -10.920.17194 \r\n \r\nEXPENDITURES \r\nPersonal Serw:es Education, General end Departmental Services Sponsored Operations \r\nOperating Expenses Education, General and Departmental SelVlces Sponsored Opera1Jons \r\nCaprtal Outlay Specaal Funding Inltlatlve \r\n \r\n$ 18.385,386 00 $ 18,334.981 84 $ \r\n \r\n4.226,199 00 \r\n \r\n3,173.894 57 \r\n \r\n5,154,991 00 18,334,57900 \r\n1,488,54900 932,583 00 \r\n \r\n5.130,206 B6 8.072.57452 1.951,32411 \r\n919.08443 \r\n \r\n50,404 36 1.052.304 43 \r\n24,784 34 10,262,004 48 \r\n-462,n511 13.498 57 \r\n \r\n$ 48:522.28700 $ 37,582,06593 $ 10,940.221 07 \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ \r\n \r\n20,049 13 $ \r\n \r\n2~0;:.:,04=9~1~3 \r\n \r\n(1) Actual amounts W8Ill prepared on e presa1bed basis of accounting that demonstrates complaance wtth budgelaJy statutes and regulations of the State of Georgaa, which Is a comprehensive basts of accounting other than generally accepted eccounlU1g principles \r\n \r\nSee notes to the finanCIal statements \r\n \r\n- 31 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDiTURES COMPARED TO \r\nBUDGET !NON-GAAP BASIS} LOTIERY FOR EDUCATION YEAR ENDED JUNE 30, 2002 \r\n \r\nSCHEDULE \"2\" \r\n \r\nREVENUES State Appropnatlons \r\n \r\nBUDGET \r\n \r\nACTUAL (1) \r\n \r\nVARIANCE FAVORABLE (UNFAVORABLE) \r\n \r\n$ 224,07800 $ 224,07800 $ \r\n \r\n..=O..=OO:=.. \r\n \r\nEXPENDITURES \r\nEqUIpment, Technology and Construction Trust Fund \r\nSpeasl Funding Inlbabves \r\n \r\n$ 125,04600 $ 125,04600 $ \r\n \r\n99,03200 \r\n \r\n98,59587 \r\n \r\n000 43613 \r\n \r\n$ 224m8oo $ 223,641 87 $ \r\n \r\n--=4:::36~13::. \r\n \r\nExcess of Revenues over Expendrtures \r\n \r\n$ \r\n \r\n436 13 $ \r\n \r\n....;4~36~1,;:,3 \r\n \r\n(1) Actual amounts were prepared on a prescribed baSIS of accounting that demonstrates compliance WIth budgetary statutes and regulabons of the State of Georg,a, which Is a comprehensive baSIS of accounbng other than generelly accepted accounting pnnClples \r\n \r\nSee notes to the finanCIal statements \r\n \r\n32 - \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2002 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTotals per Annual Supplement \r\n \r\nA=uals June 30, 2002 June 30, 2001 \r\n \r\nCompensated Absences June 30, 2002 June 30, 2001 \r\n \r\nAdjustments \r\n \r\nShared selVlC98 on Jointly Staffed P9IllOI1nei \r\n \r\nArmstrong AUanbc State University \r\n \r\nClark, \r\n \r\nMarline \r\n \r\nJohnson, OIls \r\n \r\nRIchardson, Joseph \r\n \r\nShavers. \r\n \r\nSonja \r\n \r\nValdosta State UnMl1Slly \r\n \r\nBngnatl, \r\n \r\nJames \r\n \r\nSALARIES $ 17,905,83841 $ \r\n \r\nTRAVEL 397,77569 \r\n \r\n288,96033 -1\u00264,963 97 \r\n \r\n904,32871 -949.830 85 \r\n \r\n-3.300 00 -9,60000 -e,073 00 -3.39000 62,82354 \r\n$ 18,024,70317 $_.....:3~9:.:.7!..:.n.:.;5~6;:;9:. \r\n \r\nSee notes to the finanCIal statements \r\n \r\n- 33- \r\n \r\n SECTIONn AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAB STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-548-98-02 FS-548-99-03 FS-548-99-05 FS-548-00-01 FS-548-00-02 FS-548-00-03 FS-548-00-04 FS-548-00-05 FS-548-00-06 FS-548-00-07 FS-548-00-08 FS-548-00-09 FS-548-00-1O FS-548-00-11 FS-548-00-12 FS-548-01-01 FS-548-01-02 FS-548-0 1-03 FS-548-0 1-04 FS-548-01-05 FS-548-01-06 FS-548-0 1-07 FS-548-0 1-08 FS-548-01-09 FS-548-01-10 FS-548-01-11 FS-548-01-12 FS-548-01-13 FS-548-01-14 FS-548-0 1-15 FS-548-01-16 FS-548-01-17 \r\n \r\nUnresolved - See Corrective ActlonIResponses PrevIOusly Reported Corrective Action Implemented PrevIOusly Reported Corrective Action Implemented Further ActIon Not Warranted Unresolved - See Corrective ActlonlResponses PrevIOusly Reported Correctlve Action Implemented Further Action Not Warranted Further ActIon Not Warranted Further ActIon Not Warranted PrevIOusly Reported Correctlve ActIon Implemented Previously Reported CorrectIve Actlon Implemented PrevIOusly Reported CorrectIve ActIon Implemented Partially Resolved - See Corrective ActIonIResponses Further ActIon Not Warranted Further ActIon Not Warranted Partially Resolved - See CorrectIve ActIonIResponses Unresolved - See CorrectIve ActionlResponses PrevIOusly Reported CorrectIve ActIon Implemented PreVIously Reported CorrectIve ActIon Implemented PreVIously Reported Corrective Actlon Implemented PrevIOusly Reported Corrective Actlon Implemented PrevIOusly Reported Corrective ActIon Implemented PartIally Resolved - See CorrectIve ActlonlResponses Unresolved - See Correctlve ActIonIResponses Partially Resolved - See Corrective ActIonlResponses PreVIously Reported CorrectIve ActIon Implemented PreVIously Reported Correctlve ActIOn Implemented PrevIOusly Reported Corrective ActIon Implemented PartIally Resolved - See CorrectIve ActIonlResponses Unresolved - See CorrectIve ActlOnlResponses Further ActIon Not Warranted Unresolved - See Corrective ActlonIResponses \r\n \r\n-I- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONfRESPONSES \r\nEXPENDITURESILIABILITIESIDISBURSEMENTS DefiCIt Cash Balance Fmdmg Control Number: FS-S48-98-02 \r\nAs a lImited resource mstItul1on, Savannah State UruversIty has requested the Board of Regents for enhancement fundmg to address the Instoncal underfundmg of Its academIc programs, faculty and staffdevelopment, student development, operatIonal areas, capItal Improvements, as well as endowment and recruItment and scholarslnp actIVItIes If approved, tlus adchtIonal funding would asSISt m elIminatIng the NROTC defiCIt, m partIcular and augment Savannah State UruVerslty'S complex mission witlun the state's !ugher education enVIronment. \r\nREVENUESIRECENABLESIRECEIPTS \r\nStudent Accounts ReceIvable Not Supported by FinanCIal AId Fmding Control Number. FS-S48-Qo..02 \r\nReconcilIahon ongomg. Students are only allowed to complete regIstral10n WIthout full payment of fees m two ClTCumstances. Each occurrence is supported by the expectation of receIving FmanClal AId The Caslner's Office IS presented WIth a deferment authorized by the Vice PresIdent for BUSiness and Fmance or the VIce PresIdent for Academic AffaIrs. There are situatIons where a student IS awarded Fmancial AId and It IS subsequently removed from the student's account. Management IS m0!Utonng to ensure complIance \r\nThe Umverslty IS m the process ofreconcilIng the Banner Student System to the General Ledger. Reports have been IdentIfied to asSISt in the reconcIliation A reVIew IS underway to determine vanances on a student-by-student basIS. \r\nThe procedure used in tins process IS as follows: A report (TGRRCON) IS run through the Banner Student System ThIs report lIsts the specific detail codes pOstIng to the General Ledger Account IdentIfied. An Aging Report (TGRAGES) IS then run through the Banner Student System to proVIde the detaIl by student for the detaIl codes requested A query IS also run through the PeopleSoft FinanCial System by student and account number. The two detaIl reports (TGRAGES) and the General Ledger query Will be compared on a student-by-student basIS to determine If they agree. Where dIfferences are detected, the student's account WIll be analyzed and the appropnate adjustment IS made to eIther the Ledger or Banner. \r\nThe expected completIon date oftlus IS June 30, 2003 \r\n-2- \r\n \r\n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECfIVE ACTIONIRESPONSES \r\nGENERAL LEDGER F31lure to Morutor Travel Advances Finding Control Number. FS-548-00-10 \r\nAll current year and maJonty of pnor year advances have been cleared. The remaJrung unresolved balances are those of former employees, no longer employees of Savannah State UniversIty. \r\nPlan of actIOn I) Determine accuracy and vahdIty ofreceivable. 2) Contact former employee - use skip tracing If necessary 3) If valid, collect receIvable or present finding to upper management for further action, wluchever IS apphcable. \r\nScheduled final detemunatlOn: June 2003. \r\nCASH AND CASH EQUIVALENTS \r\nREVENUESIRECEIVABLESIRECElPTS EXPENDITURESlLlABILITIESfDlSBURSEMENTS Inadequate Separation of Duties Finding Control Number FS-548-01-01 \r\nInternal control and separation offunctions are bemg addressed In the reorgaruzatlon ofthe Office of Student Accounts and Cashienng The reorganization was completed on December 1,2002. \r\nThe UruVerslty IS in the process of preparmg a Cash Operations Manual The followmg are excerpts from tlus manual that address the UruVerslty'S stance on tlus Issue. The format of the manual states the Umverslty's pohcy followed by an outlined procedure to ensure adherence to the pohcy. The expected completion date oftlus manual IS January 31, 2003. Upon completion It Will be dlstnbuted to all UruVerslty staffInvolved In the cash handhng process. \r\n-3- \r\n \r\n SAYANNAB STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nCASH AND CASH EQUIVALENTS REVENUESIRECEIVABLESIRECEIPTS EXPENDITURESILIABll.ITIESIDISBURSEMENTS Inadequate Separation of Duties Fmdmg Control Number FS-548-01-01 \r\nSEPARATION OF DUTIES \r\nSeparatIOn of dutIes IS the one mtemal control winch most effectIvely assures the secure handling of cash TIns is attaIned by haVIng a dIfferent mdividual receIve cash, prepare the transmIttal, and reconcile the ledger sheets. This allows each person to serve as a control over the others, catclnng mIstakes and preventIng the nusappropnanon of funds. \r\nIn a small office where separation of dutIes is difficult, It IS Imperative that the supervIsor review cash operations each day. \r\nCASH AND CASH EQUIVALENTS Theft ofFunds Fmdmg Control Number. FS-548-01-02 \r\nInternal control and separation of functIons are beIng addressed m the reorganIZatIon ofthe Office of Student Accounts and Cashiering. The reorganization was completed on December 1,2002 In additIon, the outcome ofthe investigatIon bemg performed by the Georgia Bureau of InvestIgatIon IS still pendmg. \r\nThe Umverslty IS m the process of preparing a Cash Operations Manual The followmg are excerpts from tins manual that address the UmveTSIty's stance on tins Issue. The format of the manual states that the Umverslty's polIcy followed by an outlIned procedure to ensure adherence to the polIcy. The expected completion date of tins manual is January 31, 2003 Upon completIon It WIll be dlstnbuted to all Umverslty staffmvolved m the cash handlIng process. \r\n-4- \r\n \r\n SAVANNAHSTATEUN[VERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECfIVE ACTIONfRESPONSES \r\nCASH AND CASH EQUNALENTS Theft of Funds Fmdmg Control Number. FS-548-01-02 \r\nSEPARATION OF DUTIES \r\nSeparation of dulles IS the one mternal control winch most effectIvely assures the secure handlIng ofcash ThIs IS attaIned by haVIng a dIfferent mdlvldual to receive cash, prepare the transmIttal, and reconcIle the ledger sheets ThIs allows each person to serve as a control over the others, catclnng mIstakes and preventIng the mlsappropnatlon of funds. \r\nIn a small office where separation of dutIes IS difficult, It IS Imperallve that the superVIsor reVIew cash operations each day \r\nSAFEGUARDING OF ASSETS \r\nCash IS prone to theft or mIsplacement. Accordmgly, It IS Important to have mternal controls m place to safeguard these assets so that access IS lImited to authonzed personnel only. \r\nGENERAL LEDGER Agency Fund Deficits and Lack ofPurpose Statements Fmdmg Control Number: FS-548-O1-08 \r\nProcedures are bemg Implemented to ensure that agency accounts are establIshed only upon complellon of Trust Agreements, whIch are kept on file \r\nPnor year defiCIts Will be elImrnated Budget momtors avaIlabilIty of funds \r\nGENERAL LEDGER Balance Sheet Accounts Not Supported by DetaIl FmdIng Control Number FS-548-01-09 \r\nDunng the year under reVIew, the Umverslty establIshed new Cleanng Accounts to separate the vanous Fmanclal AId categones Adjustments have been made to transfer amounts between the Cleanng Accounts as needed The old accounts are still bemg reconcIled. \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail FmdIng Control Number: FS-548-01-09 \r\nThe procedure to reconcile the accounts follows' \r\nQuenes are run through the PeopleSoft Fmanclal System to provIde an Itermzed Instory of the vanous accounts. TIns hIstory IS venfied against the Tnal Balance to determme Ifthe two reports agree. A reconcilIatIon IS prepared by student to mchcate those transactIons that do not clear offdunng the reconcIlIatIon penod The reconcllmg Items mdlcate that a student has a balance due to the UruVerslty If It is a debIt or the UruVerslty eIther owes the student or funds need to be returned to the grantor agency If It IS a credit. Adjustments are forwarded eIther by Journal entry or an adjustment sheet to the appropnate office to remove the aId from the student's account and refund the agency Where funds are due to the UruVerslty, the student IS placed on Accounts ReceIvable and sent a bill \r\nThe expected complenon date oftlns IS June 30, 2003, \r\nGENERAL LEDGER DefiCienCies m Accounnng Procedures Fmdmg Control Number. FS-548-01-10 \r\nManagement wIll address these defiCIenCIes and establIsh adequate mternal controls. \r\nGENERAL LEDGER Failure to Morutor Travel Advances Fmdmg Control Number. FS-548-01-14 \r\nAll current year and maJonty of pnor year advances have been cleared. The remaInIng unresolved balances are those of former employees, no longer employees of Savannab State Umverslty. \r\nPlan ofacnon. I) DetermIne accuracy and vallchty of receIvable 2) Contact former employee - use skIp tracmg If necessary. 3) If valId, collect receivable or present findIng to upper management for further action, whichever IS applIcable \r\nScheduled final determination June 2003 \r\n-6- \r\n \r\n SAVANNAHSTATEUN~RSITY \r\nAUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED.COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCORRECfIVE ACTIONIRESPONSES \r\nGENERAL LEDGER SubSIdIary Ledger ofStudents Accounts Receivable not ReconcIled WIth General Ledger Fmdmg Control Number FS-54801-15 \r\nThe UruVer5lty IS m the process ofreconcl1mg the Banner Student System to the General Ledger Reports have been IdentJfied to asSiSt m the reconcIlIation A reVIew IS underway to determme vanances on a student-by-student basIS \r\nThe procedure used m tlus process IS as follows' \r\nA report (TGRRCON) IS run through the Banner Student System. ThIs report lIsts the specIfic detail codes posting to the General Ledger Account Identified An Agmg Report (TGRAGES) IS then run through the Banner Student System to provide the detail by student for the detail codes requested A query IS also run through the PeopleSoft Fmanclal System by student and account number The two detail reports (TGRAGES) and the General Ledger query WIll be compared on a student-by-student basIS to determme if they agree. Where chfferences are detected, the student's account WIll be analyzed and the appropnate adjustment IS made to eIther the Ledger or Banner. \r\nThe expected completion date ofthis is June 30, 2003. \r\nFUND EQUITIES DefiCit to be Funded from Subsequent Years' Operation Fmdmg Control Number: FS-548-O1-17 \r\nWe concur WIth tlus findmg The InstJtutJon has been closely momtonng the budgets for the atWetics program. As a result, the defiCIt has been reduced over the years Management, along With the AtWetJc Director IS aggresSIvely workmg to obtain new sources of revenues, mcluslve of the creation of an atWetJc foundal1on For FIscal Year 2002, tlus program realIZed a surplus m the amount of $9,279.23 (net of deprecIation expense of $6,478 63), therebyreducmg the cumulattve defiCIt \r\n-7- \r\n \r\n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-S48-99-07 FA-S48-00-01 FA-S48-00-03 FA-S48-00-04 FA-S48-0D-06 FA-S48-0I-01 FA-S48-01-02 FA-S48-01-03 FA-S48-01-04 FA-S48-01-0S FA-S48-01-06 FA-S48-01-07 \r\n \r\nPreviously Reported CorrectIve ActIon Implemented PrevIOusly Reported Correclive Aclion Implemented PrevIOusly Reported Correclive Aclion Implemented Further Aclion Not Warranted Previously Reported Correclive ActIOn Implemented PrevIOusly Reported Correclive Aclion Implemented Parlially Resolved - See Correclive AclionlResponses PrevIOusly Reported Correclive ActIOn Implemented Unresolved - See Correclive ActlOnlResponses PartIally Resolved - See Correclive AclionIResponses PartIally Resolved - See Correclive AClionlResponses Partially Resolved - See Correclive AclionlResponses \r\n \r\nCORRECTIVE ACTIONIRESPONSES \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES ExceSSive and Improper Expenditures Higher EducatIOn -Inslitulional Aid (CFDA 84.031) FIndIng Control Number FA-S48-01-02 \r\n \r\nWe do not concur With thiS findIng. Funds were expended for Image BUilding acliVitIes as approved by the Department ofEducatIon. The DOE In Its letter ofDecember 7,2001, has authonzed that expenditures inCurred due to obligalions made pnorto June 27. 2001, are allowable. Our office IS currently correspondIng With the DOE Audit Resolulion Department to asSiSt With determInatIons on these findIngs We have submitted several fInancial records requested by the DOE In support ofthe questIonable expenditures Cited In the findIngs We anliclpate a determInalion Will be reached before the end of the current Fiscal Year June 2003. \r\n \r\nELlGffiILITY SPECIAL TESTS AND PROVISIONS DefiCienCies In Internal Controls Student FInanCial Aid Cluster Program FIndIng Control Number. FA-S48-01-04 \r\n \r\nInternal control and separalion of funclions are being addressed In the reorgaruzalion ofthe Office of Student Accounts and Casluenng The reorganlzalion was completed on December I, 2002 \r\n \r\n-8- \r\n \r\n SAVANNAHSTATE~RSITY \r\nAUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nCORRECfIVE ACTIONIRESPONSES \r\nELIGffiILITY SPECIAL TESTS AND PROVISIONS DefiCienCies in Internal Controls \r\nStudent Fmanclal Aid Cluster Program \r\nFmdmg Control Number: FA-548-QI-04 \r\nThe mternal control Issue relatmg to the distrIbution of checks was addressed m the separation of the Cashier's Office and the Office of Student Accounts. Procedures have been put in place to segregate the duties and lImit access to the checks. The theft of funds IS slill bemg mVesligated by the GeorgIa Bureau of Invesllgallon. \r\nThe Umversily IS m the process ofprepanng a Cash Operallons Manual The following are excerpts from this manual that address the Umverslty's posilion on thiS Issue. The format of the manual states the Umverslty's polIcy followed by an outlmed procedure to erISure adherence to the polIcy The expected complelion date of tlus manual IS January 31, 2003. Upon complelion, It Will be distrIbuted to all Umverslty stafImvolved m the cash handImg process \r\nSEPARATION OF DUTIES \r\nSeparation of dulles IS the one mternal control which most effecllvely assures the secure handlIng of cash. This IS attained by havmg a different mdlViduai receive cash, prepare the tranSII1lttal, and reconcile the ledger sheets ThIs allows each person to serve as a control over the others, catchmg mIstakes and prevenllng the mIsappropriation of funds. \r\nIn a small office where separation of dutIes IS difficult, It IS Imperallve that the superVIsor reView cash operallons each day. \r\nSAFEGUARDING OF ASSETS \r\nCash IS prone to theft or misplacement. Accordingly, It IS Important to have internal controls m place to safeguard these assets so that access IS limIted to authonzed personnel only. \r\n- 9- \r\n \r\n SAVANNAH STATE UNNERSITY AUDlTEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR EI\\'DED JUNE 30, 2002 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nEQUIPMENT AND REAL PROPERTY Inadequacies m Operation of Property Management System Higher Education - Instltullonal Aid (CFDA 84 031) Fmdmg Control Number FA-548-01-05 \r\nI) The University mamtams an equipment mventory numbenng system that Identifies pieces of eqUIpment as Federally funded With the conversion to the PeopleSoft Asset Management software, we are allocatmg a field to house the program number Unfortunately, the software IS still not functiOning properly to date We are expectmg completion of thIs project by June 2003 \r\n2) We do not concur With thiS findmg Equipment mentIOned are part of the Title III funded Acluevement Lab at the Library and the NROTC BUlldmg \r\nSPECIAL TESTS AND PROVISIONS DefiCienCies m Student Fmanclal AId Refund Process Student Fmanclal Aid Cluster Program Fmdmg Control Number FA-548-01-06 \r\nThe Umverslty has Implemented the follOWIng process to ensure refunds and repayments are processed correctly and m a timely manner \r\nCodes were set up m the Banner Student System to Identify those students that have never attended class ThIs code IS used to capture students that have unoffiCially WIthdrawn from the UnIVefSlty A report IS generated from thIS code by the RegIstrar and dlssemmated to the vanous offices for processmg \r\nStudents that offiCially Withdraw from the University complete a WIthdrawal form m the Office of the Vice PreSident for AcademIC Affairs Tlus form IS then Circulated to the \"anous offices for processmg Once the Registrar's Office enters the code and effective date, fees are assessed agam which adjusts the charges to the student's account lfnecessary The Office of Student Accounts performs a calculatIOn to determme If the student has excess funds remammg on their account This credit balance IS analyzed to determme If the funds should be refunded to the student or sent back to the grantor A refund request IS processed to cut a check, If the funds are due to the student A.!J adjustment form IS forwarded to the appropnate office to reverse the aid and return the funds, If due back to the grantor \r\n- 10- \r\n \r\n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 2002 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nPERIOD OF AVAllABILITY DefiCit Fund Balances Student Fmanclal Aid Cluster Program Finding Control Number FA -548-01-07 \r\nFiscal Year 2000 and 200I are reconciled for both PELL and DIrect Lending Programs Weare working very hard to find an easy way of reconcIling our books with that of the Federal government records for Fiscal Year 1998 and 1999. It has become dIfficult and tIme consummg to fmd records for transactIons that occurred pnor to the conversIOn to Banner Two staff members are workmg on tlus project. It IS projected that the reconclilatIon process Will be completed by the end of Fiscal Year 2003. \r\nThe follOWIng steps are used in the reconcIliatIon process. \r\nI) Generate finanCial aId disbursement record from Banner 2) Generate expenditure hIstory record from accountIng (CUFA) system 3) Generate LOC 732 In the case of Direct Loan and Year to Date Pell government \r\nrecords. 4) Copy these data mto flat files and convert It to excel spreadsheet 5) Process a three-way match of these records usmg student SOCIal secunty numbers \r\nand/or names. 6) Venfy the discrepanCIes In these three records Make the necessary adjustments. \r\nSome of the errors we IdentIfied so far are: \r\na Adjustments of one FIscal Year were posted mto another year (debIt or credit). b CorrectIons were not sent to the DOE on tIme and therefore, loans were not \r\nbooked In such ClTcumstances, the loans become Inslltutlonalloans. The CashIer's Office will establish a receivable account and wlil attempt to collect c Students never attended school but the finanCIal aId was not adjusted, whIch results In sending back the money to the government Etc . \r\n- II - \r\n, \r\n \r\n SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30. 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCASH AND CASH EQUNALENTS REVENUESIRECEIV ABLESIRECEIPTS EXPENSESILIABILITIESIDISBURSEMENTS GENERAL LEDGER CAPITAL ASSETS Inadequate Separation of Dulles FmdIng Control Number FS-548-Q2-01 \r\nOur exarrunallon of the mternal accounllng control procedures revealed that the Uruverslty did not provide for adequate separallon of dulles m the performance ofthe followmg accountmg functIons and related procedures \r\nI) Cash receIptmg funcllons were not separated from cash dIsbursement and general ledger functIOns \r\n2) Cash collecllon functIons and m3.Intenance of dewl accounts receivable records were not separated from general ledger funcllons \r\n3) DepoSIt preparallon funcllons were not separated from cash receIpts funcllons \r\n4) Banner receivable and accounts receIvable funcllons were not separated from the check dIsbursement funcllons. \r\n5) SUperviSOry access level to the vanous functIOns WIthm the accounts payable, accounts receivable, human resources, capital assets and general ledger modules of the GeorgIaFzrst System were not separated \r\nThese condIllons were the result of management's f3.IIure to asSIgn employee dutIes In a manner to adequately safeguard assets and/or promote effiCIency and accuracy m key accounllng funcllons. The UruversIty should review the accountmg procedures In place, desIgn procedures that would enhance segregatIon of dulles relallve to the above control categones and Implement procedures to strengthen the mternal controls over the accounllng funcllons \r\nREVENUESIRECEIVABLESIRECEIPTS F3.IIure to Morutor Out-of-State TUIllon Fee WaIvers Fmdmg Control Number. FS-548-02-02 \r\nOur exammallon of fee W3.Ivers for the year under revIew, revealed that management f3.Iled to morutor out-of-state tUIllon fee W3.Ivers As a result, W3.Ivers for out-of-state tuIlIon granted by the UmversIty exceeded the amount allowable per Board of Regents polIcy by $247,493 73 The Uruversily also f3.Iled to properly record out-of-state tuIlIon fee W3.Ivers for Spnng 2002 and Summer 2002, totalmg $483,681 00. An audIt adjustment of$390,945 00 was made to reflect the out-of-state \r\n-I - \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nREVENUESIRECEIVABLESIRECEIPTS FaIlure to MOnItor Out-of-State Twuon Fee WaIvers F1Od1Og Control Number: FS-548-02-02 \r\nfees waIved for Spnng 2002. Fee WaIvers for Swnmer 2002 were not mcluded 10 the adjustment due to errors m 1OfonnaUon provIded. \r\nThese defiCIenCies occurred because management dId not comply With the Board ofRegents PolIcy Manual, SeclJon 704.0302 winch states, \"the number of such WaIvers 10 effect at any time does not exceed two-percent ofthe equIvalent full-tune students enrolled at the mstltulJon m the fall semester ImmedIately precedmg the semester for WhICh the out-of-state !wtlon IS to be WaIved\" and faIled to appropnately recognIze and record out-of-state fee WaIvers for two semesters on the generaIledger. The UnIVersIty should follow polICIes and procedures to ensure that out-of-state tuItIon fee WaIvers are properly recorded for each semester and are WIthm the allowable lmut \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures F1Od1Og Control Number. FS-548-02-03 \r\nFor the year under reView, our exanunatlon of employee compensatJon records for forty-two employees revealed the follOWIng defiCIenCies: \r\nI) Employment contracts for swnmer semester 2002, for fourteen employees were not aVaIlable for revIew. The UnIVersIty faIled to Issue contracts for all ten-month employees who prOVIded SerVICes dunng thiS penod. \r\n2) Documentation to support an overtIme payment could not be located. \r\nThese deficienCIes were the result ofthe UruversIly'S failure to have polICIes and procedures 10 place to ensure that SIgned employment contracts are ISSUed, employment contracts are on file for all applIcable personnel and supportmg documentation for overtIme payments IS on file. The UruVerslty should Implement POlICIes and procedures to ensure that personnel files are properly maIntamed and that overtime payments are adequately documented. \r\n-2- \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30. 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nGENERAL LEDGER Agency Fund DefiCits and Lack of Purpose Statements Finding Control Number' FS-548-02-04 \r\nAt June 30, 2002, the Uruverslty had twenty-sIx agency funds that had defiCit balances totaling $473,602.67 In addillon, the Umverslty failed to provide purpose statements for SIX of the indivIdual agency funds \r\nThese defiCienCies were the result of the Uruverslty disbursing funds pnor to or In excess of the receipt of funds and resulted from management's failure to estabhsh agency funds In accordance WIth Board of Regents poltcles and procedures The Uruverslty should IDlplement procedures to ensure that all funds are received pnor to the disbursement and new accounts are supported by reqUired purpose statements. The Uruverslty should seek reimbursement for the deficit balances from the orgamzalIons Involved. \r\nGENERAL LEDGER DefiCienCies In Accounung Procedures Finding Control Number FS-548-02-05 \r\nOur examination and testing for the year under review revealed the follOWing defiCienCies In accounung for financial transacllons by Savannah State Umverslty \r\nI) Cash receipts were not posted to the general ledger for thirty or more days due to management's failure to create the reqUired Banner flat files necessary for the Interface between Banner and GeorgiaFlrst \r\n2) The Uruverslty failed to proVIde adequate documentation to support a $51,444 30 vanance between Banner receipts recorded on the general ledger and the actual bank depOSIt. In addition, two depoSits In transit on the June 2002 bank reconclhallon, totaling $119,740 94 failed to clear the bank unul November and December 2002 \r\n3) Audit procedures determmed that sales, totaling $83,270 16, from August 2001, were not recorded In the appropnate sales account \r\n4) An adjustment of $74,462 57 was necessary to correctly record bookstore Inventory Vendor ISSUed credits were not maintained Wlthm the formal accounllng records The credits and/or refund checks were reViewed, maintained and/or receipted by bookstore personnel. \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nGENERAL LEDGER DefiCIenCIes In AccountIng Procedures FIndIng Control Number FS-548-02-05 \r\n5) Twenty exceptIOns were noted In our expenditure sample of fifty-five vouchers Three vouchers could not be located, eleven vouchers dId not have adequate documentatIOn and SIX vouchers lacked purchase orders \r\n6) Checks outstandIng for more than mnety days were not vOIded In a timely manner \r\nThese condItIons occurred because the Umverslty faded to have adequate accountIng poliCies and procedures In place The Umverslty should revIew current accounting poliCies and procedures, IdentItY weaknesses, and Implement procedures to ensure that cash receipts are recorded In the general ledger In a timely manner, bank depOSits are made timely, bookstore sales are correctly recorded, vendor credits are maintained Within the formal accounting records, vouchers are maIntained With adequate documentatIOn and checks outstanding for more than mnety days are VOIded \r\nGENERAL LEDGER InadequacIes In Control Over SubSidiary Ledgers Finding Control Number FS-548-02-06 \r\nOur examinatIOn Included a review of the procedures utilized by Savannah State Umverslty In recording transactIOns to the vanous modules compnslng the GeorglaFIRSTaccountmg system Our testing revealed that, at June 30, 2002, the Umverslty's general ledger module dId not balance With the SUbSIdIary modules ThiS condition was pnmanly due to errors In posting subSidiary records dunng the conversIOn from the old College Umverslty Fmanclal AccountIng (CUFA) legacy accounting system to the new GeorgtaFIRST accounting system and due to transactIOns beIng posted to the general ledger module rather than the appropnate SUbSidiary modules. The Umverslty dId not proVide a reconCiliation of the general ledger balances to the subSidiary records wluch resulted In extensive work by the auditors to Identify reconCilIng Items at June 30, 2002 Management's failure to ensure that SUbSidiary records are reconCIled With the general ledger causes Internal reports to management, generated from the SUbSidiary modules, to be Inaccurate and IDlsleadmg This conditIOn can lead to erroneous deCISIOns by the Umverslty's management and result In Inaccurate reporting of finanCial information \r\nTo ensure accurate and timely reporting of finanCial mformatlon from subSIdIary records, the Umverslty should post transactions correctly to the SUbSidIary ledgers rather than asJournal entnes In the general ledger The Umverslty should develop Internal accounting controls and procedures to ensure that reconCIliations of SUbSidiary ledgers and the general ledger are performed on a regular baMs \r\n-4- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED ruNE 30, 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nACCOUNTING CONTROLS (OVERALL) Inadequate ClOSing Procedures Finding Control Number FS-548-02-07 \r\nDunng fiscal year 2002, the Board ofRegent ofthe Umverslty System ofGeorgJa converted unIts of the Umverslty System from the College Umverslty Financial Accountmg (CUFA) legacy system to the new GeorgJaF,rst System (FInanclal,lnformatlon and Reporting System for TomolTOw). In Apnl of 2002, Savannah State Umverslty placed tIus accounting system Into productIOn \r\nThe management of Savannah State UmvefSlty IS responsible for Implementing procedures to estabhsh and maIntam adequate control over the operation, utihzatlon, and mtegnty of their data processed WIth the GeorgJaFIRST System We encountered problems With the fmanclal data presented by the Umverslty. The Umverslty's faJiure to estabhsh and adhere to a final closmg for the year ended June 30, 2002, created a sltuatlon where data presented for review was mcomplete. ExtenSive audit procedures were necessary to determine the vahdJty of the mformatlOn proVided. \r\nTo reduce the nsk ofreportmg mcomplete Information, the Umverslty should work WIth the Board of Regents Central Office to develop procedures that WIll result m complete reportmg of all financial data m a more effiCient and timely manner. \r\nCAPITAL ASSETS Inadequate Capital Assets Records Fmdmg Control Number FS-548-02-08 \r\nOur review ofSavannah State Umverslty's Accounting procedures for the Capital Asset Management System determmed that procedures In place were InSuffiCient to proVIde adequate control over the Umverslty's Capital assets. The followmg defiCienCies were noted: \r\n1) The Umverslty did not reconcile the eqUIpment asset endmg book balance at June 30, 2001, to the adjusted begJnmng balance as of July I, 2001 \r\n2) The Umverslty did not reconcile the property records to the capitals ledger. Extensive procedures were performed m an attempt to detenmne the vanances. Vanances were Identified m accumulated depreciation, eqUIpment and CapitaliZed collections. Net adjustments of$426,053.16 were made to obtam per audJt figures for capital assets \r\n3) The Umverslty was unable to proVIde a hstlng of equipment which mcluded all of the follOWing attnbutes. property descnptlon mcludJng senal number and decal number, source of funds used to purchase Item, acqUISItion date and cost, reference to ongJnatlng mVOlces and reference to phYSical locatIOn of the eqUIpment Item \r\n-5- \r\n \r\n SAVANNAHSTATEUNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nFINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS \r\nCAPITAL ASSETS Inadequate CapItal Assets Records Fmdmg Control Number FS-548-02-08 \r\nThese defiCIencIes are result ofmanagement's faIlure to Implement adequate polICies and procedures to ensure that the UruVerslty'S CapItal assets are properly maIntaIned The Uruverslty should establIsh appropnate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded. \r\nFEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nACTIVITIES ALLOWED OR UNALLOWED Improper ActIVIty Higher EducatIon - InstItutIonal Aid (CFDA 84.031) QuestIoned Cost $7,185.07 Fmdmg Control Number. FA-548-02-01 \r\nAt June 30, 2002 the UruVerslty'S accountmg records reflected $7,185.07 of expendItures for \"Umverslty's Image BUlldmg\" ActIVIty The U S Department of EducatIon determmed, 10 a memorandum dated June 27, 2001, that \"UmversIty Image BuildIng IS an unallowable actiVIty\" Furthermore, the U S. Department of Education dIrected that \"as ofJune 27, 2001, any TItle Ill, part B funds for tins actiVIty that have not been expended are suspended\" The addItIonal expendItures 10 thIS actiVIty were the result of management's disregard to comply WIth allowable actiVIties as set forth 10 the Federal regulatIons and mandates made by the U S Department of Education. The Umverslty should adhere to the Federal regulatIons governmg allowable actIVIties. The Umverslty should contact the U S. Department of Education for resolutIon of tins findIng. \r\nALLOWABLE COST/COST PRINCIPLES DefiCIenCIes 10 Internal Controls Higher Education - Institutional AId (CFDA 84 031) Fmdmg Control Number FA-548-02-02 \r\nDunng the year under reView, a sample offorty-slx TItle ill expendItures revealed the Uruverslty'S faIlure to comply WIth the general provIsIon for allowable cost accordmg to OMB CIrcular A-21 SectIons C and J The follOWIng InstanCes were noted 10 the expendIture sample. \r\n1) Payments for meals at two workshops were based upon the number ofpersons lIsted on the purchase requISItion request rather than the number ofmdIVlduals that actually attended the events thIS resulted 10 the vendor recelvmg payment for SerVIces that were not prOVIded to the Umverslty. \r\n-6- \r\n \r\n SAVANNAB STATE UNIVERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30. 2002 \r\nFEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nALLOWABLE COST/COST PRINCIPLES Deficiencies in Internal Controls Higher EducatIOn - Instltuhonal Aid (CFDA 84 031) Fmdmg Control Number FA-S48-02-02 \r\n2) Seven expenchtures lacked adequate documentatIon. \r\n3) One voucher mcluded unallowable lodgmg cost of$136.46 T1us amount was approved m error as part of an employee's travel reunbursement \r\n4) Three vouchers were prod from dupbcated mvOlces rather than from the ongmal mVOlces \r\nThese conditIons were the result of management's fll.l1ure to have adequate accountmg poliCies and procedures 10 place to ensure compliance WIth OMB Circular A-21 The Umverslty should develop and ID1plement poliCies and procedures to ensure that program expenchtures are allowable accordIng to Federal regulatIOns In adchtIon, the Umverslty should develop a momtonng process to ensure that controls are bemg followed The Umverslty should contact the U. S. DepartInent of EdueatlOn for resolution of this findmg \r\nALLOWABLE COSTS/COST PRINCIPLES Improper Expenchtures Higher EducatIon - InstitutIonal AId (CFDA 84 031) QuestIOned Cost $1,112.00 Fmdmg Control Number. FA-S48-02-03 \r\nDunng the year under reView, the Umversltyutllized Title ill funds, m the amount of$l, 112.00, for duplicatIng fonus that are used m the general operatIng actIVitles ofthe Umverslty The use of TItle ill funds for general operatIng actiVitIes, that should be pll.ld utlhzmg State and local funds, constitutes noncompliance With the \"supplement versus supplant\" rule mcluded m 34 CFR 608.20 \r\nA projection of questIoned cost could not readily be determmed. However, the likely questIOned costs are believed to exceed $10,000.00. \r\nThe UmvefSlty should ID1p1ement poliCies and procedures to ensure that Title ill funds are used only to supplement (rather than supplant) State and local funds. The Umverslty should consult WIth the U. S Department of Education to resolve the questIOned cost of$1,112 00. \r\n- 7- \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nFEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nELIGIBrr..ITY SPECIAL TESTS AND PROVISIONS DefiCIencies m Student Fmanclal AId Refund Process Student Fmanclal AId Cluster Program QuestIoned Costs $3,99081 Fmdmg Control Number' FA-548-02-04 \r\nFor the year under reVIew, an exammatlon of the Umverslty's student finanCIal aId refund process revealed the follOWIng defiCienCies \r\n1) Unearned Title IV funds were not applIed by the Umverslty to the appropnate student finanCIal aId program for one student selected for refund testmg, resultmg In questioned cost of $234 82. In addItion, ten students were dIsbursed Title IV funds greater than the amounts earned resulting In addItIonal questIoned cost of$3,755.99. \r\n2) Unearned TItle IV funds were not applIed by the Umverslty to the appropnate student financial aId programs wltlun 30 days as reqwred by the Higher EducatIon Amendments of 1998, PublIc Law 105-244 \r\n3) Due to the Umverslty's faIlure to notIfy students WItlun 10 days after refund checks are aVaIlable for dIsbursement, refund checks were cancelled and reIssued after 60 or more days \r\n4) Three refund checks were reIssued before the first refund check was cancelled \r\nA projectIon of questioned cost could not be readIly determmed However, the lIkely questioned costs are belIeved to exceed $1 a,OOO.DO. \r\nThese defiCIenCIes were the result of management's faIlure to complete the refund process In accordance WIth Federal regulations The Umverslty should develop md Implement procedures to ensure that unearned funds are correctly retumed to the appropnate accounts m a timely marmer m accordance WIth the Higher Education Amendments of 1998, PublIc Law 105-244 The Umverslty should contact the U S. Department of Education regardmg resolution of thIS findmg \r\nFederal Programs/Awards Affected \r\nStudent FmancIaI AId Cluster Programs U S Department of EducatIon Federal Supplemental EducatIOn Opportumty Grant (CFDA 84.007) Federal Work Study-Program (CFDA 84033) Federal Pell Grant Program (CFDA 84 063) Federal DIrect Student Loan Program (CFDA 84 268) \r\n-8- \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2002 \r\nFEDERAL AWARD FINDINGS AND OUESTIONED COSTS EQUIPMENT AND REAL PROPERTY MANAGEMENT FaIlure to MaIntain a Property Management System HIgher EducatIon - instItutIonal AId (CFDA 84 03 I) Finding Control Number FA-548-02-05 For the year under reView, the University faIled to proVIde a Title ill equIpment Inventory report AudIt procedures relating to eqUIpment could not be performed The UniVersIty faIled to have Internal controls m place and operatIonal to ensure comphance WIth Federal requIrements for eqwpment as set forth In 34 CFR 74 and OMB CIrcular A-I 10, Subpart c 34 The UniVersity should estabhsh pohcles and procedures to ensure that eqUIpment purchases are IdentIfied by fund sources and grant award numbers, property records are maIntamed m accordance WIth Federal requirements and phYSical Inventones are conducted every two years. The U S Department of EducatIon should revIew these matters and determme appropnate actIon by the UniVersIty to resolve tlus findmg \r\n-9- \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-bs25-b1999-h2000","title":"Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2000","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, 31.97402, -81.09243"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["1999/2000"],"dcterms_description":["Began with: Fiscal year ended June 30, 2000; ceased with: Fiscal year ended June 30, 2008.","Title from cover.","From some providers, may include also a letter dated December 18, 2007 from State Auditor, regarding certain matters of internal control and operations of Savannah State University.","Report year covers fiscal year.","For some years, report may be released instead called: Management report, Savannah State University, Savannah, Georgia, an organizational unit of the State of Georgia.","Description based primarly on print version record.","Fiscal year ended June 30, 2008, released in 2009? (Georgia Government Publications database, viewed January 10, 2024)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, GA : Georgia. Dept. of Audits and Accounts, 2000"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Savannah State University (Ga.)--Appropriations and expenditures","Financial statements--Georgia","Auditors' reports--Georgia"],"dcterms_title":["Savannah State University, Savannah, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2000"],"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-bs25-b1999-h2000"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-bs25-b1999-h2000"],"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":" SAVANNAH STATE UNNERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\n \r\nEXHIDITS \r\n \r\nFINANCIAL STATEMENTS \r\n \r\nA COMBINED BALANCE SHEET \r\n \r\nALL FUND GROUPS \r\n \r\n2 \r\n \r\nB COMBINED STATEMENT OF CHANGES IN FUND BALANCES \r\n \r\nALL FUND GROUPS \r\n \r\n4 \r\n \r\nC STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \r\n \r\nAND OTHER CHANGES \r\n \r\n6 \r\n \r\nD NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n7 \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\nE COMBINING BALANCE SHEET \r\n \r\nCURRENT FUNDS - UNRESTRICTED \r\n \r\n20 \r\n \r\nF COMBINING STATEMENT OF CHANGES IN FUND BALANCES \r\n \r\nCURRENT FUNDS - UNRESTRICTED \r\n \r\n22 \r\n \r\nG COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \r\n \r\nAND OTHER CHANGES \r\n \r\nUNRESTRICTED \r\n \r\n24 \r\n \r\nSCHEDULES \r\n \r\nSCHEDULESOFREVENUESANDEXPENDTILffiESCONWAREDTOBUDGET \r\n \r\n1 \r\n \r\nRESIDENT INSTRUCTION \r\n \r\n26 \r\n \r\n2 \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\n29 \r\n \r\n3 CHANGES IN INVESTMENT IN PLANT \r\n \r\n30 \r\n \r\n4 SCHEDULE OF FUND BALANCES \r\n \r\nCURRENT FUNDS AND PLANT FUNDS \r\n \r\n32 \r\n \r\n5 RECONCILIATION OF SALARIES AND TRAVEL \r\n \r\n34 \r\n \r\n SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - \r\nSECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n SECTION I FINANCIAL \r\n \r\n RUSSELL W. HINTON \r\nSTATE AUDITOR (404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n254 Washington Street, S.w., Suite 2]4 Atlanta, Georgia 30334-R400 \r\nDecember 14,2000 \r\n \r\nHonorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Regents ofthe University System of Georgia \r\nand Honorable Carlton E. Brown, President Savannah State University \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \r\nLadies and Gentlemen: \r\nWe have audited the accompanying financial statements (Exhibits A through D) of Savannah State University as of and for the year ended June 30, 2000. These financial statements are the responsibility ofthe University's management. Our responsibility is to express an opinion on these financial statements based on our audit. \r\nWe conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for ouroplmon. \r\nAs described in Note 1 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the financial statements of this departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material. \r\n \r\n00ARL-62 \r\n \r\n As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $902,834.15 as of June 30, 2000, and the net change in fund balance for the year ended June 30, 2000, would be increased by $27,699.20. \r\nIn our opinion, except for the effects on the financial statements ofthe matters discussed in the third and fourth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position ofSavannah State University as ofJune 30, 2000, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles. \r\nOur audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying combining statements (Exhibits E through G) and the financial schedules (Schedules 1 through 5) are presented for purposes ofadditional analysis and are not a required part ofthe fmancial statements ofSavannah State University. Such information has been subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, except for the effects of the matters discussed in the third and fourth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole. \r\nRespectfully submitted, \r\n~-~eOllSWL. Hintown .\u003c!J,.:k: State Auditor \r\nRWH:jb 00ARL-62 \r\n \r\n FINANCIAL STATEMENTS - 1- \r\n \r\n Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant \r\n \r\nSAVANNAH STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30, 2000 \r\n \r\nCURRENT FUNDS \r\n \r\nUNRESTRICTED \r\n \r\nRESTRICTED \r\n \r\nLOAN FUNDS \r\n \r\nENDOWMENT AND SIMILAR \r\nFUNDS \r\n \r\n$ \r\n \r\n808,374.83 \r\n \r\n$ \r\n \r\n23,432.34 $ \r\n \r\n941,498.81 \r\n \r\n734,249.56 $ \r\n \r\n799,777.46 \r\n \r\n874,424.07 \r\n \r\n631,037.65 \r\n \r\n28,537.82 \r\n \r\n961,475.70 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n2 \r\n \r\n EXHIBIT \"A\" \r\n \r\nUNEXPENDED \r\n \r\nPLANT FUNDS RENEWALS AND REPLACEMENTS \r\n \r\nINVESTMENT IN PLANT \r\n \r\nAGENCY FUNDS \r\n \r\nTOTAL (Memorandum \r\nOnly) \r\n \r\n$ 1,309,838.91 $ 355,464.39 \r\n \r\n832,992.58 \r\n \r\n$ \r\n \r\n$ 74,095,923.66 \r\n \r\n564,359.16 $ \r\n \r\n4,480,496.63 2,763,915.48 \r\n631,037.65 28,537.82 \r\n961,475.70 74,095,923.66 \r\n \r\n$ 1,665,303.30 $ \r\n \r\n832,992.58 $ 74,095,923.66 $ 564,359.16 $ 82,961,386.94 \r\n \r\n$ 1,663,338.61 $ 1,663,338.61 \r\n \r\n$ \r\n \r\n1,964.69 $ \r\n \r\n$ \r\n \r\n1,964.69 $ \r\n \r\n$ 169,952,33 $ 3,821,162,23 \r\n \r\n204,947.00 \r\n \r\n99,675.00 \r\n \r\n394,406.83 \r\n \r\n394,406.83 \r\n \r\n961,475.70 \r\n \r\n$ 564,359.16 $ 5,481,666.76 \r\n \r\n$ 74,095,923.66 832,992.58 832,992.58 $ 74,095,923.66 \r\n \r\n$ 822,655.60 75,200.81 718,014.36 223,484.45 \r\n74,095,923.66 -161,698.24 1,706,139.54 \r\n$ 77,479,720.18 \r\n \r\n$ 1,665,303.30 $ \r\n \r\n832,992.58 $ 74,095,923.66 $ 564,359.16 $ 82,961,386.94 \r\n \r\n-3- \r\n \r\n SAVANNAH STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES \r\nALL FUND GROUPS YEAR ENDED JUNE 30. 2000 \r\n \r\n EXHIBIT\"B\" \r\n \r\n$ \r\n \r\n41,168.62 \r\n \r\n$ \r\n \r\n41,168.62 \r\n \r\n$ \r\n \r\n95,803.87 $ \r\n \r\n845,694.94 \r\n \r\n$ \r\n \r\n941,498.81 $ \r\n \r\n$ $ 8,169.59 $ -6,204.90 \r\n \r\n$ \r\n \r\n188,274.45 \r\n \r\n188,274.45 \r\n \r\n$ \r\n \r\n194,643.45 $ 6,119,939.36 $ \r\n \r\n638,349.13 67,975,984.30 \r\n \r\n0.00 0.00 0.00 5,987,966.19 71 ,491,753.99 \r\n \r\n1,964.69 $ \r\n \r\n832,992.58 $ 74,095,923.66 $ 77,479,720.18 \r\n \r\n-5- \r\n \r\n SAVANNAH STATE UNIVERSITY STATEMENT OF CURRENT FUNDS REVENUES,EXPENDITURES, \r\nAND OTHER CHANGES YEAR ENDED JUNE 30, 2000 \r\n \r\nEXHIBIT\"C\" \r\n \r\nUNRESTRICTED \r\n \r\nRESTRICTED \r\n \r\nTOTAL (Memorandum \r\nOnly) \r\n \r\nREVENUES \r\n \r\nState Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Endowment Income Sales and Services of Auxiliary Enterprises Other Sources \r\n \r\n$ \r\n \r\n19,549,956,00 \r\n \r\n$ 19,549,956,00 \r\n \r\n5,844,107,64 \r\n \r\n5,844,107,64 \r\n \r\n241,906,53 $ 17,205,201.89 \r\n \r\n17,447,108.42 \r\n \r\n630,78 \r\n \r\n563,795,29 \r\n \r\n564,426.07 \r\n \r\n14,460,93 \r\n \r\n14,460.93 \r\n \r\n5,290.92 \r\n \r\n243,906.64 \r\n \r\n249,197.56 \r\n \r\n10,794.00 \r\n \r\n10,794.00 \r\n \r\n4,178,615.65 \r\n \r\n4,178,615.65 \r\n \r\n623,583,01 \r\n \r\n623,583.01 \r\n \r\nTotal Revenues \r\n \r\n$ 30,444,090.53 $ 18,038,158.75 $ 48,482,249.28 \r\n \r\nEXPENDITURES AND MANDATORY TRANSFERS \r\n \r\nEducational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships Mandatory Transfers for: Investment Income for Endowment Principal \r\nAuxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units \r\n \r\n$ \r\n \r\n12,657,615.54 $ \r\n \r\n391,702.09 $ 13,049,317.63 \r\n \r\n13,381.72 \r\n \r\n1,075,303.91 \r\n \r\n1,088,685.63 \r\n \r\n368,028.70 \r\n \r\n1,585,419.15 \r\n \r\n1,953,447.85 \r\n \r\n2,764,957.56 \r\n \r\n435,042.21 \r\n \r\n3,199,999.77 \r\n \r\n2,099,801.11 \r\n \r\n154,905.71 \r\n \r\n2,254,706.82 \r\n \r\n4,607,418.38 \r\n \r\n997,838.11 \r\n \r\n5,605,256,49 \r\n \r\n3,222,267.32 \r\n \r\n3,222,267.32 \r\n \r\n375,068.00 \r\n \r\n13,397,947.57 \r\n \r\n13,773,015.57 \r\n \r\n41,168,62 \r\n \r\n41,168.62 \r\n \r\n988,044.70 6,891.06 \r\n1,351,965.64 193,060.49 \r\n1,131,242,97 316,443.82 \r\n \r\n988,044.70 6,891.06 \r\n1,351,965.64 193,060.49 \r\n1,131,242.97 316,443,82 \r\n \r\nTotal Expenditures and Mandatory Transfers \r\n \r\n$ 30,096,187,01 $ 18,079,327.37 $ 48,175,514.38 \r\n \r\nOTHER TRANSFERS AND ADDITIONS/(DEDUCTIONS) \r\n \r\nExcess of Restricted Receipts over \r\nTransfers to Revenues \r\nRefunded to Grantors Transfers for Renewals and Replacements Prior Period Adjustments (Net) Remittances to the Board of Regents \r\nof the University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \r\n \r\n$ \r\n \r\n-278,865.61 $ \r\n \r\n-278,865.61 \r\n \r\n-22,977.81 \r\n \r\n-22,977.81 \r\n \r\n$ \r\n \r\n-188,274.45 \r\n \r\n~188,274.45 \r\n \r\n17,331.62 \r\n \r\n17,331.62 \r\n \r\n-271,769.29 \r\n \r\n-271,769.29 \r\n \r\nTotal Other Transfers and Additions/(Deductions) $ \r\n \r\n-442,712,12 $ \r\n \r\n-301,843.42 $ \r\n \r\n-744,555.54 \r\n \r\nNet Increase/(Decrease) in Fund Balances \r\n \r\n$ \r\n \r\n-94,808.60 $ \r\n \r\n-343,012.04 $ \r\n \r\n-437,820.64 \r\n \r\nThe notes to the financial statements are an integral part of this statement. -6- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nREPORTING ENTITY Savannah State University is one ofthirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System o_fGeorgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity. \r\nThe Board of Regents has constitutional authority to govern, control and manage the University System ofGeorgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit ofthe Board ofRegents ofthe University System of Georgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships with the Board ofRegents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. \r\nFUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the University, the accounts of the University are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or obj ectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group. \r\nWithin each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies. \r\nFund groups and funds presented in the accompanying financial statements are as follows: \r\nCURRENT FUNDS \r\nUNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, research, public service, etc. \r\nRESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes. \r\n-7- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\n. EXHIBIT \"D\" \r\n \r\nNOTEl: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nFUND ACCOUNTING \r\nLOAN FUNDS \r\nThe fund used to account for resources which have been made available for financial loans to students. \r\nENDOWMENT AND SIMILAR FUNDS \r\nThe fund used to account for endowment funds and term endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized. Term endowment funds are similar to endowment funds except that upon the passage ofa stated period oftime or the occurrence ofa particular event, all or part of the principal may be expended. \r\nPLANT FUNDS \r\nUNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes. \r\nRENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties. \r\nINVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others. \r\nAGENCY FUNDS \r\nThe fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations. \r\nBASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period. \r\n- 8- \r\n \r\n SAVANNAHSTATEUNITVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2000 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. \r\nCompensated absences represent obligations ofthe University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $902,834.15 and a related net reduction of current year expenditures of $27,699.20 have not been reported in the current funds as required by generally accepted accounting principles. \r\nPrior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements. \r\nTo the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalfofthe University. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment. \r\nThe Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses. \r\n \r\n- 9- \r\n \r\n SAVANNAH STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2000 \r\n \r\nEXHffiIT\"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\n \r\nBUDGET The Board ofRegents ofthe University System ofGeorgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the Board level and represents appropriations provided by the Amended Appropriations Act of 1999-2000. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The allocation ofthe appropriated budget is made to the University by the Administrative Central Office. In addition, the University receives Federal funds and other funds directly and includes these funds in the budget filed with the Administrative Central Office. \r\n \r\nA comparison ofanticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below: \r\n \r\nResident Instruction Operating Expenses: Education, General and Departmental Services Capital Outlay Year 2000 Project \r\n \r\n$ 110.529.71 $ 580.165.92 $ 42.327.00 \r\n \r\nThese overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the Board object class level. \r\n \r\nCASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. \r\n \r\nINVESTMENTS Investments are reported at fair value. Funds received by the University as endowments or for restricted purposes are invested according to conditions stipulated by the donor, grantor, or in accordance with the Board of Regents authorizing resolutions. Gains and losses on investment transactions are accounted for in the funds where such assets are recorded. \r\n \r\nACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Board ofRegents ofthe University System of Georgia - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements. \r\n \r\n- 10- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nINVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method. \r\nInventories of goods for resale are valued at cost using the first-in, first-out method. \r\nPREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt ofgoods and services that will benefit periods subsequent to the balance sheet date. \r\nMEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned \"Memorandum Only\" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data. \r\nNOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: \r\n(1) Bonds, bills, certificates ofindebtedness; notes, or other direct obligations ofthe United States or of the State of Georgia. \r\n(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. \r\n(3) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. \r\n(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia. \r\n \r\n- 11 - \r\n \r\n SAVANNAHSTATE~RSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS \r\n \r\nSTATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. \r\n \r\n(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. \r\n \r\nAs authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements. \r\n \r\nThe treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. \r\n \r\nCATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2000, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk: \r\n \r\nCategory 1 - Amounts covered by depository insurance or collateralized with securities (at fair value) held by the University or by its agent in the University's name. \r\n \r\nCategory 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the University's name. \r\n \r\nCategory 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the University's name, and amounts uncollateralized. \r\n \r\nTotal Cash Deposits \r\n \r\nCarrying Amount \r\n \r\nBank Balances \r\n \r\nRisk Categories \r\n \r\n2 \r\n \r\n3 \r\n \r\n$ 3330688.71 $ 5 028 661.88 $ 30596827 $ 371 471 79 $ 4.351 221.82 \r\n \r\nCATEGORIZATION OF INVESTMENTS The carrying amounts of investment balances as of June 30, 2000, are as follows: \r\n \r\n- 12- \r\n \r\n SAVANNAHSTATEUNNERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2000 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS \r\n \r\nCATEGORIZATION OF INVESTMENTS \r\nBoard of Regents Short-Tenn Fund Total Return Fund \r\nTotal Investments \r\n \r\n$ 247,182.17 895,299.71 \r\n$ 1.142.481.88 \r\n \r\nFunds invested in an investment pool managed by another governmental entity are not required to be categorized since the University did not own any specific, identifiable investment securities of the pool. \r\n \r\nNOTE 3: INVESTMENT IN PLANT \r\n \r\nThe following is a summary of Investment in Plant fixed assets as of June 30, 2000: \r\n \r\nLand Buildings Improvements Other Than Buildings Equipment Library Books and Collections \r\n \r\n$ 325,975.16 48,592,996.34 \r\n7,963,515.26 12,276,148.71 4,937,288.19 \r\n \r\nTotal Investment in Plant \r\n \r\n$74,095,923.66 \r\n \r\nNOTE 4: RISK MANAGEMENT \r\n \r\nSavannah State University is a participant in the Board of Regents of the University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The University and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the financial statements of the Board of Regents of the University System ofGeorgia - Administrative Central Office. All units ofthe University System of Georgia share the risk of loss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $1,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield ofGeorgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents. \r\n \r\nThe Department of Administrative Services (DOAS) has the responsibility for the State ofGeorgia ofmaking and carrying out decisions that will minimize the adverse effects ofaccidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of \r\n \r\n- 13- \r\n \r\n SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2000 \r\n \r\nEXHIBIT\"D\" \r\n \r\nNOTE 4: RISK MANAGEMENT \r\nloss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit ofthe 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. \r\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 SelfInsurance Fund. \r\nNOTE 5: RETIREMENT PLANS \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nPlan Description Savannah State University participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia issues a separate stand alone fmancial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\nFunding Policy Employees ofthe University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2000, the employer contribution rate was 11.29% for covered employees. In addition, the University contributed 2.35% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\n- 14- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\nEXHffiIT\"D\" \r\n \r\nNOTE 5: RETIREMENT PLANS \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\nFunding Policy \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2000 1999 1998 \r\n \r\n100% 100% 100% \r\n \r\n$ 1,462,846.34 $ 1,462,909.44 $ 1,474,701.16 \r\n \r\nREGENTS RETIREMENT PLAN \r\n \r\nPlan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. \r\n \r\nFunding Policy Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly ofthe State of Georgia. The employer contributes 8.79% ofthe participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. \r\n \r\nThe University and the covered employees made the required contributions of$337,901.96 (8.79%) and $192,208.52 (5%), respectively. \r\n \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\n \r\nPlan Description Savannah 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 ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime 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. \r\n \r\n- 15 - \r\n \r\n SAVANNAHSTATEU}ITVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2000 \r\n \r\nEXHIBIT \"D\" \r\n \r\nNOTE 5: RETIREMENT PLANS \r\nGEORGIA DEFINED CONTRIBUTION PLAN \r\nBenefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. If a member has less than $ 3,500.00 credited to hislher account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to hislher account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. \r\nContributions and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. \r\nTotal contributions made by employees during fiscal year 2000 amounted to $25,887.49 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. \r\nNOTE 6: LEAVEPOUCffiS \r\nEmployees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Basis of Accounting (Compensated Absences) \r\nEmployees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment, except as noted in the subsequent paragraph. \r\nCertain employees who retire with a minimum ofthree months ofunused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia. \r\nNOTE 7: CONTINGENCffiS \r\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 which are disallowed under grant terms. The amount ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position. \r\n- 16- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nNOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2000 \r\n \r\nEXHIBIT tiD\" \r\n \r\nNOTE 7: CONTINGENCffiS \r\n \r\nLitigation, claims and assessments filed against Savannah 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, 2000. \r\n \r\nNOTE 8: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \r\n \r\nPursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board of Regents ofthe University System of Georgia has established group health and life insurance programs for regular employees ofthe University System ofGeorgia. It is the policy ofthe Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the University System of Georgia are eligible for these postemployment 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. \r\n \r\nAs ofJune 30, 2000, there were 140 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2000, Savannah State University recognized as incurred $313,471.88 of expenditures, which was net of $105,009.51 of participant contributions. \r\n \r\nNOTE 9: ENROLLMENT \r\n \r\nThe equivalent full-time student enrollment of Savannah State University was as follows: \r\n \r\nRegular Term Fall Semester, 1999 Spring Semester, 2000 \r\n \r\n1,713 1,781 \r\n \r\nAverage \r\n \r\nSummer School, 1999 \r\n \r\n- 17 - \r\n \r\n SUPPLEMENTARY INFORMATION - 19- \r\n \r\n SAVANNAH STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED \r\nJUNE 30, 2000 \r\n \r\nASSETS \r\nCash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups \r\n \r\nRESIDENT INSTRUCTION \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\n$ \r\n \r\n599,064.71 $ \r\n \r\n365,611.22 \r\n \r\n110,793.18 \r\n \r\n28,537.82 \r\n \r\n1,058,764.70 \r\n \r\n63,875.81 \r\n \r\nTotal Assets \r\n \r\n$ 2,162,771.63 $===63;,;;,8;,;,7,;;;;5.=81= \r\n \r\nLIABILITIES AND FUND BALANCES \r\nLiabilities Accounts Payable Salaries Payable Student Deposits Due to Other Fund Groups \r\nTotal Liabilities \r\nFund Balances Unrestricted \r\nTotal Liabilities and Fund Balances \r\n \r\n$ 1,712,301.54 $ 204,947.00 \r\n \r\n61,210.61 \r\n \r\n$ 1,917,248.54 $ 245,523.09 \r\n \r\n61,210.61 2,665.20 \r\n \r\n$ 2,162,771.63 $==6=3~,8=7=5.=81== \r\n \r\nSee notes to the financial statements. \r\n \r\n- 20- \r\n \r\n EXHIBIT\"E\" \r\n \r\nAUXILIARY ENTERPRISES \r\n \r\nSTUDENT ACTIVITIES \r\n \r\nTOTAL \r\n \r\n$ 145,434.31 $ 808,374.83 \r\n \r\n$ \r\n \r\n360,403.55 \r\n \r\n8,234.79 \r\n \r\n734,249.56 \r\n \r\n520,244.47 \r\n \r\n631,037.65 \r\n \r\n28,537.82 \r\n \r\n1,058,764.70 \r\n \r\n$ \r\n \r\n880,648.02 $ 153,669.10 $ 3,260,964.56 \r\n \r\n$ \r\n \r\n187,537.58 $ 26,821.56 $ 1,987,871.29 \r\n \r\n204,947.00 \r\n \r\n99,675.00 \r\n \r\n99,675.00 \r\n \r\n97,289.00 \r\n \r\n97,289.00 \r\n \r\n$ \r\n \r\n384,501.58 $ 26,821.56 $ 2,389,782.29 \r\n \r\n496,146.44 \r\n \r\n126,847.54 \r\n \r\n871,182.27 \r\n \r\n$ \r\n \r\n880,648.02 $ 153,669.10 $ 3,260,964.56 \r\n \r\n- 21 - \r\n \r\n SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES \r\nCURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30, 2000 \r\n \r\nREVENUES AND OTHER ADDITIONS \r\nUnrestricted Current Fund Revenues Adjustments \r\nPrior Years' Expenditures/Accounts Payable Prior Years' Checks Voided \r\nTotal Revenues and Other Additions \r\nEXPENDITURES AND OTHER DEDUCTIONS \r\nEducational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the \r\nUniversity System of Georgia Prior Year's Unrestricted Fund Balance (Surplus) \r\nAdjustments Prior Years' Revenues/Accounts Receivable \r\nTotal Expenditures and Other Deductions \r\nTRANSFERS BETWEEN FUNDS \r\nNonmandatory Renewals and Replacements \r\nNet Increase/(Decrease) for the Year \r\nFUND BALANCES JULY 1,1999 \r\nFUND BALANCES JUNE 30. 2000 \r\n \r\nRESIDENT INSTRUCTION \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\n$ 25,540,770.62 $ \r\n34,726.37 4,817.43 \r\n$ 25,580,314.42 $ \r\n \r\n378,606.00 378,606.00 \r\n \r\n$ 25,486,312.91 $ \r\n \r\n375,940.80 \r\n \r\n270,893.09 16,732.73 \r\n \r\n876.20 \r\n \r\n$ 25,773,938.73 $ \r\n \r\n376,817.00 \r\n \r\n$ \r\n \r\n-193,624.31 $ \r\n \r\n439,147.40 \r\n \r\n1,789.00 876.20 \r\n \r\n$ \r\n \r\n245,523.09 $ ==~2::.;,6~6.;.;5.,;;;;20;;,. \r\n \r\nSee notes to the financial statements. \r\n \r\n- 22- \r\n \r\n EXHIBIT\"F\" \r\n \r\n- AUXILIARY ENTERPRISES \r\n \r\nSTUDENT ACTIVITIES \r\n \r\nTOTAL \r\n \r\n$ 4,250,484.78 $ 274,229.13 $ 30,444,090.53 \r\n \r\n2,862.38 2,508.74 \r\n \r\n946.96 \r\n \r\n38,535.71 7,326.17 \r\n \r\n$ 4,255,855.90 $ 275,176.09 $ 30,489,952.41 \r\n \r\n$ 246,284.62 $ 26,108,538.33 \r\n \r\n$ 3,987,648.68 \r\n \r\n3,987,648.68 \r\n \r\n11,775.28 \r\n \r\n22.25 \r\n \r\n271,769.29 28,530.26 \r\n \r\n$ 3,999,423.96 $ 246,306.87 $ 30.396,486.56 \r\n \r\n$ _ _-1.:...:8:..:::8.!:,2~47..:.;.4..:.;5::... \r\n \r\n$ \r\n \r\n68,157.49 $ \r\n \r\n427,988.95 \r\n \r\n$ 28,869.22 $ \r\n97.978.32 \r\n \r\n-188,274.45 -94,808.60 965.990.87 \r\n \r\n$ \r\n \r\n496,146.44 $ 126.847.54 $ ======8=7=11::::,1=82=.2=7= \r\n \r\n- 23- \r\n \r\n SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, \r\nAND OTHER CHANGES UNRESTRICTED \r\nYEAR ENDED JUNE 30, 2000 \r\n \r\nNet Increase/(Decrease) in Fund Balances \r\nSee notes to the financial statements, \r\n \r\n- 24- \r\n \r\n$ \r\n \r\n-193,624,31 $===1=,7,;:,89=,0...0. = \r\n \r\n EXHIBIT\"G\" \r\n \r\nAUXILIARY ENTERPRISES \r\n \r\nSTUDENT ACTIVITIES \r\n \r\nTOTAL \r\n \r\n$ 19,549,956.00 \r\n \r\n$ 238,424.68 \r\n \r\n5,844,107.64 \r\n \r\n241,906.53 \r\n \r\n630.78 \r\n \r\n5,290.92 \r\n \r\n$ 4,178,615.65 \r\n \r\n4,178,615.65 \r\n \r\n71,869.13 \r\n \r\n35,804.45 \r\n \r\n623,583.01 \r\n \r\n$ 4,250,484.78 $ 274,229.13 $ 30,444,090.53 \r\n \r\n$ 12,657,615.54 \r\n \r\n13,381.72 \r\n \r\n368,028.70 \r\n \r\n2,764,957.56 \r\n \r\n$ 246,284.62 \r\n \r\n2,099,801.11 \r\n \r\n4,607,418.38 \r\n \r\n3,222,267.32 \r\n \r\n375,068.00 \r\n \r\n$ \r\n \r\n988,044.70 \r\n \r\n6,891.06 \r\n \r\n1,351,965.64 \r\n \r\n193,060.49 \r\n \r\n1,131,242.97 \r\n \r\n316,443.82 \r\n \r\n988,044.70 6,891.06 \r\n1,351,965.64 193,060.49 \r\n1,131,242.97 316,443.82 \r\n \r\n$ 3,987,648.68 $ 246,284.62 $ 30,096,187.01 \r\n \r\n$ -188,274.45 -6,404.16 $ \r\n \r\n$ 924.71 \r\n \r\n-188,274.45 17,331.62 \r\n \r\n$ -194,678.61 $ \r\n \r\n-271,769.29 924.71 $ _ _-4;..;4=2,,-,-7..;.;;12=.1.;.;;2;;... \r\n \r\n$ \r\n \r\n68,157.49 $ 28,869.22 $ ==-..,;;9=4=,8=08:=.6=:0,== \r\n \r\n- 25- \r\n \r\n SAVANNAH STATE UNIVE:RSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET \r\nRESIDENT INSTRUCTION YEAR ENDED JUNE 30, 2000 \r\n \r\nREVENUES \r\nState Appropriations Other Revenues Retained \r\n \r\nCURRENT FUNDS \r\n \r\nUNRESTRICTED \r\n \r\nRESTRICTED \r\n \r\nPLANT FUNDS \r\n \r\nRENEWALS AND \r\n \r\nUNEXPENDED \r\n \r\nREPLACEMENTS \r\n \r\n$ 19,171,350.00 \r\n \r\n$ \r\n \r\n6,369,420.62 $_~18~,O~3~8.:.!,1~58~'l.:75~ \r\n \r\n1,456,300.00 488,359.09 $ _ _---'1~0.:::;O,\u003c.:.14~0::.::.5~2=_ \r\n \r\n$ 25,540,770.62 $ 18,038,158.75 $ \r\n \r\n1,944,659.09 $ _ _--e1,.;;,0-'-'O,=-14..;.;0;.;..5;;.:2;.,. \r\n \r\nEXPENDITURES \r\nPersonal Services: Education, General and Departmental Services $ Sponsored Operations \r\nOperating Expenses: Education, General and Departmental Services Sponsored Operations \r\nCapital Outlay Special Funding Initiative Year 2000 Project \r\n \r\n19,639,456.74 $ \r\n5,136,414.71 \r\n635,534.46 74,907.00 \r\n \r\n1,841,685.67 \r\n16,196,473.08 \r\n$ \r\n \r\n1,942,694.40 $ \r\n \r\n93,771.52 \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ 25,486,312.91 $ 18,038,158.75 $ \r\n \r\n1,942,694.40 $ \r\n \r\n$ \r\n \r\n54,457.71 $ \r\n \r\n0.00 $ \r\n \r\n1,964.69 $ \r\n \r\n9;:.,:3\"\",7c.;,7..:..1.:,;:52=6.,3;,;;6._9.;,;;0.0.. \r\n \r\n(1) To eliminate tuition waivers not budgeted. \r\n \r\nSee notes to the financial statements. \r\n \r\n- 26- \r\n \r\n SCHEDULE \"1\" \r\n \r\nTOTAL \r\n \r\nADJUSTMENTS (1) \r\n \r\nTOTAL (Budget Basis) \r\n \r\nBUDGET \r\n \r\nVARIANCEFAVORABLE (UNFAVORABLE) \r\n \r\n$ 20,627,650.00 24,996,078.98 $ \r\n \r\n$ 20,627,650.00 $ 20,627,650.00 $ \r\n \r\n-374,707.00 \r\n \r\n24,621,371.98 \r\n \r\n27 ,645,322.00 \r\n \r\n0.00 -3,023,950.02 \r\n \r\n$ 45,623,728.98 $ \r\n \r\n-374,707.00 $ 45,249,021.98 $ 48,272,972.00 $ \r\n \r\n-3,023,950.02 \r\n \r\n$ 19,639,456.74 1,841,685.67 \r\n5,136,414.71 $ 16,196,473.08 \r\n2,036,465.92 635,534.46 74,907.00 \r\n \r\n$ 19,639,456.74 $ 19,730,505.00 $ \r\n \r\n1,841,685.67 \r\n \r\n3,539,708.00 \r\n \r\n-374,707.00 \r\n \r\n4,761,707.71 16,196,473.08 \r\n2,036,465.92 635,534.46 74,907.00 \r\n \r\n4,651,178.00 18,217,053.00 \r\n1,456,300.00 645,648.00 32,580.00 \r\n \r\n91,048.26 1,698,022.33 \r\n-110,529.71 2,020,579.92 -580,165.92 \r\n10,113.54 -42,327.00 \r\n \r\n$ 45,560,937.58 $ \r\n \r\n-374,707.00 $ 45,186,230.58 $ 48,272,972.00 $ \r\n \r\n3,086,741.42 \r\n \r\n$ \r\n \r\n62?91.40 $ \r\n \r\n0.00 $ \r\n \r\n62,791.40 \r\n \r\n$ \r\n \r\n62.791.40 \r\n \r\n-27 - \r\n \r\n SAVANNAH STATE UNIVERSITY \r\n \r\nSCHEDULE \"2\" \r\n \r\nSCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET \r\n \r\nLOTTERY FOR EDUCATION \r\n \r\nYEAR ENDED JUNE 30, 2000 \r\n \r\nREVENUES State Appropriations \r\n \r\nCURRENT FUNDS UNRESTRICTED \r\n \r\nBUDGET \r\n \r\nVARIANCE FAVORABLE (UNFAVORABLE) \r\n \r\n$ \r\n \r\n378,606.00 $ 378,606.00 $ \r\n \r\n--.-,;o;.;.;.o~O_ \r\n \r\nEXPENDITURES \r\n \r\nEquipment, Technology and Construction \r\n \r\nTrust Fund \r\n \r\n$ \r\n \r\nSpecial Funding Initiatives \r\n \r\n265,940.80 $ \r\n110,000.00 \r\n \r\n268.606.00 $ \r\n110,000.00 \r\n \r\n2.665.20 0.00 \r\n \r\n$ \r\n \r\n375.940.80 $ 378.606.00 $ _ _-:---=2;.:.:.6:..;;:,65,;;.;.;;,;20;.,.. \r\n \r\nExcess of Revenues over Expenditures \r\n \r\n$ ===\".;2:1::.6=6=:5.=20=. \r\n \r\n$ ====2:!:.6:=65=.=20= \r\n \r\nSee notes to the financial statements. \r\n \r\n- 29- \r\n \r\n SAVANNAH STATE UNIVERSITY CHANGES IN INVESTMENT IN PLANT \r\nYEAR ENDED JUNE 30. 2000 \r\n \r\nLand Buildings Improvements Other Than Buildings Equipment Library Books and Collections \r\n \r\nADDITIONS \r\n \r\nBALANCE JULY 1,1999 \r\n \r\nCURRENT FUNDS \r\n \r\nUNRESTRICTED \r\n \r\nRESTRICTED \r\n \r\n$ \r\n \r\n325,975.16 \r\n \r\n44,775,694.48 \r\n \r\n7,725,366.94 \r\n \r\n10,449,035.83 $ \r\n \r\n1,378,639.26 $ \r\n \r\n517,610.81 \r\n \r\n4,699,911.89 \r\n \r\n243,376.30 \r\n \r\n$ 67,975,984.30 $ \r\n \r\n1,622,015.56 $ =====51\"\",7=,6=:10=..8..1. = \r\n \r\nSee notes to the financial statements. \r\n \r\n- 30- \r\n \r\n SCHEDULE \"3\" \r\n \r\nPLANT FUND UNEXPENDED \r\n \r\nGEORGIA STATE FINANCING AND \r\nINVESTMENT COMMISSION \r\n \r\nDEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS \r\n \r\nBALANCE JUNE 30, 2000 \r\n \r\n$ \r\n \r\n325,975.16 \r\n \r\n$ 1,699,041.08 $ \r\n \r\n3,378,089.44 $ \r\n \r\n1,259,828.66 \r\n \r\n48,592,996.34 \r\n \r\n238,148.32 \r\n \r\n7,963,515.26 \r\n \r\n69,137.19 \r\n \r\n12,276,148.71 \r\n \r\n6,000.00 \r\n \r\n4,937,288.19 \r\n \r\n$ 1,937,189.40 $ \r\n \r\n3,378,089.44 $ \r\n \r\n1,334,965.85 $ ==74=,0=9=5=,9=23=.6=6= \r\n \r\n- 31 - \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS \r\nJUNE 30, 2000 \r\n \r\nNET INVESTMENT IN PLANT Investment in Plant Facilities \r\nRESTRICTED Deficit \r\nUNRESTRICTED Designated For Bus Replacement Reserve For Intercollegiate Athletics For Inventory Reserve For Renewals and Replacements Reserve For Subsequent Years' Expenditures For Uncollectible Accounts Surplus Regular Lottery for Education \r\n \r\nRESIDENT INSTRUCTION \r\n \r\nCURRENT FUNDS \r\n \r\nUNRESTRICTED \r\n \r\nLOTTERY FOR \r\n \r\nAUXILIARY \r\n \r\nEDUCATION \r\n \r\nENTERPRISES \r\n \r\nSTUDENT ACTIVITIES \r\n \r\n$ \r\n \r\n98,954,26 \r\n \r\n$ \r\n \r\n-89,265,55 \r\n \r\n520,244.47 \r\n \r\n41,560.42 \r\n \r\n21,997.14 $ 43,170.38 \r\n \r\n126,502.54 345.00 \r\n \r\n105,008.41 \r\n \r\n$ \r\n \r\n$ \r\n \r\n245,523.09 $ \r\n \r\n2,665.20 2,665.20 $ \r\n \r\n496,146.44 $ \r\n \r\n126,847.54 \r\n \r\n$ \r\n \r\n245,523.09 $ \r\n \r\n2,665.20 $ \r\n \r\n496,146.44 $ \r\n \r\n126,847.54 \r\n \r\nSee notes to the financial statements. \r\n \r\n- 32 \r\n \r\n SCHEDULE \"4\" \r\n \r\nRESTRICTED \r\n \r\nUNEXPENDED \r\n \r\nPLANT FUNDS RENEWALS AND REPLACEMENTS \r\n \r\nINVESTMENT IN PLANT \r\n \r\nTOTAL \r\n \r\n$ 74,095,923.66 $ 74,095,923.66 \r\n \r\n$ -161,698.24 \r\n \r\n$ _ _-1:.,::6c.:.1,;::;6::::,:98\"\".2::.4:.. \r\n \r\n$ \r\n \r\n48,950.58 \r\n \r\n784,042.00 \r\n \r\n$ \r\n \r\n48,950.58 \r\n \r\n-89,265.55 \r\n \r\n619,198.73 \r\n \r\n784,042.00 \r\n \r\n148,499.68 \r\n \r\n85,075.80 \r\n \r\n$ \r\n \r\n1,964.69 \r\n \r\n$ \r\n \r\n1,964.69 $ _ _---=:83::2::.::,90.:;92::.:..::::,:58:.... \r\n \r\n106,973.10 2,665.20 \r\n$ 1,706,139.54 \r\n \r\n$ -161,698.24 $ \r\n \r\n1,964.69 $ \r\n \r\n832,992.58 $ 74,095,923.66 $ 75,640,364.96 \r\n \r\n- 33- \r\n \r\n SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL \r\nYEAR ENDED JUNE 30, 2000 \r\n \r\nSCHEDULE \"5\" \r\n \r\nTotals per Annual Supplement \r\n \r\nAccruals June 30, 1999 June 30, 2000 \r\n \r\nAdjustments \r\n \r\nShared Services on Jointly Staffed Personnel \r\n \r\nArmstrong Atlantic State University \r\n \r\nEason, \r\n \r\nThomas \r\n \r\nRichardson, Joseph \r\n \r\nGeorgia Southern University \r\n \r\nDavies, \r\n \r\nDavid \r\n \r\nFort Valley State University \r\n \r\nLamhut, \r\n \r\nLester \r\n \r\nSALARIES \r\n$ 17,196,936.23 $ \r\n \r\nTRAVEL 413,584.57 \r\n \r\n-5,637.71 204,947.00 \r\n \r\n-12,016.00 -7,012.70 -850.00 -1,345.63 \r\n$ 17,375,021.19 $ =====41=3:;::,5:=84=.=57= \r\n \r\nSee notes to the financial statements. \r\n \r\n- 34- \r\n \r\n SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\n548-96-01 FS-548-98-01 FS-548-98-02 FS-548-98-03 FS-548-98-04 FS-548-98-05 FS-548-98-06 FS-548-98-07 FS-548-98-08 FS-548-99-01 FS-548-99-02 FS-548-99-03 FS-548-99-04 FS-548-99-05 FS-548-99-06 FS-548-99-07 FS-548-99-08 FS-548-99-09 FS-548-99-10 \r\n \r\nFurther Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Previously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Actio:r1JResponses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented \r\n \r\nCORRECTIVE ACTIONIRESPONSES \r\n \r\nEXPENDITURESILIABTI..,ITIESIDISBURSEMENTS Deficit Cash Balance Finding Control Number: FS-548-98-02 \r\n \r\nThe NROTC Program is extremely important to the Institution. Equally important is the identification of funds to reduce the deficit systematically. Every effort is made to ensure funds are identified for any new awards. The deficit was decreased during the period under review. Management has established a goal of eliminating the deficit over a five-year period. \r\n \r\nFUND BALANCE Deficit to be Funded from Subsequent Years' Operation Finding Control Number: FS-548-98-04 \r\n \r\nAggressive measures were taken to ensure the deficit did not increase during the year under review. In fact, the deficit was greatly reduced this year. Management fully expects this trend to continue. \r\n \r\n- 1- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nAUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRlOR YEAR FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nPRlOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nEXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-99-02 \r\nDuring the last quarter ofthe fiscal year, a Supervisor ofAccounts Payable was hired. She worked diligently at removing and canceling remaining balances on payables. Journal entries were made where appropriate. \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures . Finding Control Number: FS-548-99-03 \r\n1) Effective 7/1/2000, an identified coding in the computer system corrected this finding. We will continue to monitor this process. \r\n2) These discrepancies will be immediately corrected. 3) A procedure has been established to verify the beginning and ending dates of leave \r\nrecords. 4) Procedures are in place to validate/support the processing of compensation. 5) Procedures have been implemented to process only those time sheets with the \r\nsignatures of the employee and the supervisor. 6) The University has stressed the importance of safeguarding confidential documents. \r\nThis is believed to be an isolated incident and procedures have been implemented to correct this problem. 7) A receivable was set up for the employee, but has not been collected. \r\nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-99-04 \r\nDuring the year under review, efforts were made by the University in conjunction with the Board of Regents staff members 'to reconcile the Banner Clearing Accounts. Reports are generated out of the Banner Student System and the CUPA system for purposes of reconciliation. An excel spreadsheet is prepared for the reconciliation. \r\n-2- \r\n \r\n SAVANNAB STATE UNNERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-99-05 \r\nOver the year, the University worked toward correcting the deficiencies in accounting procedures. \r\n1) Accounts Payable balances were cancelled by journal entry where appropriate. 2) Strict attention was given to the recognition of revenue in the correct accounts. 3) An accounts receivable was set up for the garnishment of$1,054.50. Garnishments \r\nhave been honored on time. 4) A receivable was set up and requested from the Georgia Department ofRevenue for \r\nthe overpayment of sales taxes. Accounting procedures have been implemented to correct the problem. 5) Salary and travel accounts were reconciled. 6) Expenditure vouchers were placed in locked cabinets and retrieved through a signout process. \r\nGENERAL LEDGER Failure to Correctly Maintain Payroll Operation Agency Funds Finding Control Number: FS-548-99-06 \r\nAuditors from the Board of Regents were brought on site to assist in the reconciliation process and reconciling items were identified. The University will assign and train a staff member to reconcile the Agency Accounts on a monthly basis. \r\nGENERAL LEDGER Inadequate Documentation of Journal Entries Finding Control Number: FS-548-99-08 \r\nThe University is still experiencing a problem with missing j ournal entries. To resolve this finding, we are in the process of ordering notebooks to house the journal entries. An employee will be required to sign out the entire notebook instead of individual entries. \r\n-3- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nAUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTIONIRESPONSES \r\n \r\nGENERAL LEDGER Inadequacies in Travel Advances/Prepaid Travel Finding Control Number: FS-548-99-09 \r\n \r\nProcedures have been established to monitor Travel Advances and Prepaid Travel accounts on a monthly basis. Travel Regulations have been revised and implemented to reduce the need for advances by employees unless traveling with students. Employees sign an authorization form that allows for a reduction in payroll for outstanding advances. Letters were also sent to employees notifying them of outstanding advances. \r\n \r\nLetters were sent to employees by the Accounts Payable staffnotifying them ofour intent to cancel outstanding advances unless expenses were claimed by certain dates. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-548-98-02 FA-548-98-03 FA-548-98-04 FA-548-98-05 FA-548-98-07 FA-548-99-01 FA-548-99-02 FA-548-99-03 FA-548-99-04 FA-548-99-05 FA-548-99-06 FA-548-99-07 FA-548-99-08 FA-548-99-09 FA-548-99-10 \r\n \r\nUnresolved - See Corrective ActionlResponses Further Action Not Warranted Unresolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses \r\n \r\n-4- \r\n \r\n SAVANNAH STATE UNIVERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nALLOWABLE COSTS/COST PRINCIPLES Employee Compensation Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-02 \r\nTitle III and other Federal funded programs are required to submit time and effort reports on a monthly basis. Individuals responsible for administering these accounts will: \r\n1) Verify the accuracy of the report. 2) Make sure that the person preparing the r~port as well as his/her supervisor signs them. 3) Ensure that the percent of effort reflected in the report supports the actual work \r\nperformed. \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-04 \r\nThere was no report from the Department of Education. The finding is unresolved and questioned. \r\nPERIOD OF AVAILABILITY Unallowable Expenditures Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-05 \r\nProcedures have been established to monitor grant accounts to ensure that funds are spent within the specified time period ofthe grant and to return any unspent funds to the grantor. in a timely fashion. Departments will be required to obtain authorization from funding agencies and carry-over unspent amounts throughout the grant award budget period. \r\nREPORTING Final Performance Report Prepared with Budget Figures Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-98-07 \r\nThis was a deviation from past practices as a result of turnover in personnel. Future reporting will resume the historical practice ofreflecting actual expenditures. \r\n-5- \r\n \r\n SAVANNAHSTATEUN[VERSITY AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTIONIRESPONSES \r\nALLOWABLE COSTS/COST PRINCIPLES Employee Compensation Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Research and Development Cluster Programs Finding Control Number: FA-548-99-01 \r\nPersonnel in the Department of Grants and Contracts has been made aware of OMB Circular 21 as it pertains to time and effort reports. Procedures are now in place to make sure that time and effort reports are submitted for all Federal programs on a monthly basis. The Office of Contracts and Grants will verify the accuracy ofthe report. The office will also ascertain that the percent reflected in its report supports its actual work performed. \r\nDAVIS-BACON ACT Payment of Prevailing Wage Rates not Monitored Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-99-02 \r\nEmployees responsible for administering the Federal programs have been made aware of the requirements ofthe Davis-Bacon Act. Future contractual obligations involving Federal funds will be monitored for compliance. \r\nELIGIBILITY Overpayment of Student Financial Aid Weaknesses in Internal Control Structure Student Financial Aid Cluster Program Finding Control Number: FA-548-99-03 \r\nFinal resolution is contingent upon a response from the United States Department of Education. The Institution has submitted requested information to the Department per its November 20, 2000 letter. \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-99-05 \r\nThere was no report from the Department of Education. The finding is unresolved and questioned. \r\n- 6- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nAUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTIONIRESPONSES REPQRTING Expenditures in Excess of Authorization Federal Pell Grant Program (CFDA 84.063) Finding Control Number: FA-548-99-07 The Office of Contracts and Grants have been working closely with the Office ofFinancial Aid to ensure that the University's records and SPS Summary report reconcile. A remarkable improvement has been made this year. SPECIAL TEST AND PROVISIONS Failure to Disclose Federal Funding in Public Announcement Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-99-1 0 The bid packets contained an announcement stating\" ... this project is fully Federally funded\" as opposed to \"this project is 100% Federally funded in the amount of$ ... \" Future notices have been revised to read\" ... This project is 100% financed with Federal funds as part of a $1,000,000 Title ill Program.\" \r\n-7- \r\n \r\n SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCASH AND CASH EQUNALENTS REVENUESIRECENABLESIRECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-548-00-0l \r\nOur examination ofthe internal accounting control procedures revealed that the University did not provide for adequate separation of duties in the performance ofthe following accounting functions and related procedures: \r\nl) Cash custody and receipting functions were not separated from cash disbursement and general ledger functions. \r\n2) Cash collection functions and maintenance of detail accounts receivables records were not separated from general ledger functions. \r\n3) Deposit preparation functions were not separated from cash receipts functions. \r\n4) Banner receivable and accounts receivable functions were not separated from the check disbursement functions. \r\n5) Miscellaneous invoice preparation and accounts receivable functions were not separated from cash receipts and general ledger functions. \r\n6) Accounts payable and disbursement functions were not separated from general ledger functions. \r\n7) Check signing functions were not separated from voucher preparation and approval for payment functions. \r\nThese conditions were the result of management not assigning employee duties in a manner to adequately safeguard assets and/or promote efficiency and accuracy in key accounting functions. The University should review the accounting procedures in place, design proc'edures that would enhance segregation of duties relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions. \r\nREVENUESIRECENABLESIRECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-00-02 \r\nAt June 30, 2000, Savannah State University had $295,050.26 in student accounts receivable which were over one year old and not supported by approved financial aid. There is no provision in the \r\n- 1- \r\n \r\n SAVANNAB STATE UNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30. 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nREVENUES/RECEIVABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number: FS-548-00-02 \r\npolicies of the Board of Regents for defennents of student accounts without the student having approved financial aid at the time of registration. \r\nCollections of student accounts receivable should be made on at least a quarterly basis, and no student should be granted a defennent without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, if necessary. \r\nEXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Monitor Accounts Payable Finding Control Number: FS-548-00-03 \r\nAn examination of the accounts payable subsidiary records was perfonned to test transactions for validity and accuracy. The following deficiencies related to accounts payable were disclosed: \r\nI) Payments ofaccounts payable were incorrectly charged to expenditure accounts rather than as liquidation of accounts payable. \r\n2) Residual accounts payable balances were not transferred to the University's surplus account after final payment of all associated invoices. \r\nThese deficiencies occurred because of the University's failure to have procedures in place to adequately monitor accounts payable. The University should develop and implement policies and procedures to ensure that accounts payable are adequately monitored and properly liquidated on a timely basis. \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-00-04 \r\nFor the year under review, our examination of employee compensation records for thirty-four employees revealed the following deficiencies: \r\n1) A systematic computer programming error allowed all ten-month employees to accrue additional leave during the summer months that they were not eligible to receive. According to an analysis presented by the University, sick leave for Summer 1999 was overstated by 5,217.94 hours. According to the University's policy, ten-month employees are not eligible to earn leave over the summer months. \r\n-2- \r\n \r\n SAVANNAHSTATEUNNERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nEMPLOYEE COMPENSATION Inadequate Payroll Procedures Finding Control Number: FS-548-00-04 \r\n2) A review of the vacation and sick leave records revealed that: \r\na) Eight employees had leave slips in their personnel files but the leave was not posted to the leave report. \r\nb) Fourteen employees were charged for leave taken, however, no documentation was available to indicate leave taken. \r\nc) One employee requested vacation leave but sick leave was deducted from the report. \r\n3) Personnel files did not contain documentation to support summer salaries or stipends. \r\n4) A review of two employees weekly time sheets for twelve months revealed that: \r\na) eight time sheets were signed by someone designated by the supervisor. \r\nb) fifteen time sheets lacked prior approval for overtime. \r\nAccording to the University's sick leave policy, overtime must have prior approval by the Vice President of Business and Finance before being worked. \r\nThese deficiencies were the result of the University's failure to adhere to established policies and procedures concerning accounting for employee compensation. The University should establish internal controls to ensure the above deficiencies are corrected. The University should also determine the excessive sick leave hours granted to ten-month employees and make the necessary corrections. \r\nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-00-05 \r\nFor the year under review, the University failed to reconcile the Banner System to the general ledger and could not provide adequate supporting documentation for balance sheet clearing accounts at June 30, 2000 comprised of an accounts receivable balance of $79,482.77, an accounts payable balance of-$380.85, a financial aid balance of-$53,601.59, a returned check balance of$119.10 and an unapplied cash balance of -$206,756.30. Detailed subsidiary records are necessary to support these amounts recorded on the accounting records and financial statements. \r\n-3- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nSCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nGENERAL LEDGER Balance Sheet Accounts Not Supported by Detail Listings Finding Control Number: FS-548-00-05 \r\nThese account balances resulted primarily from interfaces between the University's Banner Student Registration System and the University's accounting system. Management was unable to produce subsidiary records from the Banner Student Registration System to support the balances recorded on the accounting system's general ledger. \r\nThe University should investigate the balances in the Balance Sheet clearing accounts, determine the cause and make the appropriate adjustments to the accounting records to ensure that assets and liabilities are accurately represented on the accounting records. Procedures should be implemented to ensure that detailed subsidiary records are generated from the Banner Student Registration System that support the balances on the general ledger. \r\nGENERAL LEDGER Deficiencies in Accounting Procedures Finding Control Number: FS-548-00-06 \r\nOur examination and testing for the year under review revealed the following deficiencies in accounting for various financial transactions by Savannah State University: \r\n1) Several exceptions were noted in the expenditure sample of seventy-five vouchers. One voucher could not be located, two vouchers did not have adequate documentation and four vouchers were charged to the incorrect account. \r\n2) Management incorrectly calculated one month's sales tax liability resulting in an overpayment of$4,476.58. \r\n3) Management failed to receipt and deposit cash and checks in a timely manner. Cash and checks in the amount of $22,163.61 were found in the cashier's office that had not been receipted. Dates on documentation and checks revealed that the cash and checks had been received up to ninety days prior to being found. \r\n4) Restricted Fund revenues were not recognized in an amount equivalent to the Restricted Fund expenditures. Variances were identified and adjustments were made. \r\nThese deficiencies were the result of management's failure to establish internal control procedures which are necessary to adequately safeguard the University's assets. The University should implement appropriate procedures and controls to ensure that expenditure vouchers are maintained with adequate documentation, payments for sales taxes are correctly made, cash and checks are receipted in a timely manner and revenue is properly recorded. \r\n-4- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nSCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nGENERAL LEDGER Failure to Correctly Maintain Payroll Agency Funds Finding Control Number: FS-548-00-07 \r\nDuring the year under review, management failed to correctly maintain the payroll deductions and employer liability accounts as follows: \r\n1) Variances existed between monthly receipts and disbursement for many ofthe payroll agency accounts. Management failed to perform monthly reconciliations and to identify variances. \r\n2) The employee payroll deduction (health, life and dental) accounts had a net deficit of $111,049.14. Also, the U. S. savings bond, garnishments and retirement account had deficit balances totaling $14,546.27. \r\n3) The employer liability (health and life) accounts had a net balance of $216,544.11 which management could not determine the proper disposition. \r\nThe deficiencies were the result of the management's failure to properly monitor and reconcile the payroll agency funds. Management should implement policies and procedures to ensure payroll changes and adjustments are made timely and monthly reconciliation's ofreceipts and disbursements are performed. \r\nGENERAL LEDGER Inadequate Documentation of Journal Entries Finding Control Number: FS-548-00-08 \r\nFor the year under review, numerous journal entries lacked adequate documentation. This situation occurred because ofthe University's failure to ensure that journal entries were properly documented and maintained. The University should develop procedures to ensure that all journal entry transactions are properly maintained and supported by adequate documentation. \r\nGENERAL LEDGER Dormant Restricted Funds Finding Control Number: FS-548-00-09 \r\nFor the year under review, eleven restricted fund proj ect~ had no activity. It was noted that the grant period had ended on all eleven projects; however, fund balances remained fot these projects at June 30, 2000. \r\n-5- \r\n \r\n SAVANNAHSTATEU}ITVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30,2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nGENERAL LEDGER Donnant Restricted Funds Finding Control Number: FS-548-00-09 \r\nThese donnant accounts are a result ofmanagement's failure to monitor the activity occurring in the Restricted Funds and failure to return excess funds promptly to the grantor when the project is complete. The University should implement procedures that will provide proper monitoring ofthe Restricted Fund and grant periods to ensure that funds are returned to the grantor when the project is complete. The University should contact the grantors to detennine ifthe donnant account funds are to be returned. \r\nGENERAL LEDGER Failure to Monitor Travel Advances Finding Control Number: FS-548-00-10 \r\nFor the year under review, an examination of employee travel advances revealed that management failed to monitor employee travel advances and clear outstanding balances in a timely manner. These deficiencies occurred because of management's disregard of the University's travel policy which states \"advances must be cleared within three days subsequent to returning to campus or the conclusion ofthe event.\" The University should follow policies and procedures to ensure that travel advances are monitored and cleared in a timely manner. \r\nGENERAL LEDGER Agency Fund Deficits and Lack ofPurpose Statements Finding Control Number: FS-548-00-11 \r\nAt June 30, 2000, the University had twenty-two agency funds that had deficit balances totaling $89,737.88. In addition, the University failed to provide purpose statements for six of the new individual agency funds. \r\nThe deficiencies were the result ofthe University disbursing funds prior to or in excess ofthe receipt of funds and from management's failure to establish agency funds in accordance with Board of Regents policies and procedures. The University should implement procedures to ensure that all funds are received prior to the disbursement and new accounts are supported by required purpose statements. The University should seek reimbursement for the deficit balances from the organizations involved. \r\n-6- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nFUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number: FS-548-00-12 \r\nAt June 30, 2000, the University's Restricted Funds had an overall deficit balance of$161,698.24. This deficit is a result of the Universities lack of sufficient funds to meet obligations on a current basis. The Board ofRegents' Policy Manual Section 703.02 states that \"when any situation develops which would create a deficit at an institution, the president shall take the appropriate corrective action\". \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nALLOWABLE COSTS/COST PRINCIPLES Time and Effort Report Deficiencies Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-01 \r\nFor the year under review, our examination of forty-three time and effort reports for five employees revealed the following deficiencies: \r\n1) One report lacked the employee's signature. \r\n2) One report was signed more than twelve months after the period. \r\n3) Three reports were signed more than ninety days after the period, \r\n4) Six reports lacked date of approval. \r\n5) Seven reports lacked approval. \r\nOMB Circular A-21, requires that activity reports or other payroll documents used as original documentation for payroll and payroll charges be prepared and signed by the employee and the responsible official when salaries are charged to a Federal program. \r\nThe above conditions occurred because ofmanagement's failure to ensure all time and effort reports were properly prepared by employees. Management should ensure that complete time and effort reports are prepared by all employees whose salaries are charged to a Federal program. Time and effort reports should contain all required elements so that management can rely on the reports to support accounting and payroll records. \r\n-7- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nSCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nDAVIS-BACON ACT Payment of Prevailing Wage Rates Not Monitored Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-02 \r\nFor the year under review, it was noted that the University did not monitor the wages paid by one contractor for working on a Title III construction project. Federal regulations, as reflected in Appendix A to 34 CFR 74, require that all laborers employed by the contractor who work on construction contracts in excess of $2,000.00 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates). \r\nThis condition resulted from management's failure to ensure that all individuals at the University were aware of their responsibilities regarding the Davis-Bacon Act and requirements ofthe DavisBacon Act were being met. The University should take steps to ensure that wages paid for construction projects financed with Federal funds are monitored and are in compliance with the provisions of the Davis-Bacon Act. \r\nELIGIBllJTY Overpayment of Student Financial Aid Weaknesses in Internal Control Structure Student Financial Aid Cluster Program Questioned Cost: $8,105.39 Finding Control Number: FA-548-00-03 \r\nA sample of forty student files was selected to determine if financial aid was properly calculated, awarded and disbursed to eligible students. The items sampled contained financial aid disbursements of$623,884.19 out ofa population of$13,963,059.99. Our examination revealed that four students received overpayments totaling $8,105.39 as shown below. \r\n(1) Two students were disbursed a total of$5,386.00 in excess ofneed, based on estimated cost of attendance. Title IV of the Higher Education Act of 1986 states that an institution must coordinate Title IV programs with other Federal and non-Federal student financial aid programs it administers and must establish controls to preclude the awarding ofassistance in excess of a student's financial need. The errors were caused by management's failure to review awards before disbursements were made. \r\n(2) One student received a refund in excess of the correct amount by $1,155.39. This error resulted from management's failure to review refund calculations prior to disbursement of funds. \r\n-8- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nELIGIBILITY Overpayment of Student Financial Aid Weaknesses in Internal Control Structure Student Financial Aid Cluster Program Questioned Cost: $8,105.39 Finding Control Number: FA-548-00-03 \r\n(3) One student was disbursed $1,564.00 ofFederal Work-Study Program funds in excess ofthe approved grant award. This error was caused by management's failure to monitor the student's disbursements. \r\nA projection of these errors to the total population resulted in likely questioned cost in excess of $10,000.00. \r\nThe University should develop and implement policies and procedures to ensure adequate controls over the eligibility process are in place and that student financial aid awards are properly reviewed and approved prior to disbursement. Also, the University should develop and implement a monitoring process to ensure that the controls are being followed. The University should contact the U. S. Department of Education regarding resolution of these questioned costs. \r\nFederal Programs/Awards Affected: \r\nStudent Financial Aid Cluster Programs U. S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Questioned Costs: $10,030.12 Finding Control Number: FA-548-00-04 \r\nFor the year under review, our examination included a review of the internal accounting controls utilized by the University in maintaining their property management system and testing the system for compliance with Federal laws and regulations. The following conditions existed: \r\n- 9- \r\n \r\n SAVANNAHSTATE~ERSITY \r\nSCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Questioned Costs: $10,030.12 Finding Control Number: FA-548-00-04 \r\n1. The University failed to maintain a property management system that identified Federal equipment purchases by Federal grant award number. This deficiency is system-wide and affects all Federal awards. \r\n2. The University was unable to ensure appropriate Federal agencies were notified when disposing of equipment due to inadequacies in identifying equipment by fund source and grant award number in the property management records. \r\n3. The Title III Equipment Inventory Report, as presented for audit purposes by the University's Title III Office, contained numerous errors and omissions. The Report listed numerous incorrect locations; incorrect, missing or duplicated University decal numbers; and various omissions ofFederal Share percentage, dates ofpurchase, purchase prices, and manufacturer's serial numbers. \r\n4. A sample of 53 equipment items was examined. This examination revealed that two items could not be found. One scanner, purchased in March 1997 for $835.00, could not be located. Also, one Tangent computer could not be located. The computer was acquired in July 1995 for $3,165.00 \r\n5. One printer, purchased from Federal funds in June 1999 at a cost of$I,298.12, remained in its original shipping container. This condition was also noted in the audit report for June 30, 1999. \r\n6. Two computers, totaling $4,732.00, were not being utilized by the Title III program for which they were acquired. This deficiency was noted in the audit report for June 30, 1998 and June 30, 1999. University personnel assert that the computers were being used in the Title III program as required. However, our examination noted that the computers were not being used in the Title III program as alleged by the University. \r\nThe University failed to have internal controls in place and operational to ensure compliance with Federal requirements for equipment as set forth in 34 CFR 74 and OMB Circular A-11O, Subpart C.34. The University should establish policies and procedures to ensure that equipment purchases are identified by fund sources and grant award numbers, property records are maintained in accordance with Federal requirements and physical inventories are conducted. Also, the University should establish policies and procedures to ensure equipment purchases are utilized for the program \r\n- 10- \r\n \r\n SAVANNAH STATE UNNERSITY SCHEDULE OF FINDINGS AND OUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nEQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031) Questioned Costs: $10,030.12 Finding Control Number: FA-548-00-04 \r\nacquiring the equipment. The U. S. Department of Education should review these matters and determine appropriate action by the University to resolve this finding. \r\nPERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program Finding Control Number: FA-548-00-05 \r\nAt June 30, 2000, the University's Fiscal Year 1999 Federal Pell Grant Program had a deficit fund balance of$120,189.79 and the Fiscal Year 1998 Federal Direct Loan Program had a deficit fund balance of$18,592.96. These deficit fund balances are a result ofmanagement's failureto establish controls to ensure that funds are not disbursed without proper authorization. \r\nThe University should implement procedures to ensure that funds are available to cover valid expenditures. In order to be reimbursed for these excess expenditures, the University, in conformity with Federal statutes, must certify the validity of these payments to the U. S. Department of Education. \r\nFederal Programs/Awards Affected: \r\nStudent Financial Aid Cluster Programs U. S. Department of Education Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process. Student Financial Aid Cluster Program Questioned Cost: $2,770.17 Finding Control Number: FA-548-00-06 \r\nOur examination of the University's student financial aid refund process revealed the following deficiencies: \r\n- 11 - \r\n \r\n SAVANNAHSTATE~ERSITY \r\nSCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2000 \r\nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nSPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process. Student Financial Aid Cluster Program Questioned Cost: $2,770.17 Finding Control Number: FA-548-00-06 \r\n(1) Refund amounts were not applied to the appropriate student financial aid programs for four out of eight students selected for refund testing. Three students were issued refund checks rather than management correctly applying the refunds to the Federal Direct Student Loan Program resulting in questioned cost of $1 ,800.17. One student was not disbursed a refund and management failed to charge back the $970.00 refund to a Federal Direct Student Loan Program. \r\n(2) The University does not calculate a refund for students who do not officially withdraw from the University nor does the University maintain records to ascertain if a student has dropped out and a refund is due. This deficiency was caused by management's failure to implement procedures to determine ira refund of institutional charges is required in accordance with Federal Regulation 34 CFR 668.22. \r\nThe projection of questioned cost could not be readily determined. However, the likely questioned costs are believed to exceed $10,000.00. \r\nThe University should implement procedures to ensure that refunds are correctly calculated and applied to the appropriate accounts in a timely manner. Refunds should be calculated for all \"unofficial\" withdrawals. The University should contact the U. S. Department of Education regarding resolution of this finding. \r\nFederal Programs/Awards Affected: \r\nStudent Financial Aid Cluster Programs U. S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268) \r\n- 12- \r\n \r\n SAVANNAH STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2000 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SPECIAL TEST AND PROVISIONS Failure to Disclose Federal Funding in Public Announcement Higher Education - Institutional Aid (CFDA 84.031) Finding Control Number: FA-548-00-07 During the year under review, the University issued one bid solicitation that did not disclose the dollar amount ofFederal funds for the project and the percentage ofthe total cost ofthe project to be financed with Federal funds as required by Attachment S ofthe Federal Grant Award. Management should review Attachment S of the Federal Grant Award and comply with the conditions under Public Law 105-78, Sec. 508. \r\n- 13- \r\n \r\n "}],"pages":{"current_page":1,"next_page":null,"prev_page":null,"total_pages":1,"limit_value":10,"offset_value":0,"total_count":8,"first_page?":true,"last_page?":true},"facets":[{"name":"type_facet","items":[{"value":"Text","hits":8}],"options":{"sort":"count","limit":16,"offset":0,"prefix":null}},{"name":"creator_facet","items":[{"value":"Georgia. 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