REPORT NO. 2009-116 F EBRUARY 2009 SOUTH FLORIDA COMMUNITY COLLEGE Financial Audit For the Fiscal Year Ended June 30, 2008 This is trial version www.adultpdf.com BOARD OF TRUSTEES AND PRESIDENT Members of the Board of Trustees and President who served during the 2007-08 fiscal year are listed below: County Dr. Louis H. Kirschner, Chair from 7-25-07 DeSoto Gary Delatorre, Vice-Chair from 7-25-07 Hardee Jan B. Brewer, Vice-Chair to 7-24-07 DeSoto Tamela Cullens Highlands Joan H. Hartt Highlands David Leidel from 8-31-07 (1) Highlands Richard L. Maenpaa Hardee Kimble D. McKay, Chair to 7-24-07, to 8-24-07 (1) Highlands Anne D. Reynolds Highlands Dr. Norman L. Stephens, Jr., President Note: (1) Member position remained vacant from August 25, 2007, to August 30, 2007. The Auditor General conducts audits of governmental entities to provide the Legislature, Florida’s citizens, public entity management, and other stakeholders unbiased, timely, and relevant information for use in promoting government accountability and stewardship and improving government operations. The audit team leader was Yuling Liu, CPA, and the audit was supervised by David A. Blanton, CPA. Please address inquiries regarding this report to James R. Stultz, CPA, Audit Manager, by e-mail at jimstultz@aud.state.fl.us or by telephone at (850) 922-2263. This report and other audit reports prepared by the Auditor General can be obtained on our Web site www.myflorida.com/audgen ; by telephone at (850) 487-9024; or by mail at G74 Claude Pepper Building, 111 West Madison Street, Tallahassee, Florida 32399-1450. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 SOUTH FLORIDA COMMUNITY COLLEGE TABLE OF CONTENTS PAGE NO. EXECUTIVE SUMMARY i INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Statement of Net Assets 13 Statement of Revenues, Expenses, and Changes in Net Assets 15 Statement of Cash Flows 16 Notes to Financial Statements 18 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 33 Internal Control Over Financial Reporting 33 Compliance and Other Matters 34 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -2- cash flows thereof for the fiscal year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report on our consideration of South Florida Community College‘s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, rules, regulations, contracts, and grant agreements and other matters included under the heading INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS . The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The MANAGEMENT’S DISCUSSION AND ANALYSIS on pages 3 through 12 is not a required part of the basic financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Respectfully submitted, David W. Martin, CPA February 9, 2009 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -4- net assets. When the reverse occurs, the result is a decrease in net assets. The relationship between revenues and expenses may be thought of as South Florida Community College‘s operating results. These two statements report South Florida Community College‘s net assets and changes in them. You can think of the College’s net assets, the difference between assets and liabilities, as one way to measure the College’s financial health, or financial position. Over time, increases or decreases in the College’s net assets are one indication of whether its financial health is improving or deteriorating. You will need to consider many other nonfinancial factors, such as certain trends, student retention, condition of the buildings, and the safety of the campus, to assess the College’s overall financial health. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector institutions. All of the current fiscal year’s revenues and expenses are taken into account regardless of when cash is received or paid. A condensed statement of assets, liabilities, and net assets of the College and its component unit for the respective fiscal years is shown in the following table: 6-30-08 6-30-07 12-31-07 12-31-06 Assets Current Assets 10,519$ 8,469$ 4,447$ 3,719$ Capital Assets, Net 58,605 55,498 1,539 1,310 Other Noncurrent Assets 3,661 4,818 4,366 4,429 Total Assets 72,785 68,785 10,352 9,458 Liabilities Current Liabilities 1,612 3,241 141 137 Noncurrent Liabilities 1,915 1,725 Total Liabilities 3,527 4,966 141 137 Net Assets Invested in Capital Assets, Net of Related Debt 58,605 55,498 1,539 1,310 Restricted 8,922 6,245 8,307 7,700 Unrestricted 1,731 2,076 365 311 Total Net Assets 69,258$ 63,819$ 10,211$ 9,321$ Increase in Net Assets 5,439$ 8.5% 890$ 9.5% Assets, Liabilities, and Net Assets at June 30 (In Thousands) College Component Unit The increase in net assets is primarily attributable to a $2 million increase in current assets and $3 million increase in capital assets due to the completion of the Health and Science Building and the renovation of buildings on the Highlands campus. The increase in assets was offset by a $1.6 million decrease in current liabilities due to the completion of the Health and Science Building. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -5- Revenues and expenses of the College and its component unit for the respective fiscal years are shown in the following table: 6-30-08 6-30-07 12-31-07 12-31-06 Operating Revenues Student Tuition and Fees, Net of Scholarship Allowances 1,895$ 1,936$ Federal Grants and Contracts 263 1,518 State and Local Grants and Contracts 60 539 Nongovernmental Grants and Contracts 156 255 Sales and Services of Educational Departments 591 456 Auxiliary Enterprises 1,037 1,078 Other Operating Revenues 45 143 211 183 Total Operating Revenues 4,047 5,925 211 183 Less, Operating Expenses 29,213 28,736 1,593 1,190 Operating Loss (25,166) (22,811) (1,382) (1,007) Nonoperating Revenues (Expenses) State Appropriations 17,374 16,820 Other Nonoperating Revenues 5,448 4,551 2,272 2,016 Nonoperating Expenses (5) (761) Net Nonoperating Revenues 22,822 21,366 2,272 1,255 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses (2,344) (1,445) 890 248 Capital Appropriations 7,207 5,801 Capital Grants, Contracts, Gifts, and Fees 576 960 Increase in Net Assets 5,439 5,316 890 248 Net Assets, Beginning of Year 63,819 58,503 9,321 9,073 Net Assets, End of Year 69,258$ 63,819$ 10,211$ 9,321$ Operating Results for the Fiscal Years (In Thousands) College Component Unit $ $ Operating Revenues GASB Statement No. 35 categorizes revenues as either operating or nonoperating. Operating revenues generally result from exchange transactions where each of the parties to the transaction either give up or receive something of equal or similar value. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -6- The following chart presents the College’s operating revenues for the 2007-08 and 2006-07 fiscal years: Operating Revenues: College (In Thousands) $1,936 $1,518 $539 $255 $143 $1,895 $263 $60 $156 $591 $1,037 $45 $1,078 $456 $0 $1,500 $3,000 Student Tuition and Fees, Net Federal Grants and Contracts State and Local Grants and Contracts Nongovernmental Grants and Contracts Sales and Services of Educational Departments Auxiliary Enterprises Other 2006-07 2007-08 College operating revenue changes were the result of the following factors: ¾ Net student tuition decreased by $41,650 after the scholarship allowance. This is a bit misleading given increased enrollment and increased fee rates. However, scholarships and scholarship allowance increased $241,792 so the net tuition recognized on the statements is less even though more was charged and received for tuition. ¾ Federal grants decreased by $1.3 million and State grants decreased by $478,863. This was primarily caused by the State funding the Florida Center for Dual Addictions directly rather than indirectly through the College with a grant containing a mixture of Federal and State dollars. Additionally, a private grant was not renewed and that contributed significantly to the $99,419 decrease in nongovernmental grants and contracts. ¾ Sales and services of educational activities increased by $134,719. The increase was caused by an overall increase of activity for ancillaries. Conversely, auxiliary revenues decreased by $41,049. The small overall decrease was caused by small declines to auxiliary activities. Component unit operating revenues increased $27,899 due to an increase in rental income. Operating Expenses Expenses are categorized as operating or nonoperating. The majority of the College’s expenses are operating expenses as defined by GASB Statement No. 35. GASB gives financial reporting entities the choice of reporting operating expenses in the functional or natural classifications. The College has chosen to report the expenses in their natural classification on the statement of revenues, expenses, and changes in net assets and has displayed the functional classification in the notes to financial statements. Operating expenses for the College and its component unit for the respective fiscal years are presented in the following table: This is trial version www.adultpdf.com . version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009- 116 SOUTH FLORIDA COMMUNITY COLLEGE TABLE OF CONTENTS PAGE NO. EXECUTIVE SUMMARY i INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS. not audit the information and express no opinion on it. Respectfully submitted, David W. Martin, CPA February 9, 2009 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009- 116. thought of as South Florida Community College s operating results. These two statements report South Florida Community College s net assets and changes in them. You can think of the College s net