Miles Community College Custer County Montana, fiscal year ended June 30, ... audit report

2007·16 MB·English

by  Montana.Legislature.Legislative Audit Division

MILES COMMUNITY COLLEGE

CUSTER COUNTY, MONTANA

Fiseal Year Fnded June 30, 2007

AUDIT REPORT

Prepared Under Contact With:
MONTANA LEGISLATIVE BRANCH, AUDIT DIVISION
LEGISLATIVE AUDIT DIVISION

Scott A. Seucat, Legislative Auditor
Tori Tunthswsen,
Chick Deputy Legislative Auditor

Deputy Legislative Autom:
Tare Gill
“Angle Grove

November 2007

‘The Legislative Audit Committee
of the Montana State Lesiature:

Enclosed isthe repo an the audit of Miles Community College for the fiscal year ended
Sane 30, 2007

“The audit was conducted by Denning, Downey & Associates, CPA's PC under a contact
between he firm and ou olfice. The comatens sed evonunerxsions contained inthis
epost represent the views ofthe firm and nor necessary the Legislative Auditor.

“The agency's wren respanse to the report recommendations is inched inthe hac of

the audit report
RRespoctlly submited,
Scull A Seacsl
Legislative Auditor
arcig

ow 1 iat Capo Belding 20 oe 205708: elon, MI = 39620-708,
Phase (448122 EAR (HH) HHITEA- Ed adage
MILES COMMUNITY COLLEGE
CUSTER COUNTY, MONTANA
Fiscal Yeur Ended Sune 30, 2007
‘TABLE OF CONTENTS
Onganiation 1
Manajement Discussion and Analysis

Independent Auditor's Report lo

Financial Statements

Slutement of Nel Assets ~ Business-type netivties 2
iatement of Revenues, Expenses and Changes in Net Assets B
iatement of Cash Flows a

Endowment Statement of Financial Postion Is

Endowment Statement of Activities 16

Engosement Statement of Cash Flaws 0

Fiduciary Funds — Statemert of Fiduciary Net Assets 18

Fiduciary bunds Statement of Changes in Fiduciary Nel Assets 9

Notes to Financial Statements

‘Supplemental Information

Functional Classification of Operating Txpenses 2
Student Financial Aid Modified Statement of Cash Reveipts und Dishursernents 3
Student Financial Assistance Programs M4
Schedule of Full Tims Equivalert 35

Report on Internal Conirol Over Finaneis! Reporting Based on an Audit of Financial
Statements Performed in Accordance with Governmest Auditing Standards

Report on Othot Compliance, Financ‘al, and Internal Accounting Control Matters 3”

Report on Prior Audit Recommendations 40

Auudite’s Response to Audit Recommendations
MILES COMMUNITY COLLEGE
CUSTER COUNTY, MONTANA,
ORGANIZATION
Fiscal Yea Ended June 30, 2007

BOARD OF TRUSTEES

Saazon Wileos Chairperson
Gaxrct Marland Vice Chairperson
Bill Griffin Trustee
Rusty lion Trustee
Kelly Reid Trustee
Susam Stanton Tastee
Jan Wagner Trustee

COLLEGE OFFICIALS,

Stefani Hieswa President
Tad Torgerson Administeative Dean
Laura Bennett Conteoller
Miles Community College, Custer County, Montana
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2007

Overview

Miles Community College’s Management Discussion and Analysis (M&A) presents an
overview of its Fruncial condition and assists the reader it focusing on significant financial
‘sues for the year ended June 30, 2007. The discussion has been prepared by management and
shhould be readin conjunction with the accompanying Finacial statements and footnotes

ins

jl and Other College Highlights

+ Reorganization A full-time Heavy Equipment insteuctor was hired in November 2006,
‘This program was implemented in response tp the needs in the industry. In addition. a
second Lntollment SpecialistRecruiter was hired. ‘The terlory covered by the recruiter
has expanded and the neec: for inereased student serviees on campus facilitated the ned
fora second position.

‘+ Union Negotiations — The Miles Community College Facalty Association, a MEA-MPT
Taculty union, was organized during, Fiscal year 2005, Miles Community College Faculty
Association epresentatives negotiated a collective bargaining agreement with the Miles

Community College Board of Trustees. master agreement was reashed in fiscal oat
2007, which was retroactive to July 1, 2007,

‘Program Development ~ Ite Dean of Academie Affairs is working with businesses and
faculty to develop programs needed in the area. The College has developed ar Lquine
program and an inventory of several other new possible programs for developmeat.

# Grant The Workforce Inovation in Regional Feonomie Development (WIRED) grant
‘was awarded in spring 2007, ‘The WIRED grant is focused in the area of developing
skilled worsforce for the biofuels industry, in order to promote industry development

12 Miles Cammunity College WIRED grant is Focuses! specifically on oilseed
production for biociesel. ‘The grant includes training for weneral public and high school
students a8 well as the development of curriculum for Miles Community College, In
‘addition, here isa distance education based entrepreneurship certticate being developed

a part ofthe grant

‘© Distance Education programs ~ With the declining population in eastern Montan, the
College has implemented alternative methoxls such as interactive telovisioa and on-line
classes to deliver ils educational services. Av a eonseeuence of this ineteased focus on
distance oducation, the Dean of Academic Alfains is working with the Montana
University System (MUS) to form a gateway Zor all calleges‘universties to affer enline
‘general education eourses om a common site,

i (FTE) ~ Ia fiscal year 2007, the College experienced a 4.6 peresnt decrease
3c with 422 resident FYE. Management feels the major cause for the deeresse
in enrollment is due to the relatively song loctl economy and continu
uunemplogmert rates,
Using the Financial Statements
The College's Financial statements consist ofthe following thre statements
* Balance Sheet
+ Statement of Revenues, Fxpenses and Changes in Net Assets
Statement of Cash Flows

‘These Financial statements sre prepared in accordance with Governmental Accounting Standards
Board (GASB) Statement 35, Basic Financial Staremeuts-acd Management's Discussion and
Analyser Public Colleges and Universities. They lifter significanlly, in form: and the
seounting principles utilized, From financial sintements presented prior wo fiscal yeur 2003, The
financial statements presented in prior yeurs focused on the accountability of funds, while these
statements focus on the financial condition of the college, ths results of operations, ard cash
ows ofthe college as 8 whole.

Signiticun: changes to the financial statements are as follows:
The finarvial statements are prepared using the accrual basis of accounting, which means
revenues are reported when earned and expenses are reported when incurred, regardless

of when the cash was actually received ar pu,

+ Capita) assets sre now depreciated over their expected useful lives instead of recorded
enlirely as a eutrent period expense in the year of acquisition. Depreciation is trated as
an operating expense, and capital assets arc reported in the statements al vost less
accumulated depreciation

+ Assets and Liabilities ure ceated us current (due within one your) or a8 non-current (due
jn more than one yeat). and in te Statement of Net Assets wre presented in order of their
relative liquidity

+ Reyennes ad Expenses are classified as operating o: non-operating. “Operating” is
defined by the Governmenal Accounting Samdards Board (GASB) as resulting Thom
transactions involvieg exchanges of goods or serviees for payment, “Non-operating” is
defined by GASB as resulting from transactions not involving the exchange of goods or
services for psyment, Miles Community College shows a substantial “operating loss” in
the Statement 9” Revenues, Fxpenses, snd Changes in Net assess primarily because
GASB requires Gut State Appropriation ard District Levy revenues must be reporced as
“non-operating”,

‘+ Tuition an! Fees ate reported net of any Tuition Waivers that were appliod directly to a
slusdents aout

‘he three financial st aser of the financial statements to
mnine whetber the College's overall financial condition hus improved or deteriorated as a
resull of the current year's financial activities. These financial statements prescat similar
information w thal disclosed in private sector financial statoments
Balance Sheet

‘Une Balance Sheet. which reports all assets and Tabiliies of the College, presents the financial
position of the College at the end of the fiseal year. ‘The net assets ure sinrply the difference
defeen total assets and total liabilities. The ehsnge in net assets during the Fiscal yeur is un
indicator of the change in the averall ficancial condition of the College during the yeu A
summary of the Balance Sheet tollows:

ASSETS 6130/2007

otal Current Assets SL848,126

otal Noncurent Assets 5.087.863
TOTAL ASSETS 56,935,980

LIABILITES

Total Current Liabilities S_585.498

Total Noncurrent Liabilities
‘TOTAL LIABLILITES

19s

NET ASSETS

Invested in Capital Assets, Net of Retated Debt

Restricted. Expendable

Unrestricted 632302
TOTAL NET ASSETS,

92486,822

33,741,661

Current assets include the College's cash: taxes, grants, student Toa, snd accounts receivable:
inventories: and other assets expected t0 benefit the College within ame year. The $188,282
Snerease from fiscal year 2006 to fiscal year 2007 was eqused primarily by a increase in cash,

Noneurrent assets primurily represent the College's Capital Assets less Accumulated
Depreciation,

(Current liabilities incluce payroll and related liabilities, amounts payable to suppicts for goods
ang services reecived, revenue received which the College has not yet eamed, student deposit
balances, and debt principal payments dus within onc yeas. ‘Total curren liabilities deere
almost S73,846 from fiscal year 2006 Fiscal year 2007. ds Ings
the state appropriation reversion,

Noncurrent liabilities primar'ly represent debt principal payments due alter ome
{also includes the amount of compensated absence Fabiliy

car period.

Invested in capital assets, uet of related debt represents dhe histovieal cosis of capital assets
less accumulate depreciation und Jess ccbt balances relaced to the eapital assets, his balaace
increases as assets are acquired and debt is repsid, and dooteases as assels are depreciated and
bt is incurret. otal capital assets inereased By $45,031 ftom fiscal year 2006 lo Fiscal year
‘2007 mostly due to the equipment purchased in conjunction withthe Wired Grant Program.

Restricted expendable net assets represent funds that may be expended by the College but only
it accordance with restretions imposed by an extemal party, such as a donor or governmental
ently

4
Unrestricted met assets are funds that he College hus fo use for whatever purpose it determines
is appropriste, These assels may he designated for specific purposes by action of management

Total not assets increased by $299,231 from liseal yeur 2006 to Fisel yer 2007, which
indicates the overall linaneial postion ofthe College has improved over tha ine period

Statement of Revenue, Expenses,

1d Chunges in Net Assets

‘The Statement of Revenues, Expenses and Changes in Not Assets presents the revenues earned
und expenses incurred during the year on a full acerenl basis, which mesns revenues and
expenses are recognized whey they were ested of incurred, reyandless af” wher ash was
received or paid. Results of operations are clasified as either operating or nonoperating

A summary of she Scatement of Reverues, Expenses and Changes in Not Assets follows:

6/30/2006 __ 6/30/2007

(Operating Reventes BS ASISRTE $4,633,929
(Operating Expenses 91S16 7.187.696
OPERATING LOSS, $2.403.63R) “SO.553.767)

Nonoperating Revenues (Expenses) $2,806,950 § 2,920,882
‘Transfer ftom fiduciary funds

INCREASE (DECREASE) IN NET ASSETS, $ 403512,

Net Assets, Beginning of Year $030068 5 3.442380
[Restatement of expenses $_ (82.000)

Net Assets, ind oF Year S371, 65L

Operating revenues represent the revenue received from iwiion and fees, federal stte, and
private grants and contracts, indirect eost recoveries (hom grants), auifiry activities, and other
operating revenues. Total operating revenucs increased by $118,051 from fiscal year 2006 9
fiscal year 2007. This was mainly due t@ other operating revenue which includes the distant
‘nursing, bus operations, and seholanships,

Nonoperating revenue (expenses) consists of interest income, slate appropriations, district
levies, interes payments, and other ron-opsrating revenues and expenses. Nonoperating revenu
increased 123.932 fram fiscal yeur 2006 to fiscal yeur 2007, The major item affecting this
change isthe interest income,

Increase (decrease) in net assets represents the difference beeen total revenues and (oil
expenses.
The fallowing provides u comparative analysis of revenues snd expenses for the two fiscal years:

ANALYSIS OF ALL SOURCES OF REVENUE

INCREASE
FISCAL YEAR 2006 AL YEAR 2007 (DECRLASE
SOURCE OF REVENUE AMOUNT PERCENT AMOUNT PERCEN FY'06 VS
r faaed
Operating Revenues
Tuilon and ess (Net SLIRSH IST SLaies! 158% § 46.108
ere Grants and Coneacts UM¥s29 1g Lgnowy 15.8% (Ad8AH)
State Geants and Contents “ao STH ASidsl— S868 24452
Priva and Local Grants and\Contacts 328.175, 407556 5.2084 79,38
Inve Cust Recovers $05 1s. 98 23
Anilary Entorvise Activitios 1.022 LOWS Anise Gaon,
Other Operating Reverses 160.383 B76 ast 189,403
Total Operating Revenve HSI STE Tia Gh.e TR

NNonoperating Revenues
Incevest Irene s sss7 S 9532 12% S981
Sue Apporsavons L413 Lsmua7 2040 28981
Distt Levies 1361402 Laon ise 38.165
“Total Nonoperating Revenues SaECEM Those 39a “STN

Total Revenue s14stam Sxovmso1 wuss
ANALYSIS OF CATRGORY OF EXPENS

INCREASE,
FISCAL YEAR2006_ FISCAL YEAR2007_ (DECREASE
CATEGORY OF EXPENSE AMOUNT PERCENT AMOUNT PERCENT. FY‘06 ¥

nw
“Gperating Expenses

sales 12875932 S297%668 8%
Benet ‘07.265 ISG 124%
Travel sss BDH 3X6
Spplies 431.359 sors 5a
Contacte Ssrvice nein TMs Slt

Rent and Lasse 3546 pm? 10s
Repairs and Blanenanse ner ayaa 0.38%
Advertising 24h ‘avs obs
Meetings ane Dies 26011 DAS 0.7%
Cites 168.773 ninns 20s
Sanden Supp 53.988, 1619 922%
Commanisasons sia vise 1208 3762
Software ress 16318 922%
ied aM ionass

Scbolarsiss and Grants ws3072 wrest

Teen 31379 93.009

Indirect Coss wa en

Foal fr Resale ins 33849

ems for Reale 19a 9600

(rhs Operating pense eens 25.409

Depreciation Lspense asn20 2631913

‘Total Operadng Expenses “S691 SI6 VE Le STIRS

Nonoperating pense

Inserest Payments S 1tdot 1.868 $1379

Orhee Nonepsatng Fxersos 00% E

‘Total Nonoperiing Expenses “SLE Ls FET

Tota Expenses SIPS OW thm $7546 _—_ 100%

‘Comments about specific revenue ard expense items are

‘Private and Local Grants and Contracts ~ During fiscal year 2007 the College
receive $72,000 gift Irom the Miles Community College Endowment Corporation to
fund positions for a fulltime Firollment Specialiv/Recruiter andl a Heavy Equipment
Insirctor.

‘© Expenses (general comment): Overall expenses ineveased $271,476 ftom fisesl year
2006 10 fiseil yeur 2007 moslly due to step ad eosloPliving increases reecived by
faculty and staf and scholarships awarded to students.