GASTON COLLEGE (A Component Unit of the State of North Carolina)
Total Page：16
File Type：pdf, Size：1020Kb
GASTON COLLEGE (A Component Unit of the State of North Carolina) FINANCIAL STATEMENTS As of and for the Year Ended June 30, 2018 And Report of Independent Auditor TABLE OF CONTENTS REPORT OF INDEPENDENT AUDITOR ........................................................................................ 1 MANAGEMENT’S DISCUSSION AND ANALYSIS ........................................................................... 3 FINANCIAL STATEMENTS COLLEGE EXHIBITS A-1 STATEMENT OF NET POSITION ................................................................... 8 A-2 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION .... 9 A-3 STATEMENT OF CASH FLOWS .................................................................... 10 NOTES TO THE FINANCIAL STATEMENTS ......................................................................... 12 REQUIRED SUPPLEMENTARY INFORMATION ............................................................................. 40 REPORT OF INDEPENDENT AUDITOR ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .......................... 46 Report of Independent Auditor Members of the Board of Trustees Gaston College Dallas, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of Gaston College (the “College”), a component unit of the State of North Carolina, and Gaston College Foundation, Inc. (the “Foundation”) a blended component unit, as of and for the year ended June 30, 2018, which collectively comprises the College’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the College’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of the College and the Foundation as of June 30, 2018, and the respective changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 20 to the financial statements, the College adopted Governmental Accounting Standards Board (“GASB”) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. In addition, Management identified the under-accrual of payroll expenses in accordance with generally accepted government accounting standards (“GAGAS”) at the previous year-end. As a result, net position as of July 1, 2017, has been restated. Our opinion is not modified with respect to these matters. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to this information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2018, on our consideration of the College’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the 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 in considering the College’s internal control over financial reporting and compliance. Charlotte, North Carolina December 10, 2018 2 Gaston College Management’s Discussion and Analysis The following is a discussion and analysis of Gaston College’s financial performance, providing an overview of the activities for the fiscal year ended June 30, 2018. The College’s financial statements are blended with the Gaston College Foundation, Inc. The Foundation exists to assist the College and its students. Overview of the Financial Statements This discussion and analysis is an introduction to the College’s basic financial statements. The College’s basic financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows. The Financial Statements are accompanied by Notes to the Financial Statements that explain and provide more detailed information. The Statement of Net Position presents information about the College’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position measure whether the College’s financial position is improving or deteriorating. The Statement of Revenues, Expenses, and Changes in Net Position describes changes in the College’s net position during the fiscal year. Revenue is presented in a format that distinguishes between operating and nonoperating revenues. The Statement of Cash Flows provides detail about the College’s cash activities for the year. The direct method is used to present cash flows. Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the College’s financial statements. Statement of Net Position Net position serves as an indicator of the College’s financial position. In the case of Gaston College, net position decreased $53,687,480.16. Excluding restatements, net position increased $323,492.92. Note 10 provides a more detailed analysis of the restatement. The decrease represents a 67.03% decrease compared to the prior year’s total net position. Significant year-to-year differences reported on the Statement of Net Position are the result of pension and postretirement activities. Noncapital Assets which include cash and cash equivalents, investments, accounts receivable, prepaid expenses, and inventory, increased $1,567,736.07 during the 2017-18 fiscal year. A majority of this increase in noncapital assets comes from positive investment returns. Service and fee revenue also contributed to the increase in noncapital assets. Capital Assets decreased $255,315.71 as depreciation and disposal costs exceeded new construction and equipment purchases for the fiscal year. Net Position Invested in Capital Assets mirrors the balance reported as Capital Assets less construction accounts payable