James H. Faulkner State Community College

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Ronald L. Jones, Chief Examiner

14-268

Report on the

James H. Faulkner

State Community College

Bay Minette, Alabama

October 1, 2012 through September 30, 2013

Filed: April 18, 2014

Department of

Examiners of Public Accounts

50 North Ripley Street, Room 3201

P.O. Box 302251

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State of Alabama

Department of

Examiners of Public Accounts

Ronald L. Jones Chief Examiner

P.O. Box 302251, Montgomery, AL 36130-2251 50 North Ripley Street, Room 3201 Montgomery, Alabama 36104-3833

Telephone (334) 242-9200

Honorable Ronald L. Jones

ChiefExaminer ofPublic Accounts Montgomery, Alabama 36130

Dear Sir:

FAX (334) 242-1775

Under the authority of the Code of Alabama 1975, Section 41-5-21, we submit this report on the results of the audit of James H. Faulkner State Community College for the period October 1, 2012 through September 30, 2013.

Sworn to and subscribed before me this

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14-268

Examiner ofPublic Accounts

~·

Shelia L. Levins

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Provides information required by the Governmental Accounting Standards Board (GASB) that is prepared by management of the College introducing the basic financial statements and providing an analytical overview of the College’s financial activities for the year. This information has not been audited, and no opinion is provided about the information.

Basic Financial Statements 1

Provides the minimum combination of financial statements and notes to the financial statements that is required for the fair presentation of the College’s financial position and results of operations in accordance with GAAP.

James H. Faulkner State Community College

Exhibit #1 Statement of Net Position 2

Exhibit #2 Statement of Revenues, Expenses and Changes in Net Position 4

Exhibit #3 Statement of Cash Flows 6

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Department of

Examiners of Public Accounts

SUMMARY

James H. Faulkner State Community College October 1, 2012 through September 30, 2013

James H. Faulkner State Community College (the “College”) is located in Baldwin County in Southwest Alabama and has three campuses located in Bay Minette, Fairhope, and Gulf Shores. The College provides general education at the freshman and sophomore levels leading to the Associate in Arts and Associate in Science degrees designed to facilitate transfer to a senior college or university. James H. Faulkner State Community College also provides the following technical, vocational and occupational education programs that prepare students for employment in an occupational field and leads to certificates and/or Associate in Applied Science degrees: Commercial Art/Graphic Design; Animation, Interactive Technology, Video Graphics & Visual Effects; Computer Technology; Dental Assisting; Hospitality Management; Culinary Arts; Event Planning; Pastry and Baking; Industrial Maintenance Technology; Landscape and Turf Operations Management; Management and Supervision Technology; Practical Nursing; Nursing Mobility (LPN to RN); Associate Degree Nursing; Office Administration; Paralegal; Advanced Emergency Medical Technician; Paramedic; Veterinary Technology; Respiratory Therapy; Surgical Technology; Child Development; Emergency Medical Technology; Real Estate; Automotive Technology; Building Technology; and Welding Technology.

James H. Faulkner State Community College is a publicly supported institution in the Alabama Community College System. The College is under the authority of the State Board of Education through the Department of Postsecondary Education.

This report presents the results of an audit, the objectives of which were to determine whether the financial statements present fairly the financial position and results of financial operations and whether the College complied with applicable laws and regulations, including those applicable to its major federal financial assistance programs. The audit was conducted 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, as well as, the requirements of the Department of Examiners of Public Accounts under the authority of the Code of Alabama

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14-268 B

An unmodified opinion was issued on the financial statements, which means the College’s financial statements present fairly, in all material respects, its financial position and the results of its operations for the fiscal year ended September 30, 2013.

There were no findings in the prior audit.

Tests performed during the audit did not disclose any significant instances of noncompliance with applicable state laws and regulations.

In the normal course of the College’s internal control procedures, the College became aware of certain irregularities involving invoices, billings, and some catered events of the College’s Hospitality and Culinary Arts Program. The College performed an internal investigation into the matter and turned the results of the investigation over to the Baldwin County District Attorney’s office for further review. As a result of the review, Baldwin County District Attorney’s office determined there was probable cause that certain violations of state law had occurred and the matter was reviewed in April 2013 by the Baldwin County Grand Jury. Two indictments were issued related to the investigation. Two employees were indicted on three counts related to the State Ethics Law, one count of 2nd degree theft of property, and one count related to state tax laws. On April 17, 2013, one employee was placed on paid administrative leave and another (non-tenured) employee was terminated. Both have been charged with criminal theft, ethics, and tax evasion. The non-tenured employee has pled guilty to a misdemeanor charge of use of position for personal gain and all other charges in the indictment have been dropped as a result of the plea agreement. Charges are pending on the other employee and trial is scheduled for March 2014.

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14-268 C

Department of

Examiners of Public Accounts

COMMENTS

James H. Faulkner State Community College October 1, 2012 through September 30, 2013

James H. Faulkner State Community College had its origin on May 3, 1963 when Act Numbers 92, 93, and 94 of Acts of Alabama 1963 were approved. Act Number 92 on page 257 provided funds to pay the principal and interest on bonds, not exceeding $15,000,000, issued and sold by the public corporation known as the Alabama Trade School and Junior College Authority. Act Number 93 on page 259 authorized the Governor, the Director of Finance, and the State Superintendent of Education to become a corporation, to be known as the Alabama Trade School and Junior College Authority, for the object of providing for the construction and equipment of educational institutions within the state known as junior colleges and trade schools. Act Number 94 on page 268 vested in the Alabama State Board of Education the authority and responsibility for the operation, management, control, supervision, maintenance, regulation, upkeep, improvement, equipment, and enlargement of, and additions to, educational institutions known as trade schools and junior colleges.

James H. Faulkner State Community College (the “College”) has undergone several transitions and name changes in its lifetime. For the first few months of operation, it was called Bay Minette State Junior College, but in early 1966, the State Board of Education named the College William Lowndes Yancey State Junior College in honor of a pre-Civil-War statesman and educator. In 1970, the name changed to James H. Faulkner State Junior College to honor Mr. James H. Faulkner, a prominent citizen of Baldwin County. The College name was changed again by the State Board of Education in August 1992 to James H. Faulkner State Community College to more accurately reflect its mission and purpose.

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14-268 D

James H. Faulkner State Community College began offering courses at Fairhope in 1970 and in 1975, the College added a permanent staff, student services and expanded offering of programs and services to the community. Facilities used at that time were through agreements with the Eastern Shore Art Association and Fairhope High School as well as the Fairhope Public Library. In May 1987, the College entered into a 99 year lease agreement with the City of Fairhope to acquire an approximately 10 acre property located in downtown Fairhope that had been the campus of the Marietta Johnson School of Organic Education. The Fairhope site was entered in the National Register of Historic Places by the United States Department of Interior on July 1, 1988. Since that time, the College has conducted classes at this campus.

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14-268 F

Independent Auditor’s Report

To: Dr. Mark A. Heinrich, Chancellor – Alabama Community College System Dr. Gary Branch, President – James H. Faulkner State Community College

Report on the Financial Statements

We have audited the accompanying basic financial statements of James H. Faulkner State Community College, as of and for the year ended September 30, 2013, as listed in the table of contents as Exhibits 1 through 3.

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 off 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 basic financial statements are free of 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 entity’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 entity’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.

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14-268 G

Opinion

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of James H. Faulkner State Community College, as of September 30, 2013, and its changes in financial position and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis (MD&A), 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 the required supplementary 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 inquires, 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.

Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the basic financial statements of James H. Faulkner State Community College, taken as a whole. The accompanying Schedule of Expenditures of Federal Awards (Exhibit 4) is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.

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Other Reporting Required bv Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 5, 2014, on our consideration of James H. Faulkner State Community 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 James H. Faulkner State Community College's internal control over financial reporting and compliance.

Montgomery, Alabama February 5, 2014 14-268

'1f,JtJ<r

Ronald L. Jones Chief Examiner

Department of Examiners of Public Accounts

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Faulkner State Community College

Management’s Discussion and Analysis

Faulkner State Community College is a public, open door, comprehensive community college dedicated to meeting the changing needs of citizens in the Alabama service area. By offering a broad spectrum of programs, the College provides students with opportunities for educational, personal and professional advancement. A wide range of academic courses prepares students to transfer to four-year institutions. Technical programs equip students to master certain skills as well as to utilize them through job entry.

Faulkner State Community College is proud to present its financial statements for fiscal year 2013. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows.

This discussion and analysis of the College’s financial statements provides an overview of its financial activities for the year and comparative amounts for the prior year.

Statement of Net Position

The Statement of Net Position presents the assets, liabilities, and net position of the College as of the end of the fiscal year. The Statement of Net Position is a ‘point in time’ financial statement. The purpose of the Statement of Net Position is to present to the readers of the financial statements a fiscal snapshot of Faulkner State Community College. The Statement of Net Position presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Position (Assets minus Liabilities).

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K

Net Position is divided into two major categories. The first category, net investment in capital assets, provides the institution’s equity in property, plant and equipment owned by the institution. The corpus of nonexpendable restricted resources is only available for investment purposes. The second category is unrestricted net position. Unrestricted net position is available to the institution for any appropriate purpose of the institution.

Statement of Net Assets (thousands of dollars)

2013 2012 Assets:

Assets:

Current assets $ 26,619 $ 23,840 Capital assets, net 34,946 35,494 Other Noncurrent Assets 1,690 2,168

Total Assets 63,255 61,502 Liabilities Current liabilities 8,060 7,338 Noncurrent liabilities 16,790 18,005 Total Liabilities 24,850 25,343 Net Position

Net Investment in Capital Assets 17,734 17,016 Restricted - expendable 2,137 1,140 Restricted - nonexpendable

Unrestricted 18,534 18,003

Total Net Position $ 38,405 $ 36,159

The $63.255 million in assets includes cash and cash equivalents of $18.549 million and investments of $4.277 million. A review of the Statement of Net Position also reveals accounts receivable of just over $2.453 million. Most of this represents amounts where a third party is paying for a student.

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Liabilities of $24.850 million include long-term debt of $17.420 million and compensated absences of $.632 million as of the end of the 2013 fiscal year. Also included in the liabilities is deferred revenue of $4.70 million. The assets less liabilities result in net position of $38.405 million.

Statement of Revenues, Expenses and Changes in Net Position

Changes in total Net Position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Position. 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.

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.

Statement of Revenues, Expenses and Changes in Net Position (thousands of dollars)

2013 2012

Operating revenues $ 13,681 $ 12,961

Operating expenses 30,877 29,810

Operating loss (17,196) (16,849)

Nonoperating revenues and expenses 18,724 19,886 Income (loss) before other revenues,

expenses, gains or losses 1,528 3,037 Other revenues, expenses, gains or losses 715

-Increase in net position 2,243 3,037

Net Position at beginning of year 36,159 33,122

Restatements 3

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The Statement of Revenues, Expenses, and Changes in Net Position reflect a positive year with an increase in the net position at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Position are the following:

8,098 950 270 3,382 981 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Thousands Source of Funds

OPERATING REVENUE(in thousands)

Tuition/Fees Federal Grants

Other Contracts & Revenues Auxiliary Enterprises

State Grants

The above chart displays, in thousands of dollars, the operating revenues by type and their relationship with one another.

For fall 2012, tuition and fees charged per credit hour of instruction for in-state students was $138.00. Student tuition and fees represent the largest portion of the operating revenues.

The $30.877 million in operating expenses by function (displayed in thousands) are displayed in the following chart.

OPERATING EXPENSES (in thousands)

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Although the College’s operating expenses are reported by functional classification, the operating expenses restated by their natural classification is interesting because each function contains each of the natural classification expenses except depreciation that is considered both a functional and natural expense class.

Operating expenses are summarized here by natural classification. Natural classification displays the type of expense regardless of program.

OPERATING EXPENSES BY

NATURAL CLASSIFICATION (in thousands)

2,149; 7% 8,765; 28% 1,262; 4% 3,779; 12% 1,425; 5% $13,497; 44%

Salaries and wages Benefits

Supplies Utilities Financial Aid Depreciation

The largest expenditure by natural classification is for salaries and benefits for $17.276 million. Vendors and supplies represent $10.027 million in expenditures.

Statement of Cash Flows

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The fifth and final component presented in the statement reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Position.

Cash Flows for the Year ended September 30 (thousands of dollars) 2013

Cash provided (used) by:

Operating activities $(15,419)

Noncapital financing activities 19,515 Capital and related financing activities (2,230)

Investing activities 0

Net change in cash 1,866

Cash, beginning of year 16,683

Cash, end of year $ 18,549

The primary cash receipts from operating activities consist of tuition and fees, grants, and contracts. Cash outlays include payment of wages, benefits, supplies, utilities and scholarships.

State appropriations are the primary source of noncapital financing. This source of revenue is categorized as noncapital even though the College’s budget depends on this to continue the current level of operations.

Investing activities reflect purchases, sales, and interest income earned on investments. Investments identified in the cash flow statement as investing activities include amounts earned on investments and allowed to become a part of the investment.

Economic Outlook

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James H. Faulkner

State Community College

Bay Minette, Alabama 2 Exhibit #1

Statement of Net Position

September 30, 2013

ASSETS Current Assets

Cash and Cash Equivalents $ 18,548,979.48

Deposits with Bond Trustee 1,534,696.65

Short-Term Investments 2,876,720.49

Accounts Receivable 2,453,752.61

Inventories 1,171,830.82

Bond Issuance Costs 23,673.19

Other Assets 9,265.00

Total Current Assets 26,618,918.24

Noncurrent Assets

Investments 1,400,331.62

Accounts Receivable 1,576.64

Bond Issuance Costs 288,681.97

Capital Assets:

Land 788,070.73

Improvements Other Than Buildings 2,403,403.20

Buildings 44,922,797.26

Equipment and Furniture 2,539,912.52

Library Holdings 1,533,072.84

Less: Accumulated Depreciation (17,241,469.31)

Total Capital Assets, Net of Depreciation 34,945,787.24

Total Noncurrent Assets 36,636,377.47

Total Assets $ 63,255,295.71

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James H. Faulkner

LIABILITIES Current Liabilities

Deposits $ 394,221.97

Accounts Payable and Accrued Liabilities 1,600,393.54

Deferred Revenue 4,698,199.93

Lease Obligations 110,000.00

Bond Premium 9,874.47

Bonds Payable 1,140,000.00

Compensated Absences 107,505.00

Total Current Liabilities 8,060,194.91

Noncurrent Liabilities

Bond Premium 94,630.41

Bonds Payable 16,170,000.00

Compensated Absences 524,882.35

Total Noncurrent Liabilities 16,789,512.76

Total Liabilities 24,849,707.67

NET POSITION

Net Investment in Capital Assets 17,733,637.52

Restricted for: Expendable:

Debt Service 1,150,754.14

Capital Projects 986,964.29

Unrestricted 18,534,232.09

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James H. Faulkner

Statement of Revenues, Expenses and Changes in Net Position

For the Year Ended September 30, 2013

OPERATING REVENUES

Student Tuition and Fees (Net of Scholarship Allowances of $8,699,042.30) $ 8,097,880.09

Federal Grants and Contracts 949,719.98

State and Local Grants and Contracts 981,281.08

Auxiliary Enterprises:

Residential Life (Net of Scholarship Allowances of $503,978.70) 971,717.38 Bookstore (Net of Scholarship Allowances of $1,044,417.44) 1,531,725.42 Food Service (Net of Scholarship Allowances of $207,652.61) 834,295.54

Vending 44,292.80

Other Operating Revenues 270,258.53

Total Operating Revenues 13,681,170.82

OPERATING EXPENSES

Instruction 11,997,423.82

Institutional Support 2,875,603.90

Academic Support 3,139,744.97

Student Services 2,747,679.29

Operation and Maintenance 3,275,594.57

Scholarships and Financial Aid 2,149,491.32

Depreciation 1,424,612.57

Auxiliary Enterprises 3,267,267.35

Total Operating Expenses 30,877,417.79

Operating Income (Loss) $ (17,196,246.97)

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James H. Faulkner

NONOPERATING REVENUES (EXPENSES)

State Appropriations - O&M $ 10,387,507.00

Local Appropriations 1,337,247.79

Federal Grants 7,765,175.78

Gifts 25,701.10

Investment Income 4,476.74

Interest on Capital Asset Related Debt (772,360.95)

Other Nonoperating Revenues (Expenses) (23,673.19)

Net Nonoperating Revenues 18,724,074.27

Income Before other Revenue, (Expenses), Gains or Losses 1,527,827.30

Capital Appropriations 105,000.00

Capital Grants, Contracts, and Gifts 610,189.92

Changes in Net Position 2,243,017.22

Total Net Position - Beginning of Year, as Restated (See Note 12) 36,162,570.82

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James H. Faulkner

Statement of Cash Flows

For the Year Ended September 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and Fees $ 8,137,185.26

Federal Grants and Contracts 804,779.26

State and Local Grants and Contracts 935,703.17

Payments to Suppliers (8,887,696.37)

Payments to Utilities (1,262,162.98)

Payments to Employees (12,952,967.67)

Payments for Benefits (3,698,152.02)

Payments for Scholarships (2,149,491.32)

Auxiliary Enterprise Charges:

Residence Halls 981,589.32

Bookstore 1,531,725.42

Food Service 825,904.36

Vending 44,292.80

Other Receipts (Payments) 270,258.53

Net Cash Provided (Used) by Operating Activities (15,419,032.24)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State Appropriations 10,387,507.00

Local Appropriations 1,337,247.79

Federal Grants 7,765,175.78

Gifts and Grants 25,701.10

Agency Transactions (562.71)

Net Cash Provided (Used) by Noncapital Financing Activities 19,515,068.96

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Capital Appropriations 105,000.00

Capital Grants and Gifts 610,189.92

Purchases of Capital Assets (873,061.61)

Principal Paid on Capital Debt and Leases (1,280,000.00)

Interest Paid on Capital Debt and Leases (782,235.42)

Deposits with Trustees 9,972.93

Interest on Bonds (20,349.99)

Net Cash Provided (Used) by Capital and Related Financing Activities (2,230,484.17)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest on Investments 4,476.74

Purchase of Investments (4,393.95)

Net Cash Provided (Used) by Investing Activities 82.79 Net Increase (Decrease) in Cash and Cash Equivalents 1,865,635.34 Cash and Cash Equivalents - Beginning of Year 16,683,344.14

Cash and Cash Equivalents - End of Year $ 18,548,979.48

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James H. Faulkner

Reconciliation of Net Operating Revenues (Expenses) to Net Cash Provided (Used) by Operating Activities:

Operating Income (Loss) $ (17,196,246.97)

Adjustments to Reconcile Net Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Depreciation Expense 1,424,612.57

Changes in Assets and Liabilities:

(Increase)/Decrease in Receivables, Net (344,306.57)

(Increase)/Decrease in Inventories (112,210.15)

(Increase)/Decrease in Other Assets (2,365.00)

Increase/(Decrease) in Accounts Payable 568,588.80

Increase/(Decrease) in Deferred Revenue 194,573.87

Increase/(Decrease) in Deposits Held for Others (5,055.12) Increase/(Decrease) in Compensated Absences 53,376.33

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

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Note 1 – Summary of Significant Accounting Policies

The financial statements of James H. Faulkner State Community College are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the College are described below.

A. Reporting Entity

For financial reporting purposes, James H. Faulkner State Community College is part of the primary government of the State of Alabama. The State of Alabama, through the State Board of Education, governs the Department of Postsecondary Education. The Department of Postsecondary Education, through its Chancellor, has the authority and responsibility for the operation, management, supervision and regulation of James H. Faulkner State Community College.

B. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The financial statements of James H. Faulkner State Community College have been prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

The College follows all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989 unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARBs).

It is the policy of the College to first apply restricted resources when an expense is incurred and then apply unrestricted resources when both restricted and unrestricted net resources are available.

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

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C. Assets, Liabilities, and Net Position

1. Deposits and Investments

The College has defined cash to include currency on hand and demand deposits with financial institutions.

Statutes authorize the College to invest in the same type of instruments as allowed by Alabama law for domestic life insurance companies. This includes a wide range of investments, such as direct obligations of the United States of America, obligations issued or guaranteed by certain federal agencies, and bonds of any state, county, city, town, village, municipality, district or other political subdivision of any state or any instrumentality or board thereof or of the United States of America that meet specified criteria.

Investments are reported at fair value.

2. Receivables

Accounts receivable relate to amounts due from federal and state grants, state appropriations, third party tuition, and auxiliary enterprise sales, such as food services, bookstore, and residence halls.

3. Inventories

The inventories are comprised of consumable supplies and items held for resale. Inventories are valued at cost. All inventories are valued using the first in/first out (FIFO) method.

4. Capital Assets

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

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Major outlays for capital assets and improvements are capitalized as projects are constructed. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period.

Maintenance and repairs are charged to operations when incurred. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon the sale or retirement of fixed assets being depreciated using the straight-line method, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operation.

The method of depreciation and useful lives of the capital assets are as follows:

Assets Depreciation Method Useful Lives

Buildings and Improvements Straight-Line 50 years Improvements Other Than Buildings Composite 25 years

Equipment Composite 5 – 10 years

Library Materials Composite 20 years

Capitalized Software Straight-Line 10 years Internally Generated Computer Software Straight-Line 10 years Easement and Land Use Rights Straight-Line 20 years Patents, Trademarks, and Copyrights Straight-Line 20 years

5. Long-Term Obligations

Long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds.

6. Compensated Absences

No liability is recorded for sick leave. Substantially all employees of the College earn 12 days of sick leave each year with unlimited accumulation. Payment is not made to employees for unpaid sick leave at termination or retirement.

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

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7. Deferred Tuition and Fee Revenue

Tuition and fee revenues received but related to the period after September 30, 2013, have been deferred.

8. Net Position

Net Position is required to be classified for accounting and reporting purposes into the following categories:

♦ Net Investment in Capital Assets – Capital assets, including restricted capital assets, reduced by accumulated depreciation and by outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position. Any significant unspent related debt proceeds or inflows of resources at year-end related to capital assets are not included in this calculation.

♦ Restricted:

 Nonexpendable – Net Position subject to externally imposed stipulations that they be maintained permanently by the College. Such assets include the College’s permanent endowment funds.

 Expendable – Net Position whose use by the College is subject to externally imposed stipulations that can be fulfilled by actions of the College pursuant to those stipulations or that expire by the passage of time. These include funds held in federal loan programs. ♦ Unrestricted – Net Position is the net amount of the assets, deferred outflows of resources,

liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. Unrestricted resources may be designated for specific purposes by action of management or the State Board of Education.

9. Federal Financial Assistance Programs

The College participates in various federal programs. Federal programs are audited in accordance with the Single Audit Act Amendments of 1996, the U. S. Office of Management and Budget Revised Circular A-133, Audits of States, Local Governments and Non-Profit

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

12

10. Scholarship Allowances and Student Aid

Student tuition and fees are reported net of scholarship allowances and discounts. The amount for scholarship allowances and discounts is the difference between the stated charge for goods and services provided by the College and the amount that is paid by the student and/or third parties making payments on behalf of the student. The College uses the case-by-case method to determine the amount of scholarship allowances and discounts.

Note 2 – Deposits and Investments

A. Deposits

The College’s deposits at year-end were held by financial institutions in the State of Alabama’s Security for Alabama Funds Enhancement (SAFE) Program. The SAFE Program was established by the Alabama Legislature and is governed by the provisions contained in the Code

of Alabama 1975, Sections 41-14A-1 through 41-14A-14. Under the SAFE Program all public

funds are protected through a collateral pool administered by the Alabama State Treasurer’s Office. Under this program, financial institutions holding deposits of public funds must pledge securities as collateral against those deposits. In the event of failure of a financial institution, securities pledged by that financial institution would be liquidated by the State Treasurer to replace the public deposits not covered by the Federal Deposit Insurance Corporation (FDIC). If the securities pledged fail to produce adequate funds, every institution participating in the pool would share the liability for the remaining balance.

The Statement of Net Position classification “cash” includes all readily available cash such as petty cash and demand deposits.

B. Investments

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

13

Note 3 – Receivables

Receivables are summarized as follows:

Accounts Receivable:

Federal $ 294,737.90

State 175,801.12

Other 112,065.33

Total Accounts Receivable, Net 582,604.35

Student Receivables:

Current 1,872,660.26

Noncurrent 64.64

Total Student Receivables, Net 1,872,724.90 Total Receivables $2,455,329.25

Note 4 – Capital Assets

Capital asset activity for the year ended September 30, 2013, was as follows:

Beginning

Balance Additions Deductions

Reclassifications/ Adjustments Ending Balance Land $ 486,630.99 $ 301,439.74 $ $ $ 788,070.73 Buildings 44,528,894.60 393,902.66 44,922,797.26 Improvements Other Than Buildings 2,403,403.20 2,403,403.20 Equipment Greater Than $25,000 1,714,057.90 76,638.00 1,790,695.90 Equipment Less Than $25,000 722,353.51 61,132.44 34,269.33 749,216.62 Library Holdings 1,496,931.08 39,948.77 3,807.01 1,533,072.84 Total 51,352,271.28 873,061.61 38,076.34 52,187,256.55

Less: Accumulated Depreciation

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

14

Note 5 – Defined Benefit Pension Plan

A. Plan Description

The College contributes to the Teachers’ Retirement System of Alabama, a cost-sharing multiple-employer public employee retirement system for the various state-supported educational agencies and institutions. This plan is administered by the Retirement Systems of Alabama.

Full-time employees of the College are members of the Teachers’ Retirement System. Membership is mandatory for covered or eligible employees of Faulkner State Community College. Benefits vest after 10 years of creditable service. Tier 1 employees (those hired prior to January 2013) may retire at any age after 25 years of service or at age 60 with 10 years of service. Tier 2 employees (those hired beginning January 2013 and after) may retire at age 62 with 10 or more years of service.

Retirement benefits are calculated by two methods with the retiree receiving payment under the method which yields the highest monthly benefit. The methods are (1) Minimum Guaranteed, or (2) Formula, of which the Formula method usually produces the highest monthly benefit. Under this method Tier 1 retirees are allowed 2.0125% of their average final salary for each year of service. Tier 1 employees’ average final salary is determined by the best three out of their final ten years of service. Tier 2 retirees are allowed 1.65% of their average final salary for each year of service. Tier 2 employees’ average final salary is determined by the best three out of the last five years of service. Retirees may also elect to receive a reduced retirement allowance (Special Privileges at Retirement) in order to provide an allowance to a designated beneficiary after the member’s death. Disability retirement benefits are calculated in the same manner. Pre-retirement death benefits in the amount of the annual salary for the fiscal year preceding death are provided to plan members.

The Teachers’ Retirement System was established as of October 1, 1941, under the provisions of Act Number 419, Acts of Alabama 1939, for the purpose of providing retirement allowances and other specified benefits for qualified persons employed by state-supported educational institutions. The responsibility for general administration and operation of the Teachers’ Retirement System is vested in the Board of Control (currently 14 members). Benefit provisions are established by the Code of Alabama 1975, Sections 16-25-1 through 16-25-113, as amended, and Sections 36-27B-1 through 36-27B-6, as amended.

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

15

B. Funding Policy

Tier 1 employees, with the exception of full-time law enforcement officers, are required by statute to contribute 7-1/2 percent of their salary to the Teachers’ Retirement System. Tier 1 full-time law enforcement officers (as defined by Act Number 2000-669, Acts of Alabama, page 1335) are required by statute to contribute 8-1/2 percent of their salary to the Teachers’ Retirement System. Tier 2 employees, with the exception of full-time law enforcement officers, are required by statute to contribute 6 percent of their salary to the Teachers’ Retirement System. Tier 2 full-time law enforcement officers are required by statute to contribute 7 percent of their salary to the Teachers’ Retirement System. Faulkner State Community College is required to contribute the remaining amounts necessary to fund the actuarially determined contributions to ensure sufficient assets will be available to pay benefits when due. Each year the Teachers’ Retirement System recommends to the Legislature the contribution rate for the following fiscal year, with the Legislature setting this rate in the annual appropriation bill. The percentages of the contributions and the amount of contributions made by Faulkner State Community College and its employees equal the required contributions for each year as follows:

2013 2013

Fiscal Year Ended September 30, Tier 1 Tier 2 2012 2011

Total Percentage of Covered Payroll 17.58% 15.44% 17.25% 17.51%

Contributions:

Percentage Contributed by College 10.08% 9.44% 10.00% 12.51% Percentage Contributed by Employees 7.50% 6.00% 7.25% 5.00%

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

16

Note 6 – Other Postemployment Benefits (OPEB) A. Plan Description

The College contributes to the Alabama Retired Education Employees’ Health Care Trust (the “Trust”), a cost-sharing multiple-employer defined benefit postemployment healthcare plan. The Trust provides health care benefits to state and local school system retirees and was established in 2007 under the provisions of Act Number 2007-16, Acts of Alabama, as an irrevocable trust fund. Responsibility for general administration and operations of the Trust is vested with the Public Education Employees’ Health Insurance Board (PEEHIB) members. The

Code of Alabama 1975, Section 16-25A-4, provides the PEEHIB with the authority to amend the

benefit provisions in order to provide reasonable assurance of stability in future years. The Trust issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained at the Public Educations Employees’ Health Insurance Plan website, http://www.rsa-al.gov/PEEHIP/peehip.html under the Trust Fund Financials tab. The Plan’s financial report for fiscal year 2013 will be available at the end of January 2014. The provisions of GASB Statement Number 45, Accounting and Financial

Reporting by Employers for Postemployment Benefits Other than Pensions were implemented

prospectively.

B. Funding Policy

The Public Education Employees’ Health Insurance Fund (PEEHIF) was established in 1983 under the provisions of Act Number 255, Acts of Alabama, to provide a uniform plan of health insurance for current and retired employees of state educational institutions. The plan is administered by the PEEHIB. Any Trust fund assets used in paying administrative costs and retiree benefits are transferred to and paid from the PEEHIF. The PEEHIB periodically reviews the funds available in the PEEHIF and if excess funds are determined to be available, the PEEHIB authorizes a transfer of funds from the PEEHIF to the Trust. Retirees are required to contribute monthly as follows:

Fiscal Year 2013

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

17

For employees that retire other than for disability on or after October 1, 2005 and before January 1, 2012, for each year under 25 years of service, the retiree pays two percent of the employer premium and for each year over 25 years of service, the retiree premium is reduced by two percent of the employer premium. Employees who retire on or after January 1, 2012, with less than 25 years of service, are required to pay 4% for each year under 25 years of service. In addition, non-Medicare eligible employees who retire on or after January 1, 2012 are required to pay 1% more for each year less than 65 (age premium) and to pay the net difference between the active employee subsidy and the non-Medicare eligible subsidy (subsidy premium). When the retiree becomes Medicare eligible, the age and subsidy premium no longer applies, but the years of service premium (if applicable to the retiree) will continue to be applied throughout retirement. These changes are being phased in over a 5 year period. The tobacco premium is $28.00 per month for retired members that use tobacco products.

The College is required to contribute at a rate specified by the State for each active employee. The College’s share of premiums for retired employees health insurance is included as part of the premium for active employees. The following shows the required contributions in dollars and the percentage of that amount contributed for retirees:

Fiscal Year Ended September 30, Active Health Insurance Premiums Paid By College Amount of Premium Attributable to Retirees Percentage of Active Employee Premiums Attributable to Retirees Total Amount Paid Attributable to Retirees Percentage of Required Amount Contributed 2013 $714.00 $216.90 30.38% $439,270.92 100% 2012 $714.00 $228.85 32.05% $481,282.35 100% 2011 $752.00 $198.94 26.45% $393,553.23 100%

Each year the PEEHIB certifies to the Governor and to the Legislature the contribution rates based on the amount needed to fund coverage for benefits for the following fiscal year and the Legislature sets the premium rate in the annual appropriation bill. This results in a pay-as-you-go funding method.

Note 7 – Construction and Other Significant Commitments

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

18

Note 8 – Lease Obligations

Capital Leases

The College is acquiring one building under a lease agreement, which provides for the College to purchase the building over a period of years. Minimum lease payments under capital leases together with the present value of the net minimum lease payments are shown in the table below:

Fiscal Year Building

2013-2014 $120,137.66

Minimum Lease Payments 120,137.66

Less: Amounts Representing Interest 10,137.66 Present Value of Net Minimum Lease Payments $110,000.00

Note 9 – Long-Term Liabilities

Long-term liabilities activity for the year ended September 30, 2013, was as follows:

Beginning

Balance Additions Reductions

Ending Balance

Current Portion

Leases and Bonds Payable:

Lease Obligations $ 255,000.00 $ $ 145,000.00 $ 110,000.00 $ 110,000.00 Revenue Bonds 18,445,000.00 1,135,000.00 17,310,000.00 1,140,000.00 Total Leases and Bonds 18,700,000.00 1,280,000.00 17,420,000.00 1,250,000.00

Other Liabilities:

Compensated Absences 579,011.02 53,376.33 632,387.35 107,505.00 Bond Premium Liability 114,379.35 9,874.47 104,504.88 9,874.47 Total Other Liabilities 693,390.37 53,376.33 9,874.47 736,892.23 117,379.47 Total Long-Term Liabilities $19,393,390.37 $53,376.33 $1,289,874.47 $18,156,892.23 $1,367,379.47

Bonds Payable:

Revenue Bonds, Series 2011, 3% Interest

Due Semi-Annually Through 2030. $5,195,000.00 Revenue Bonds, Series 2009, 6.125-6.3% Interest,

Due Semi-Annually Through 2028. $3,970,000.00 Revenue Bonds, Series 2005, 2.75-4% Interest,

Due Semi-Annually Through 2024. $7,605,000.00 Refunding Revenue Bonds, Series 2009B, 3% Interest,

Due Semi-Annually Through 2014. $ 540,000.00

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

19

Revenue from student tuition and fees sufficient to pay the annual debt service are pledged to secure the bonds. Principal and interest maturity requirements on bonds debt are as follows:

2011 Revenue Bonds 2009 Revenue Bonds Fiscal Year Principal Interest Principal Interest

2013-2014 $ 215,000.00 $ 195,187.50 $ 170,000.00 $ 206,712.50 2014-2015 220,000.00 188,662.50 175,000.00 199,812.50 2015-2016 225,000.00 183,112.50 185,000.00 192,612.50 2016-2017 230,000.00 178,562.50 190,000.00 184,875.00 2017-2018 235,000.00 172,737.50 200,000.00 176,462.50 2018-2019 245,000.00 164,312.50 210,000.00 167,362.50 2019-2020 255,000.00 154,312.50 220,000.00 157,412.50 2020-2021 265,000.00 144,906.25 230,000.00 146,437.50 2021-2022 270,000.00 135,200.00 240,000.00 134,387.50 2022-2023 285,000.00 124,456.25 255,000.00 121,234.38 2023-2024 295,000.00 113,212.50 270,000.00 106,956.26 2024-2025 305,000.00 101,212.50 285,000.00 90,803.13 2025-2026 320,000.00 88,312.50 305,000.00 72,734.38 2026-2027 335,000.00 74,393.75 325,000.00 53,440.63 2027-2028 350,000.00 59,400.00 345,000.00 32,921.88 2028-2029 365,000.00 43,312.50 365,000.00 11,178.13 2029-2030 380,000.00 26,550.00 2030-2031 400,000.00 9,000.00 Totals $5,195,000.00 $2,156,843.75 $3,970,000.00 $2,055,343.79

Bond Issuance Costs and Premiums

The College has bond issuance costs in connection with the issuance of its 2005 Series Revenue Bonds, 2009 Series Revenue Bonds, and 2011 Series Revenue Bonds. The issuance costs and bond premium are being amortized using the straight-line method over the life of the bonds.

2005 Series 2009 Series 2011 Series Total

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

20

2005 Revenue Bonds

2009B Refunding

Revenue Bonds Revenue Bonds Principal Interest Principal Interest Totals $ 490,000.00 $ 334,216.25 $265,000.00 $12,225.00 $ 1,888,341.25 510,000.00 316,092.50 275,000.00 4,125.00 1,888,692.50 525,000.00 296,756.25 1,607,481.25 550,000.00 272,850.00 1,606,287.50 580,000.00 244,600.00 1,608,800.00 610,000.00 214,850.00 1,611,525.00 640,000.00 183,600.00 1,610,325.00 675,000.00 150,725.00 1,612,068.75 705,000.00 116,225.00 1,600,812.50 740,000.00 82,875.00 1,608,565.63 775,000.00 50,681.25 1,610,850.01 805,000.00 17,106.25 1,604,121.88 786,046.88 787,834.38 787,321.88 784,490.63 406,550.00 409,000.00 $7,605,000.00 $2,280,577.50 $540,000.00 $16,350.00 $23,819,115.04

Bond Premium Liability

The College has a bond premium in connection with the issuance of its 2005 Series Revenue Bonds. The bond premium is being amortized using the straight-line method over the life of the bonds.

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

21

Pledged Revenues

Revenue Bonds, Series 2005

The State Board of Education of the State of Alabama has pledged student tuition fee revenues to repay $11,075,000.00 in Faulkner State Community College Revenue Bonds, Series 2005 issued on May 1, 2005 to construct a Health Care and Physical Science Laboratory Center on the Fairhope Campus and a 60,000-square-foot residential life and learning facility on the Bay Minette Campus. Future revenues in the amount of $9,885,577.50 are pledged to repay principal and interest on the bonds at September 30, 2013. Pledge revenues in the amount of $12,109,203.62 were received during the fiscal year ended September 30, 2013 with $853,160.00 or 7% of pledged revenues being used to pay principal and interest during this fiscal year. These bonds are scheduled to mature in fiscal year 2024.

Bonds, Series 2009

The State Board of Education of the State of Alabama has pledged student tuition fee revenues to repay $4,595,000.00 in Faulkner State Community College Revenue Bonds, Series 2009 issued on January 1, 2009 to construct a 2 ½ story, 46,000-square-foot building on the College’s Fairhope Campus. Future revenues in the amount of $6,025,343.79 are pledged to repay principal and interest on the bonds at September 30, 2013. Pledge revenues in the amount of $12,109,203.62 were received during the fiscal year ended September 30, 2013 with $378,412.50 or 3% of pledged revenues being used to pay principal and interest during this fiscal year. These bonds are schedules to mature in fiscal year 2028.

Refunding Revenue Bonds, Series 2009B

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

22

Bonds, Series 2011

The State Board of Education of the State of Alabama has pledged student tuition fee revenues and facility usage fee revenues to repay $5,635,000.00 in Faulkner State Community College Revenue Bonds, Series 2011 issued on June 8, 2011 to construct a new Student, Business, and Instructional Services building on its Bay Minette Campus. Future revenues in the amount of $7,351,843.75 are pledged to repay principal and interest on the bonds at September 30, 2013. Pledge revenues in the amount of $13,090,052.63 were received during the fiscal year ended September 30, 2013 with $406,487.50 or 3% of pledged revenues being used to pay principal and interest during this fiscal year. These bonds are schedules to mature in fiscal year 2030.

Note 10 – Risk Management

The College is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The College has insurance for its buildings and contents through the State Insurance Fund (SIF), part of the State of Alabama, Department of Finance; Division of Risk Management which operates as a common risk management and insurance program for state owned properties. The College pays an annual premium based on the amount of coverage requested. The SIF provides coverage up to $2 million per occurrence and is self-insured up to a maximum of $6 million in aggregate claims. The SIF purchases commercial insurance for claims which in the aggregate exceed $6 million. The College purchases commercial insurance for its automobile coverage, general liability, and professional legal liability coverage. In addition, the College has fidelity bonds on the College’s president, dean of administrative affairs, controller, and financial aid director as well as on all other college personnel who handle funds.

Employee health insurance is provided through the Public Education Employees’ Health Insurance Fund (PEEHIF) administered by the Public Education Employees’ Health Insurance Board (PEEHIB). The Fund was established to provide a uniform plan of health insurance for current and retired employees of state educational institutions and is self-sustaining. Monthly premiums for employee and dependent coverage are determined annually by the plan’s actuary and based on anticipated claims in the upcoming year, considering any remaining fund balance on hand available for claims. The College contributes a specified amount monthly to the PEEHIF for each employee and this amount is applied against the employee’s premiums for the coverage selected and the employee pays any remaining premium.

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Notes to the Financial Statements

For the Year Ended September 30, 2013

James H. Faulkner

23

Claims which occur as a result of employee job-related injuries may be brought before the State of Alabama Board of Adjustment. The Board of Adjustment serves as an arbitrator and its decision is binding. If the Board of Adjustment determines that a claim is valid, it decides the proper amount of compensation (subject to statutory limitations) and the funds are paid by the College.

Note 11 – Related Parties

James H. Faulkner State Community College Foundation, Inc.

The Foundation was incorporated as a non-profit corporation to promote scientific, literacy and educational purposes, the advancement of James H. Faulkner State Community College, and for the encouragement and support of its students and faculty. This report contains no financial statements of James H. Faulkner State Community College Foundation, Inc.

Note 12 – Net Position Restatement

Prior period adjustments have been made as outlined below:

Beginning Net Position September 30, 2012 $36,159,428.42 Prior Period Adjustment

To Correct Prior Year Building Depreciation 3,142.40

Total Adjustments 3,142.40

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James H. Faulkner

24

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James H. Faulkner

Schedule of Expenditures of Federal Awards

For the Year Ended September 30, 2013

Grantor's/ Federal Grantor/ Federal Pass-Through Pass-Through Grantor/ CFDA Grantor's Program Title Number Number Student Financial Assistance Cluster

U. S. Department of Education Direct Programs

Federal Supplemental Educational Opportunity Grants 84.007 Federal Supplemental Educational Opportunity Grants 84.007

Sub-Total Federal Supplemental Educational Opportunity Grants

Federal Work-Study Program 84.033

Sub-Total Federal Work-Study Program

Federal Pell Grant Program 84.063

Federal Pell Grant Administrative Allowance 84.063 Sub-Total Federal Pell Grant Program

Total Student Financial Assistance Cluster (M)

TRIO Cluster

U. S. Department of Education Direct Programs

TRIO - Student Support Services 84.042

Total TRIO Cluster

WIA Cluster

U. S. Department of Labor

Passed Through Alabama Department of Postsecondary Education

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James H. Faulkner

Assistance Federal Revenue

Period Total Share Recognized Expenditures

James H. Faulkner State Community College

Ronald L. Jones, Chief Examiner

James H. Faulkner

State Community College

Bay Minette, Alabama

October 1, 2012 through September 30, 2013

Department of

Examiners of Public Accounts

50 North Ripley Street, Room 3201

P.O. Box 302251

State of Alabama

Examiners of Public Accounts

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Table of Contents

Table of Contents

Department of

Examiners of Public Accounts

SUMMARY

Department of

Examiners of Public Accounts

COMMENTS

Independent Auditor’s Report

'1f,JtJ<r

Faulkner State Community College

Management’s Discussion and Analysis

Statement of Net Position

September 30, 2013

Statement of Revenues, Expenses and Changes in Net Position

For the Year Ended September 30, 2013

Statement of Cash Flows

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Notes to the Financial Statements

For the Year Ended September 30, 2013

Schedule of Expenditures of Federal Awards

For the Year Ended September 30, 2013