OMB Circular A-133 Reporting Package Saginaw Valley State ... · Reporting Package Saginaw Valley...

OMB Circular A-133Reporting Package

Saginaw Valley State University

Year ended June 30, 2010


OMB Circular A-133 Reporting Package


Audited Financial Statements and Other Financial Information (Including the Schedule of Expenditures of Federal Awards) .................................................................... i Independent Auditors’ Report 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 ........................................ 27 Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 .......................................................... 29 Schedule of Findings and Questioned Costs ......................................................................... 31 Summary Schedule of Prior Audit Findings ............................................................................ 33

Audited Financial Statements and Other Financial Information


Years ended June 30, 2010 and 2009 with Report of Independent Auditors


Audited Financial Statements and Other Financial Information

Years ended June 30, 2010 and 2009

Table of Contents

Required Supplementary Information – Management’s Discussion and Analysis ................... i

Report of Independent Auditors ............................................................................................... 1

Financial Statements

Statements of Net Assets .................................................................................................... 2

Statements of Revenues, Expenses, and Changes in Net Assets ....................................... 3

Statements of Cash Flows .................................................................................................... 4

Notes to Financial Statements .............................................................................................. 6

Other Financial Information

Schedule of Expenditures of Federal Awards ....................................................................... 24

Notes to Schedule of Expenditures of Federal Awards ........................................................ 26

iii

Total Net Assets

Invested In Capital

Assets, Net of Related Debt

81.4%

ExpendableRestricted

1%

Unrestricted17.6%

v

Total Revenue

Operating Revenue60.5%

Nonoperating Revenue

29.6%

Other Revenue9.9%

1

Report of Independent Auditors Board of Control Saginaw Valley State University We have audited the accompanying financial statements of Saginaw Valley State University, a component unit of the State of Michigan as of and for the years ended June 30, 2010 and 2009 and Saginaw Valley State University Foundation, a discretely presented component unit of the University, as of and for the years ended June 30, 2010 and 2009. These financial statements are the responsibility of the University’s administration. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the administration, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Saginaw Valley State University and its discretely presented component unit, Saginaw Valley State University Foundation as of June 30, 2010 and 2009, and the changes in their financial position and Saginaw Valley State University’s cash flows for the years 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 our report dated August 20, 2010 on our consideration of Saginaw Valley State University’s internal control over financial reporting and 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 and should be read in conjunction with this report when considering the results of our audit.

ANDREWS HOOPER & PAVLIK P.L.C.

Certified Public Accountants

5300 Gratiot • Saginaw, Michigan 48638-6035 • ph 989.497.5300 fx 989.497.5353 • www.ahpplc.com

(continued)

The Management’s Discussion and Analysis (MD&A) on pages i to viii is not a required part of the basic financial statements but is supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this supplemental information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements of Saginaw Valley State University and its discretely presented component unit, Saginaw Valley State University Foundation, taken as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole.

Saginaw, Michigan August 20, 2010

See notes to financial statements 2

SAGINAW VALLEY STATE UNIVERSITY

STATEMENTS OF NET ASSETS

June 30, 2010 June 30, 2009Component Unit Component Unit

SVSU SVSU Foundation SVSU SVSU Foundation

ASSETSCurrent Assets

Cash and cash equivalents 41,905,892$ 2,154,582$ 34,699,345$ 3,002,304$ Short-term investments 54,590 52,385Accounts receivable, net 18,031,197 708,995 2,271,811 1,755,331State appropriations receivable - operations 5,038,200 5,207,236State appropriations receivable - charter schools 11,452,370 8,516,517Inventories and prepaid expenses 2,966,830 2,941,462Notes receivable, net 6,171 6,527

Total current assets 79,400,660 2,918,167 53,642,898 4,810,020

Noncurrent AssetsCash and cash equivalents, restricted 53,656 60,295Notes receivable, net 12,342 13,252Accounts receivable, net 3,150,574 2,829,776Endowment investments 35,399,197 29,945,211Other long-term investments 192,879 7,372,663Capital assets, net 283,694,966 266,157,132

Total noncurrent assets 283,900,187 38,603,427 273,543,047 32,835,282

Total assets 363,300,847 41,521,594 327,185,945 37,645,302

LIABILITIESCurrent Liabilities

Accounts payable and accrued liabilities 8,535,045 251,461 7,284,394 245,159Deferred revenues 6,924,112 5,272,200Deposits 10,109,900 7,317,323Long-term liabilities - current portion 4,741,995 2,761,757

Total current liabilities 30,311,052 251,461 22,635,674 245,159

Noncurrent LiabilitiesDeferred revenues 1,440,000Long-term liabilities, net of current portion 129,791,495 124,304,808

Total noncurrent liabilities 131,231,495 - 124,304,808 -

Total liabilities 161,542,547 251,461 146,940,482 245,159

NET ASSETSInvested in capital assets, net of related debt 164,240,442 146,346,587Nonexpendable Restricted

Scholarships 13,418,816 11,771,553Endowed chairs 11,423,099 11,423,099Other 12,134,722 12,673,750

Expendable RestrictedCapital 50,000 87,000Scholarships and fellowships 844,869 50,933 688,346 195,633Research 65,888 65,355Instructional department use 309,663 210,303Loans 2,503 4,089Other 862,965 302,225 811,068 440,957

Unrestricted 35,431,970 3,890,338 32,119,715 808,151

Total net assets 201,758,300$ 41,270,133$ 180,245,463$ 37,400,143$



STATEMENTS OF REVENUES, EXPENSES, AND CHANGE IN NET ASSETS

For the year ended June 30, 2010 For the year ended June 30, 2009Component Unit Component Unit

REVENUES SVSU SVSU Foundation SVSU SVSU FoundationOperating revenues

Student tuition and fees 71,099,791$ 62,340,054$Less: Scholarship allowances (13,266,292) (9,474,709)

57,833,499 52,865,345Federal grants and contracts 6,251,247 5,313,983State and local grants and contracts 1,074,776 1,090,453Gifts 1,861,574$ 2,827,886$Sales and services of educational departments 4,368,138 3,692,711Auxiliary enterprises 20,784,784 18,630,057

Less: Scholarship allowances (3,163,698) (2,236,312)17,621,086 16,393,745

Other operating revenues 2,402,582 2,264,439

Total operating revenues 89,551,328 1,861,574 81,620,676 2,827,886

EXPENSESOperating expenses

Educational and generalInstruction 38,864,357 37,333,093Research 796,612 687,643Public service 2,626,286 2,407,537Academic support 14,919,914 14,041,945Student services 6,188,969 5,701,201Institutional support 12,452,651 920,416 11,878,820 831,182Operations and maintenance of plant 11,249,996 11,574,500Depreciation 11,758,730 11,322,924Student aid 9,011,043 6,346,089

Auxiliary enterprises 13,159,672 12,347,458

Total operating expenses 121,028,230 920,416 113,641,210 831,182

Operating income (loss) (31,476,902) 941,158 (32,020,534) 1,996,704

NONOPERATING REVENUES (EXPENSES)State appropriations 27,710,100 28,639,800Federal grant - State fiscal stabilization fund 807,600Federal Pell Grant Program 12,935,067 7,788,071Gifts 1,915,456 (1,915,456) 1,263,805 (1,263,805)Investment income, net 530,035 3,815,138 (427,961) (6,645,916)Interest on capital asset-related debt (5,520,068) (5,458,607)

Net nonoperating revenues (expenses) 38,378,190 1,899,682 31,805,108 (7,909,721)

Income (loss) before other revenues (expenses) 6,901,288 2,840,840 (215,426) (5,913,017)

Capital appropriations 14,532,464 267,242Additions to permanent endowments 1,108,235 1,074,162Capital grants and gifts 79,085 (79,085) 100,828 (100,828)

Total other revenues (expenses) 14,611,549 1,029,150 368,070 973,334

Increase (decrease) in net assets 21,512,837 3,869,990 152,644 (4,939,683)

Net assets - beginning of year 180,245,463 37,400,143 180,092,819 42,339,826Net assets - end of year 201,758,300$ 41,270,133$ 180,245,463$ 37,400,143$



STATEMENTS OF CASH FLOWS

For the years ended June 30,2010 2009

Cash Flows from Operating ActivitiesStudent tuition and fees 57,827,386$ 52,743,269$Grants and contracts 6,680,751 6,257,770Payments to suppliers (24,911,754) (24,922,651)Payments for utilities (3,561,155) (3,799,741)Payments to employees (53,160,201) (51,191,039)Payments for benefits (16,947,047) (15,598,212)Payments for scholarships and fellowships (9,377,500) (6,482,211)Federal share of Perkins loans (10,804) (16,343)Collection of loans to students 1,266 16,033Auxiliary enterprises charges 17,216,919 15,937,099Sales and services 5,934,922 3,893,304Other receipts 2,402,582 2,264,439

Net cash used by operating activities (17,904,635) (20,898,283)

Cash Flows from Noncapital Financing ActivitiesState appropriations 27,879,136 28,588,236Federal grant - State fiscal stabilization fund 807,600Federal Pell Grant Program 12,815,291 7,813,855Federal Direct Lending receipts 53,031,298 42,577,827Federal Direct Lending disbursements (53,031,298) (42,577,827)Gifts 1,817,436 1,449,560

Net cash provided by noncapital financing activities 43,319,463 37,851,651

Cash Flows from Capital Financing ActivitiesCapital appropriations 48,269 337,537Capital grants and gifts received 79,085 100,828Principal paid on capital debt (22,440,000) (2,235,000)Proceeds from capital debt 29,590,000 12,555,000Proceeds from capital debt premium 1,471,071Interest paid on capital debt and related costs (6,282,515) (5,330,724)Purchase of capital assets (28,384,010) (25,223,682)

Net cash used by capital financing activities (25,918,100) (19,796,041)

Cash Flows from Investing ActivitiesInterest on investments 4,436 266,952Purchase of investments (6,368,926)Proceeds from redemption of investments 7,705,383 3,270,718

Net cash provided (used) by investing activities 7,709,819 (2,831,256)

Net increase (decrease) in cash and cash equivalents 7,206,547 (5,673,929)Cash and cash equivalents - beginning of year 34,699,345 40,373,274Cash and cash equivalents - end of year 41,905,892$ 34,699,345$



STATEMENTS OF CASH FLOWS - CONTINUED

For the years ended June 30,2010 2009

Reconciliation of operating loss to net cash used by operating activities

Operating loss (31,476,902)$ (32,020,534)$

Adjustments to reconcile operating loss to net cash used byoperating activities:

Depreciation 11,758,730 11,322,924

Changes in assets and liabilities:Accounts receivable, net (3,993,248) 3,565,878Inventories and prepaid expenses 184,906 (52,318)Notes receivable, net 1,266 16,033Accounts payable and accrued liabilities 858,097 (50,657)Deferred revenues 1,711,903 4,419Deposits 2,792,577 (4,095,092)Compensated absences 268,840 427,407Student loans - federal (10,804) (16,343)

Net cash used by operating activities (17,904,635)$ (20,898,283)$

Federal Agency OrFederal / Pass Through Grantor CFDA Pass Through Federal

Program Title Number Grant Number Expenditures Student Financial Assistance Cluster (Notes 1 and 4) :U.S. Department of Education

Federal Supplemental Educational Opportunity Grant Program 84.007 E-P007A022069 158,551$ Federal Work-Study Program 84.033 E-P033A022069 325,811Federal Work-Study Program (ARRA) 84.033 E-P033A092069 62,720Federal Pell Grant Program (Note 3) 84.063 E-P063P020238 12,935,067Federal Academic Competitiveness Grant 84.375 P375A060238 320,263Federal SMART Grant 84.376 P376S060238 179,500TEACH Grant 84.379 P379T090238 554,540Loans and Loan Guarantees-Federal Direct Loan Program (Note 2) 84.268 53,031,298

US Department of Health and Human ServicesPassed through Health Resources and Services Administration (HRSA)

Scholarships for Disadvantaged Students (ARRA) 93.407 T0AHP15731RP 12,323Scholarships for Disadvantaged Students 93.925 T08HP13290AO 28,104

Total Student Financial Assistance 67,608,177

U.S. Department of EducationDirect Programs:

SVSU's Strengthening Institutions Project Year 1 84.031A P031A080261 106,504SVSU's Strengthening Institutions Project Year 2 84.031A P031A080261-09 281,454SVSU Special Education Preservice Reform & Induction 84.325T H325T070007 105,223

Total Direct Programs 493,181

Passed through Michigan Department of Energy, Labor & Economic GrowthMichigan Gear Up/College Day Program 08/09 84.334S 08-00-010 199Michigan Gear Up/College Day Program 09/10 84.334S 08-00-010 23,932Gear Up Scholarship 84.334S P334S010013 29,415

Total passed through MI Department of Energy, Labor & Economic Growth 53,546

Passed through Michigan Department of EducationMSP Teacher Leadership Collaborative 84.366B 082410-MSPF2006 2,342,114 Includes amounts passed through to the following subrecipients: Grand Valley State University $ 96,303 The Regents of The University of Michigan - Ann Arbor $103,427 The Regents of The University of Michigan - Dearborn $459,729Preparing Teachers for the Michigan Merit Social Studies Curriculum 84.367B 80290-019 41,910Middle School Mathemathics Partnership for Algebra 84.367B 80290-015 57,344Middle and High School Partnership for Earth Science 84.367B 100290-9617 17,758Algebraic Thinking Across Grades 3 - 8 84.367B 100290-9616 27,004Improving Teacher Quality, Title II Part A(3) 2008-2009 84.367B 090290-2595 117,808Writing Strategies for Middle and High School Teachers 84367B 100290-9615 3,316Urban Literacy Cadre 84.367B 090290-8650 105,669

Total Passed Through Michigan Department of Education 2,712,923

Passed through Michigan Department of Management and BudgetState Fiscal Stabilization Fund (ARRA) 84.394A 70011 807,600

Total Passed thru Michigan Department of Management and Budget 807,600

Passed Through University of California:Saginaw Bay Writing Project 84.928A 94-MI05 46,000Saginaw Bay Writing Project Year 3 Mini Grant 84.928A 94-MI05 5,000Saginaw Bay Writing Project - FY10-11 84.928A 94-MI05 8,665Saginaw Bay Writing Project - FY10-11 (Mini Grant) 84.928A 94-MI05 319

Total Passed Through University of California 59,984

U.S. Department of CommercePassed Through Industrial Technology Institute:

CMI/MMTC Admin 2009-2010 11.611 70NANB5H1147N 158,750Total Passed Through Industrial Technology Institute 158,750

Saginaw Valley State UniversitySchedule of Expenditures of Federal Awards

Year Ended June 30, 2010

24

Federal Agency OrFederal / Pass Through Grantor CFDA Pass Through Federal

Program Title Number Grant Number Expenditures

Saginaw Valley State UniversitySchedule of Expenditures of Federal Awards

Year Ended June 30, 2010

U.S. Department of Defense Passed Through Office of Naval Research:

Solidification Based Grain Refinement in Steels 12.300 N00014-08-1-1052 74,495$ Total Passed Through Office of Naval Research 74,495

U.S. Department of LaborPassed Through Michigan State University:

WIRED - Workforce Innovation Regional Economic Development 17.261 61-7295-308 746,325 Total Passed Through Michigan State University 746,325

National Aeronautics and Space AdministrationPassed Through University of Michigan:

Michigan Space Grant 43.002 NGT-40007 92Study of Our Planets 43.UNKNOWN NNG05GH68H 2,500

Total Passed Through University of Michigan 2,592

National Endowment for the Humanities Direct Programs:

MF Sculpture Museum Conservation Assessment of Drawings 45.149 PG-50892-10 6,000 Total Direct Programs 6,000

Passed through Michigan Council for Arts and Cultural AffairsRegional Biennial Juried Sculpture Exhibition 45.025 10OP0138PS 1,179

Total Passed through Michigan Council for Arts and Cultural Affairs 1,179

Passed through Michigan Humanities Council Lost Boys of Sudan 45.129 Q056-09 500

Alden B. Dow/Marshall M. Fredericks Mix Media Exhibit Planning Project 45.129 Q034-09P 516Total Passed Through Michigan Humanities Council 1,016

Institute of Museum and Library Services Passed through MFA:

Museums for America 45.301 MA-05-09-0244-09 26,813 Total passed through MFA: 26,813

National Science FoundationDirect Programs:

MRI: Acquisition of a Transmission Electron Microscope 47.041 619270 192Total Direct Programs 192

US Department of Health and Human ServicesPassed through Health Resources and Services Administration (HRSA)

Nursing Workforce Diversity (NWD) Program 09-2012 93.178 D19HP14622AO 218,092Advanced Education Nursing Traineeship 2010 93.358 A10HP12800AO 38,644

Total Passed Through Health Resources and Services Administration (HRSA) 256,736

Corporation For National and Community ServicePassed through Michigan Campus Compact:

CHS/SVSU Writing Academy 94.005 BF08-05 253Total Passed Through Michigan Campus Compact 253

Total Expenditures of Federal Awards 73,009,762$

See Notes to Schedule of Expenditures of Federal Awards

25

26


Notes to Schedule of Expenditures of Federal Awards


Note 1: As defined in OMB Circular A-133, Student Financial Assistance programs are considered to be clusters of programs and, accordingly, have been classified as one program for testing purposes. Student Financial Assistance is defined as a major program. Also, the entire Cluster was excluded when determining the dollar threshold for major program determination.

Note 2: Under the William D. Ford Federal Direct Loan Program, students and parents borrow funds directly from the federal government; the University is responsible for verifying student eligibility, electronically transmitting the loan records to the federal processor and distributing the loan funds directly to the student account or parent borrower. For the year ended June 30, 2010, Direct Student Loans totaled $53,031,298 ($22,462,950 subsidized, $26,086,684 unsubsidized, $4,430,774 PLUS, and $50,890 direct graduate).

Note 3: The Pell grant expenditures are the actual amounts incurred through June 30, 2010. The University will process amendments subsequent to year end to finalize the 2009-2010 award year. Amounts reported do not include an administrative cost allowance of $16,530.

Note 4: As of July 1, 1996, Saginaw Valley State University terminated participation in the Federal Perkins Loan Program (CFDA Number 84.038). The University will retain and administer the loan portfolio until all outstanding loans are liquidated. There was $26,513 in loans outstanding as of June 30, 2010. Additionally, the University must return to the United States Department of Education annually the Federal share of cash-on-hand as of June 30. Federal cash-on-hand as of June 30, 2010 was returned in July 2010.

The University utilizes the services of Campus Partners to administer the repayment of Perkins loans and perform certain due diligence procedures. The most recent available report on Campus Partners’ compliance and internal controls was received and reviewed. No significant items of noncompliance or control weaknesses were noted.

Note 5: The accompanying Schedule of Expenditures of Federal Awards has been prepared on the accrual basis with the exception of grants, which are generally recorded when received or when billable.

27

Independent Auditors’ Report 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

Board of Control Saginaw Valley State University

We have audited the financial statements of Saginaw Valley State University (University) and its discretely presented component unit, Saginaw Valley State University Foundation, as of and for the year ended June 30, 2010, and have issued our report thereon dated August 20, 2010. 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.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the University's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the University’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

ANDREWS HOOPER & PAVLIK P.L.C. Certified Public Accountants

5300 Gratiot Saginaw, Michigan 48638-6035 ph 989.497.5300 fx 989.497.5353 www.ahpplc.com

28

We noted certain matters that we reported to management of the University in a separate letter dated August 20, 2010.

This report is intended solely for the information and use of the Board of Control, management of the University, and federal awarding agencies and is not intended to be and should not be used by anyone other than these specified parties.


29

Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on

Internal Control Over Compliance in Accordance with OMB Circular A-133 Board of Control Saginaw Valley State University Compliance We have audited the compliance of Saginaw Valley State University (University) with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. The University’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the University’s management. Our responsibility is to express an opinion on the University’s compliance based on our audit. The University’s financial statements include the operations of its discretely presented component unit, Saginaw Valley State University Foundation, which received $-0- in federal awards. An OMB Circular A-133 audit was not required for Saginaw Valley State University Foundation. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the University’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the University’s compliance with those requirements. In our opinion, the University complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. We did not audit the University’s compliance with the requirements governing billing, recordkeeping, payment processing, reporting and due diligence functions for the University’s Federal Perkins Loan Program. Those requirements govern functions performed by Campus Partners. Campus Partners’s compliance with the requirements governing the functions it performs for the University was audited by another auditor, whose report was furnished to us. Based on our review of the other auditor’s report, we have determined that all of the compliance requirements that are applicable to the University’s Federal Perkins Loan Program are addressed either in our report or the report of the other auditor. Based on our review of the other auditor’s report, we have determined that it does not contain any reportable findings of noncompliance pertaining to the services that Campus Partners performs for the University.

ANDREWS HOOPER & PAVLIK P.L.C.

Certified Public Accountants

5300 Gratiot • Saginaw, Michigan 48638-6035 • ph 989.497.5300 fx 989.497.5353 • www.ahpplc.com

30

Internal Control Over Compliance The management of the University is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal programs. In planning and performing our audit, we considered the University’s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Board of Control and management of Saginaw Valley State University and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.


31


Schedule of Findings and Questioned Costs

Year ended June 30, 2010 Section I – Summary of Auditor’s Results Financial Statements

Type of auditor’s report issued: Unqualified

Internal control over financial reporting: Material weakness identified? Yes X No Significant deficiencies identified not considered to be

material weakness?

Yes

X None reported

Noncompliance material to financial statements noted?

Yes

X

No

Federal Awards Internal control over major programs: Material weakness identified? Yes X No Significant deficiencies identified not considered to be

material weakness?

Yes

X

None reported

Type of auditor’s report issued on compliance for major programs:

Unqualified

Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510(a)?

Yes

X

No

Identification of major programs: CFDA Number Name of Cluster and Federal Programs Student Financial Assistance: 84.007 Federal Supplemental Educational Opportunity Grant Program 84.033 Federal Work-Study Program 84.038 Federal Perkins Loan Program 84.063 Federal Pell Grant Program 84.375 Federal Academic Competitiveness Grant 84.376 Federal SMART Grant 84.268 Federal Direct Loan Program 84.379 TEACH Grant 93.925 Scholarships for Disadvantaged Students 93.407 Scholarships for Disadvantaged Students (ARRA) 84.031A Strengthening Institutions 17.261 Passed through Michigan State University:

WIRED–Workforce Innovation Regional Economic Development

84.394A Passed through Michigan Department of Management and Budget:

State Fiscal Stabilization Fund (ARRA) Dollar threshold used to distinguish between Type A and Type B programs:

$300,000

Auditee qualified as low-risk auditee? X Yes No

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Schedule of Findings and Questioned Costs (continued)

Section II – Financial Statements Findings

No matters were reported.

Section III – Federal Award Findings and Questioned Costs


33


Summary Schedule of Prior Audit Findings



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