Audit of Drake State Community and Technical College

Report on the
J. F. Drake State Community

and Technical College
Huntsville, Alabama
October 1, 2014 through September 30, 2015
Filed: July 1, 2016
Department of
Examiners of Public Accounts
50 North Ripley Street, Room 3201
P.O. Box 302251
Montgomery, Alabama 36130-2251
Website: www.examiners.alabama.gov
Ronald L. Jones, Chief Examiner
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State of Alabama
Department of

P.O. Box 302251, Montgomery, AL 361302251
50 North Ripley Street, Room 3201
Telephone (334) 242-9200
FAX (334) 242-1775
Ronald L. Jones
ChiefExaminer
Honorable Ronald L. Jones

Chief Examiner of Public Accounts
Montgomery, Alabama 36130
Dear Sir:
Under the authority of the Code of Alabama 1975, Section 41-5-21, we submit this
report on the results of the audit of J. F. Drake State Community and Technical College for
the period October 1, 2014 through September 30, 2015.
Sworn to and subscribed before me this

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Tiffany L. Mason
Examiner of Public Accounts
Table of Contents
Page
Summary
Contains items pertaining to state and federal legal compliance, College

operations and other matters.
Comments
Contains information pertaining to the history of the College.

Independent Auditors Report
Reports on whether the financial information constitutes a fair presentation of

the financial position and results of financial operations in accordance with
generally accepted accounting principles (GAAP).
Managements Discussion and Analysis
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 Colleges financial
activities for the year. This information has not been audited, and no opinion is
provided about the information.
Basic Financial Statements
Provides the minimum combination of financial statements and notes to the

financial statements that is required for the fair presentation of the Colleges
financial position and results of operations in accordance with GAAP.
J. F. Drake State Community and Technical College
Exhibit #1
Statement of Net Position
Exhibit #2
Statement of Revenues, Expenses and Changes in Net Position
Exhibit #3
Statement of Cash Flows
Notes to the Financial Statements

Huntsville, Alabama
Table of Contents
Page
Required Supplementary Information
28
Provides information required by the GASB to supplement the basic financial

statements. This information has not been audited and no opinion is provided
about the information.
Exhibit #4
Exhibit #5
Schedule of the Colleges Proportionate Share of the

Net Pension Liability
29
Schedule of the Colleges Contributions
30
Supplementary Information
31
Contains financial information and notes relative to federal financial assistance.

Exhibit #6
Schedule of Expenditures of Federal Awards
32
Notes to the Schedule of Expenditures of Federal Awards
36
Additional Information
37
Provides basic information related to the College, including reports and items
required by generally accepted government auditing standards and/or U. S.
Office of Management and Budget (OMB) Circular A-133 for federal
compliance audits.
Exhibit #7
College Officials a listing of the College officials.
38
Exhibit #8
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 a report on internal controls related to the financial
statements and on whether the College complied with laws and
regulations which could have a direct and material effect on
the Colleges financial statements.
39

Huntsville, Alabama
Table of Contents
Page
Exhibit #9
Exhibit #10
Exhibit #11
Exhibit #12
Report on Compliance for Each Major Federal Program

and Report on Internal Control Over Compliance Required
by OMB Circular A-133 a report on internal controls over
compliance with requirements of laws, regulations, contracts, and
grants applicable to major federal programs and an opinion on
whether the College complied with laws, regulations, and the
provisions of contracts or grant agreements which could have a
direct and material effect on each major program.
42
Schedule of Findings and Questioned Costs a schedule

summarizing the results of audit findings relating to the financial
statements as required by Government Auditing Standards and
findings and questioned costs for federal awards as required
by OMB Circular A-133.
46
Summary Schedule of Prior Audit Findings a report, prepared

by the management of the College, which provides the status of
all audit findings relative to federal awards included in the prior audit
reports Schedule of Findings and Questioned Costs as well as
unresolved findings included in the prior audit reports Summary
Schedule of Prior Audit Findings.
59
Auditee Response/Corrective Action Plan a response by the

College on the results of the audit and a corrective action plan
for federal audit findings.
__________________________________________________

Huntsville, Alabama
60
Department of

SUMMARY
J. F. Drake State Community and Technical College (the College) is a comprehensive

community college that provides university-transfer and career technical education through
academic and occupational training, from basic education through two-year academic and
technical programs that can lead to Associate in Arts and Associate in Science general
education transfer degrees and/or to certificates and/or Associate in Applied Science degrees
in the following areas: Accounting Technology; Business Administration; Automotive
Technology; Barbering Technology; Salon Management/Cosmetology Technology; Culinary
Arts/Hospitality Services; Engineering Graphics Technology; Electrical Technology;
Electrical Engineering Technology; Industrial Systems Technology; Computer Information
Systems Technology; Heating and Air Conditioning Technology; Machine Tool Technology;
Medical Assistant; Office Administration; Practical Nursing; and Welding Technology.
J. F. Drake State Community and Technical College is a publicly supported institution in the
Alabama Community College System. The College is under the direction and control of the
Alabama Community College System Board of Trustees through the Alabama Community
College System office.
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
1975, Section 41-5-14.
An unmodified opinion was issued on the basic financial statements, which means the Colleges
financial statements present fairly, in all material respects, its financial position and the results
of its operations for the fiscal year ended September 30, 2015.
The prior year audit findings appear to have been resolved.
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Findings are numbered and reported by the fiscal year in which the finding originally
occurred.
The following problems were found with the Colleges internal control over financial
reporting (Exhibit 10).
2015-001 The College failed to tag equipment in accordance with Board Policy.
2015-002 The College failed to have an adequate internal control system in place to
ensure that payables are accrued in the proper year.
2015-003 The College programmed the accounting software in a manner that improperly
posted transactions to the general ledger causing accounts to be misstated.
The following instances of noncompliance relative to federal financial assistance programs
were found (Exhibit 10).
2014-004 The College paid certain salaries from the Education and Human Resources
grant that do not appear to be allowable.
2014-005 The College was unable to provide all of the required time and effort reporting
forms for employees paid from the Education and Human Resources grant.
2015-006 The College awarded scholarships using Education and Human Resources grant
funds that do not appear to be allowable.
2015-007 The College was not able to provide accurate or complete supporting
documentation for the Education and Human Resource grant reports.
2015-008 The College did not ensure that federal drawdowns were properly supported
which caused expenses to be drawn twice.
The following officials/employees were invited to an exit conference to discuss the results of
this audit: Dr. Kemba Chambers, Interim President; Ms. Jenny Sewell, Interim Finance
Administrator; and Dr. Mark Heinrich, Chancellor of the Alabama Community College
System. The following individuals attended the exit conference: Dr. Kemba Chambers,
Interim President; Ms. Jenny Sewell, Interim Finance Administrator; Katrina Harris, Staff
Accountant; and Roger Bates, Legal Counsel. The following individuals from the Alabama
Community College System attended via teleconference: Jane Leatherwood, Executive
Director of Fiscal Services; Sara Calhoun, Director of Fiscal Services; Cory Rambo, Assistant
Director of Fiscal Services; Pamela Watkins, Accountant and Linda Jones, Accountant.
Representing the Department of Examiners of Public Accounts were: Ms. Melissa Knepper,
Audit Manager; Ms. Lola Fuqua-Haney and Ms. Mistie Beam, Examiners.
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Department of

COMMENTS
J. F. Drake State Community and Technical College (the College) in Huntsville, Alabama,
had its origin in 1961 as Huntsville State Vocational Technical School when Act Number 126
of Acts of Alabama 1959 was approved. Act Number 93, Acts of Alabama 1963, 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.
The College was established in 1961 and opened its doors on September 4, 1962, with the
late Mr. S. C. ONeal as its first president. In 1962, the College was established on a 30-acre
plot donated by Alabama A&M University. Mr. ONeal served as President until 1983, when
Dr. Johnny L. Harris was appointed its second president. Dr. Harris served in this capacity
until his retirement in August 2000. Dr. Helen T. McAlpine was appointed the third president
and the first female president on October 26, 2000.
In 1966, the College was renamed J. F. Drake State Technical Trade School in honor
of Dr. Joseph Fanning Drake, president of Alabama A&M University for thirty-five years.
In 1973, the College was given technical college status by the Alabama State Board of
Education, and thus assumed the name of J. F. Drake State Technical College. The College
was then authorized by the Board to offer the Associate in Applied Technology degree.
In 2012, the College received accreditation by the Southern Association of Colleges and
School Commission on Colleges (SACSCOC) effective January 1, 2012, enabling Drake
State students to seamlessly transfer their general education credit hours to any other
regionally-accredited college or university throughout the United States.
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In April 2013, the Alabama State Legislature enacted legislation that changed the name of the
College to J. F. Drake State Community and Technical College, the first two-year college in
Alabama to receive the designation of both community and technical college.
In September 2013, the Alabama Commission on Higher Education approved the instructional
role change of Drake State to enable the College to offer the Associate in Arts and Associate
in Science general education transfer degrees and the Associate in Applied Science degree in
career technical disciplines.
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To: Dr. Mark Heinrich, Chancellor - Alabama Community College System

Dr. Kemba Chambers, Interim President - J. F. Drake State Community and
Technical College, Huntsville, Alabama
Report on the Financial Statements

We have audited the accompanying basic financial statements of J. F. Drake State Community
and Technical College, as of and for the year ended September 30, 2015, as listed in the table
of contents as Exhibits 1 through 3.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors 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 auditors
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 entitys 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
entitys 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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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the basic financial statements referred to above present fairly, in all material
respects, the financial position of J. F. Drake State Community and Technical College, as of
September 30, 2015, 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.
Emphasis of Matter
As discussed in Note 13 to the financial statements, for the year ending September 30, 2015,
the College adopted new accounting guidance, Governmental Accounting Standards Board
(GASB) Statement Number 68, Accounting and Financial Reporting for Pensions an
amendment of GASB Statement Number 27. Our opinion is not modified with respect to this
matter.
As discussed in Note 9 to the financial statements, the College is undergoing an investigation
regarding the use of grant funds by the National Science Foundation. The ultimate outcome
of the matter cannot be presently determined, and no provision for any liability that may result
has been made in the financial statements. Our opinion is not modified with respect to this
matter.
Other Matters
Accounting principles generally accepted in the United States of America require that the
Managements Discussion and Analysis (MD&A), the Schedule of the Colleges
Proportionate Share of the Net Pension Liability, and Schedule of the Colleges Contributions
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 managements responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
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Our audit was conducted for the purpose of forming an opm10n on the basic financial
statements of J. F. Drake State Community and Technical College, taken as a whole. The
accompanying Schedule of Expenditures of Federal Awards (Exhibit 6) 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.
The Schedule of Expenditures of Federal Awards is the responsibility of management and was
derived from and directly relates to the underlying accounting and other records used to
prepare the basic financial statements. This information has been subjected to the auditing
procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the Schedule of Expenditures of
Federal Awards is fairly stated in all material respects in relation to the financial statements as
a whole.
Other Reporting Required bv Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated
June 1, 2016, on our consideration of J. F. Drake State Community and Technical 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 J. F. Drake State Community and Technical College's internal control over
financial reporting and compliance.
Ronald L. Jones
Chief Examiner
Department of Examiners of Public Accounts
Montgomery, Alabama
June 1, 2016
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(Required Supplementary Information)
J. F. DRAKE STATE COMMUNITY & TECHNICAL COLLEGE

Overview of the Financial Statements and Financial Analysis
From its inception J. F. Drake State Community & Technical College has been committed to
training individuals for employment in vocational, technical, and industrial pursuits. Because of
its location in the high-tech city of Huntsville, which is the space and rocket capital of America,
the college is dedicated to the teaching and advancement of the highest caliber of technical skills
through state-of-the-art facilities and equipment. The college seeks to produce an effective
participatory citizenship with economic potential as well as civic and social commitment. To
this end, the college seeks to maintain a sound fiscal foundation in support of its mission in
addition to providing responsible stewardship of public funds in compliance with state law.
Three financial statements are presented: the Statement of Net Position; the Statement of
Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flow. The
following financial statements and analysis provide an overview of the financial activities for the
year ending September 30, 2015.
The fiscal philosophy of the administration is to use resources to continually improve in
all areas in alignment with the mission of the college while providing for a reasonable reserve
of funds. These financial statements reflect the realization of that philosophy for the 2015
fiscal year.
The Statement of Net Position presents the total assets, liabilities, and net position of the
college at the end of the fiscal year. The statement conveys the total owed to third parties as
well as assets available to support the operations of the college. The difference between current
and noncurrent assets is detailed in the financial statement disclosures.
Net position is divided into three major categories; capital investments, restricted and
unrestricted net position.
Net investment in capital assets include equity in property, plant, and equipment.
Restricted net position is divided into two categories, expendable and nonexpendable.
Restricted net position is available for expenditure by the college but must be spent for
purposes as determined by donors and/or external entities that have placed time or
purpose restrictions on the use of the assets. The corpus of nonexpendable restricted
resources is only available for investment purposes.
Unrestricted net position is available to the college for any appropriate purpose of the
institution.
J
A condensed Statement of Net Position at September 30, 2015, and 2014, is presented below.
Condensed Statement of Net Position
2014
Increase
(Decrease)
Percent
Change
$ 5,988,191
8,015,168
$ 6,831,639
8,143,916
($843,448)
(128,748)
(12.3)
(1.6)
$14,003,359
$14,975,555
($972,196)
(6.5)
720,350
$720,350
----
2,046,819
8,913,792
$ 2,030,101
2,119,270
$16,718
6,794,522
0.8
320.6
$ 10,960,611
$ 4,149,371
6,811,240
164.2
2015
Assets
Current
Noncurrent
Total Assets
Deferred Outflows of Resources
Liabilities
Current
Noncurrent
Total Liabilities
Deferred Inflows of Resources
522,000
522,000
----
Net Position
Capital
Restricted
Unrestricted
Total Net Assets
6,080,140 $ 6,008,892
71,248
437,226
485,663
(48,437)
(3,276,268) 4,331,629 (7,607,897)
3,241,098 $10,826,184
(7,585,086)
1.2
(10.0)
(175.6)
(70.1)
During fiscal year 2015, total assets decreased 6.5%. The majority of this decrease was due
to a decrease in cash balances and accumulated depreciation on capital assets.
The Deferred Outflow of Resources of $720,350 is due to the implementation of GASB 68.
This amount details pension amounts paid to the Alabama State Retirement System for fiscal
2014-15.
The 164.2% increase to total liabilities was due to a decrease in current liabilities for
accounts payable and accrued liabilities and unearned revenue and noncurrent liabilities due to
the Governmental Accounting Standards Board (GASB) 68 requirement that all state entities
report their share of any unfunded pension liability. Drake States portion of the State of
Alabamas educational pension liability to be reported during fiscal 2014-15 is $6,961,000.
The Deferred Inflow of Resources of $522,000 is due to the adjustments from prior pension
calculations for fiscal year 2014-15 by the Alabama State Retirement System.
As of September 30, 2015, the colleges net position has decreased approximately 70% over
the prior year which is due to the Governmental Accounting Standards Board (GASB) 68
requirement that all state entities report their share of any unfunded pension liability.
Statement of Revenues, Expenses, and Changes in Net Position
Changes in total net position as presented on the Statement of Net Position is based on the
activity presented in the Statement of Revenues, Expenses, and Changes in Net Position
(SRECNP). The purpose of the statement is to present the revenues received by the college, both
operating and nonoperating and expenses paid. Operating revenues are received for providing
instruction and other instructional services to the various constituencies of the college.
Operating expenses are those expenses paid in return for the operating revenues and to carry out
the colleges mission. Nonoperating revenues are revenues received for services that the college
does not provide. For example, state appropriations are nonoperating because they are provided
by the Alabama State Legislature to the college without the legislature directly receiving
commensurate services for those revenues. Readers of these financial statements should gain an
understanding of the impact of the presentation of state appropriations as nonoperating revenues,
a requirement of the Governmental Accounting Standards Board. The main impact of this
classification is that the college presents an operating loss in the following SRECNP. While at
face value an operating loss might indicate fiscal concerns that should be addressed by the
colleges administration, the net operating loss presented in these financial statements must be
viewed in its proper context. The college considers state appropriations to be an integral part of
the entire fiscal viability of the institution and recommends this perspective to financial
statement readers. A condensed Statement of Revenues, Expenses and Changes in Net Position
for the 2015 and 2014 fiscal years is presented below.
Condensed Statement of Revenues, Expenses, and Changes in Net Position
2015
2014
Increase
(Decrease)
Percent
Change
$413,111
8.4
Operating Revenues
$5,355,574
$4,942,463
Operating Expenses
13,658,132
13,703,411
Operating Loss
($8,302,558)
(45,279)
(.3)
($8,760,948)
458,390
5.2
8,010,824
8,419,791
(408,967)
(4.9)
Income before Other

Revenues and Expenses ($291,733)
($341,157)
49,424
14.5
Non-operating Revenue
and Expenses
Other Revenues and

Expenses
Increase (Decrease) in
Net Assets
($291,733)
($341,157)
49,424
Net Position, Beginning

of Year
10,826,184
11,807,244
(981,060)
(8.3)
6,653,449
1039.8
($7,585,086)
(70.1)
Restatements
(7,293,352)
(639,903)
Net Position, End of Year $3,241,098
$10,826,184
14.5
Operating revenues for the year ending September 30, 2015, increased approximately 8.4%.
The increase was the result of an increase in federal, state, and local grants and contracts.
Operating expenses for the 2015 fiscal year decreased by approximately .3%. Expenses
for the eight major functions presented changed as follows: Instruction decreased 2.0%;
academic support decreased 32.0%; student services expenses decreased 6.7%; institutional
support increased 54.2%; operation and maintenance of plant expenses decreased 26.7%; student
aid decreased 16.7%; auxiliary enterprises expenses increased 108.3%; and depreciation
increased 4.0%.
Non-operating revenues for the 2015 fiscal year decreased 4.9% due to a decrease in Pell
Grant federal grants and contracts.
The college experienced a 70.1% decrease in the net position at the end of the year which is
attributed to the restatement for the Governmental Accounting Standards Board (GASB) 68
requirement that all state entities report their share of any unfunded pension liability.
The following is a graphic presentation of the total revenues by source for the fiscal year
ending September 30, 2015.
RevenuebySource
(FiscalYear2015)
2%
1%
FederalGrants&Contracts
Tuition&Fees
36%
47%
StateandLocalGrants&Contracts
StateAppropriations
9%
5%
AuxiliaryEnterprises
Other
The following is a graphic presentation of operating expenses by function for the year ending
September 30, 2015.
OperatingExpenses
(FiscalYear2015)
1% 4%
12%
Instruction
AcademicSupport
27%
StudentServices
InstitutionalSupport
10%
8%
29%
9%
Operations
Scholarships
AuxiliaryEnterprises
Depreciation

The final statement presented is the Statement of Cash Flows which presents detailed
information about the cash activity of the institution during the year. The statement is divided
into five parts. The first part presents operating cash flows and shows the net cash used by
operating activities. The second section reflects cash flows from noncapital financing activities.
Noncapital financing activities include the cash received and spent for nonoperating,
noninvesting, and other noncapital financing purposes. The third section deals with cash used
from capital and related financing activities. Capital and related activities are those in which
cash is used for the acquisition and construction of capital assets and assets related to
construction and renovation. The fourth section of the statement presents cash flows from
investing activities and shows the purchases, proceeds, and interest received from investing
activities. The fifth section reconciles the operating income or loss reflected on the Statement of
Revenues, Expenses, and Changes in Net Position to the net cash provided or used by operating
activities. A condensed Statement of Cash Flows for the years ending September 30, 2015
and 2014 is presented below.
Condensed Statement of Cash Flows for the Year ended September 30th
Increase
Percent
2015
2014
(Decrease)
Change
Cash Flows from (used) in
Operating Activities
($8,601,006) ($8,333,509)
Cash Flows from NonOperating Financing

Activities
8,097,570
Cash Flows from (used) in

Capital and Related
Financing Activities
(646,570)
Cash Flows from Investing

Activities
8,545,358
(481,462)
2,031
Net Increase (Decrease) in

Cash
($1,147,974)
2,331
($267,282)
($267,497)
(3.2)
(447,788)
(5.2)
(165,108)
(34.3)
(300)
( $880,692)
(12.9)
(329.5)
Economic Outlook
Though a major portion of expenses are covered by grants, the operations necessary to meet
community employer and student demand are underfunded. The state budget estimates for fiscal
years 2016 and 2017 remain major concerns.
At this time, the college is not aware of any other conditions that may have a significant
impact on the financial position or operations during the upcoming fiscal year. The
administration expects to sustain positive financial stability over the years ahead. The college
anticipates that the next two fiscal years will be challenging. However, the administration will
monitor resources closely to ensure the financial stability of the college.
Basic Financial Statements

September 30, 2015
ASSETS
Current Assets
Cash and Cash Equivalents
Accounts Receivable, Net
Inventories
Prepaid Expenses
Refundable Deposits
Total Current Assets
Noncurrent Assets
Deposits with Bond Trustee
Capital Assets:
Land
Improvements Other Than Buildings
Buildings
Equipment and Furniture
Library Holdings
Less: Accumulated Depreciation
Total Capital Assets, Net of Depreciation
4,239,612.53
1,728,856.85
4,471.55
9,000.00
6,250.00
5,988,190.93
295,777.71
2,375.05
958,791.15
9,811,512.88
2,384,055.87
919,447.35
(6,356,791.97)
7,719,390.33
8,015,168.04
Total Noncurrent Assets
14,003,358.97
Total Assets
DEFERRED OUTFLOW OF RESOURCES
Pension Expense
Total Deferred Outflow of Resources
720,350.11
720,350.11
The accompanying Notes to the Financial Statements are an integral part of this statement.

Huntsville, Alabama
Exhibit #1
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Liabilities
Deposit Liabilities
Unearned Revenue
Bonds Payable
Compensated Absences
Due to Federal Government
Total Current Liabilities
710,174.88
39,446.99
731,667.19
210,000.00
27,643.74
327,885.70
2,046,818.50
Noncurrent Liabilities
Bonds Payable
Pension Liability
Total Noncurrent Liabilities
1,725,000.00
227,792.54
6,961,000.00
8,913,792.54
Total Liabilities
10,960,611.04
DEFERRED INFLOW OF RESOURCES

Pension Expense
Total Deferred Inflow of Resources
522,000.00
522,000.00
NET POSITION
Net Investment in Capital Assets
Restricted for:
Expendable:
Debt Service
Scholarships and Fellowships
Instructional Department Use
Unrestricted
6,080,140.33
295,750.00
104,446.69
37,029.12
(3,276,268.10)
$
Total Net Position

Huntsville, Alabama
3,241,098.04
Exhibit #1
This Page Intentionally Blank
Statement of Revenues, Expenses and Changes in Net Position

For the Year Ended September 30, 2015
OPERATING REVENUES
Student Tuition and Fees (Net of Scholarship Allowances of $2,266,450.57)
Sales and Services of Educational Departments
Federal Grants and Contracts
State and Local Grants and Contracts
Nongovernmental Grants and Contracts
Auxiliary Enterprises:
Bookstore (Net of Scholarship Allowances of $2,955.12)
Vending
Food Services
Other
Other Operating Revenue
Total Operating Revenues
1,229,379.64
6,219.33
3,207,998.06
540,810.20
97,500.00
119,445.59
10,820.45
2,284.25
34,855.51
106,261.33
5,355,574.36
OPERATING EXPENSES
Instruction
Academic Support
Student Services
Operation and Maintenance
Institutional Support
Scholarships and Financial Aid
Auxiliary Enterprises
Depreciation
Total Operating Expenses
3,743,304.55
1,112,929.33
1,262,617.57
1,330,055.36
3,903,079.95
1,675,872.81
148,193.41
482,079.38
13,658,132.36
Operating Income (Loss)
(8,302,558.00)
NONOPERATING REVENUES (EXPENSES)

State Appropriations
Federal Grants
Investment Income
Gifts
Interest on Indebtedness
Bond Surety Fee Expense
Other
Net Nonoperating Revenues
Changes in Net Position
Total Net Position - Beginning of Year, as Restated (See Note 13)
Total Net Position - End of Year
4,809,181.00
3,187,030.29
2,031.20
24,286.28
(93,242.50)
(26,634.98)
108,173.49
8,010,824.78
(291,733.22)
3,532,831.26
3,241,098.04

Huntsville, Alabama
Exhibit #2

CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and Fees
Federal Grants and Contracts
State and Local Grants and Contracts
Nongovernmental Grant and Contracts
Other Receipts (Payments)
Sales and Services of Educational Activities
Payments for Benefits
Payments to Suppliers
Payments to Employees
Payments to Utilities
Payments for Scholarships
Auxiliary Enterprises:
Bookstore
Vending
Other
Net Cash Provided (Used) by Operating Activities
114,377.37
10,820.45
37,139.76
(8,601,005.54)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State Appropriations
Federal Grants
Gifts and Grants Received for Other Than Capital Purposes
Bond Surety Fee Expense
Other
Net Cash Provided (Used) by Noncapital Financing Activities
4,809,181.00
3,187,030.29
24,286.28
(31,101.11)
108,173.49
8,097,569.95
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Purchases of Capital Assets
Principal Paid on Capital Debt
Interest Paid on Capital Debt
Net Cash Provided (Used) by Capital and Related Financing Activities
(353,327.40)
(200,000.00)
(93,246.34)
(646,573.74)
CASH FLOWS FROM INVESTING ACTIVITIES

Investment Income
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
1,123,715.12
2,777,141.63
457,644.36
142,590.61
117,043.13
6,219.33
(1,888,486.91)
(3,634,978.71)
(5,877,017.07)
(311,341.80)
(1,675,872.81)
2,031.20
2,031.20
(1,147,978.13)
5,387,590.66
4,239,612.53

Huntsville, Alabama
Exhibit #3
Reconciliation of Net Operating Revenues (Expenses) to Net

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

to Net Cash Provided (Used) by Operating Activities:
Depreciation Expense
Changes in Assets and Liabilities:
(Increase)/Decrease in Receivables, Net
(Increase)/Decrease in Inventories
(Increase)/Decrease in Other Assets
Increase/(Decrease) in Accounts Payable
Increase/(Decrease) in Unearned Revenue
Increase/(Decrease) in Compensated Absences
Increase/(Decrease) in Deposits Held for Others
Increase/(Decrease) in Pension Liability
Net Cash Provided (Used) by Operating Activities

Huntsville, Alabama
(8,302,558.00)
482,079.38
(525,570.06)
572.95
11,000.00
(263,352.35)
(54,667.29)
34,058.14
10,781.80
6,649.89
$
(8,601,005.54)
Exhibit #3

Note 1 Summary of Significant Accounting Policies
The financial statements of J. F. Drake State Community and Technical College (the 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 J. F. Drake State Community and
Technical College are described below.
A. Reporting Entity
For financial reporting purposes, J. F. Drake State Community and Technical College is part of
the primary government of the State of Alabama. The State of Alabama, through the Board of
Trustees, governs the Alabama Community College System. The Alabama Community College
System, through its Chancellor, has the authority and responsibility for the operation,
management, supervision and regulation of J. F. Drake State Community and Technical College.
B. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The financial statements of J. F. Drake State Community and Technical 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.
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 position are available.
The Statement of Revenues, Expenses and Changes in Net Position distinguishes between
operating and nonoperating revenues. Operating revenues, such as tuition and fees, result from
exchange transactions associated with the principal activities of College. Exchange transactions
are those in which each party to the transactions receives or gives up essentially equal values.
Nonoperating revenues arise from exchange transactions not associated with the Colleges
principal activities, such as investment income and from all nonexchange transactions, such as
state appropriations.

Huntsville, Alabama

C. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and
Net Position
1. Deposits and Investments
Cash and cash equivalents include cash on hand, demand deposits and short-term investments
with original maturities of three months or less from the date of acquisition.
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 based on quoted market prices.
2. Receivables
Accounts receivable relate to amounts due from federal grants, state grants, third party tuition
and auxiliary enterprise sales. The receivables are shown net of allowance for doubtful accounts.
3. Capital Assets
Capital assets, other than intangibles, with a unit cost of over $5,000 and an estimated useful life
in excess of one year, and all library books, are recorded at historical cost or estimated historical
cost if purchased or constructed. The capitalization threshold for intangible assets such as
capitalized software and internally generated computer software is $1 million and $100,000 for
easements and land use rights and patents, trademarks and copyrights. In addition, works of art
and historical treasures and similar assets are recorded at their historical cost. Donated capital
assets are recorded at fair market value at the date of donation. Land and Construction in
Progress and intangible assets with indefinite lives are the only capital assets that are not
depreciated. Depreciation is not allocated to a functional expense category. The costs of normal
maintenance and repairs that do not add to the value of the asset or materially extend its life are
not capitalized.
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.

Huntsville, Alabama

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
Buildings and Improvements
Equipment
Library Materials
Capitalized Software
Internally Generated Computer Software
Easement and Land Use Rights
Patents, Trademarks, and Copyrights
Depreciation
Method
Useful
Lives
Straight-Line
Composite
Composite
Composite
Straight-Line
Straight-Line
Straight-Line
Straight-Line
50 years
25 years
5 10 years
20 years
10 years
10 years
20 years
20 years
4. Deferred Outflows of Resources

Deferred outflow of resources is reported in the Statement of Net Position. Deferred outflows of
resources are defined as a consumption of net assets by the government that is applicable to a
future reporting period. Deferred outflows of resources increase net position, similar to assets.
5. Long-Term Obligations
Long-term debt and other long-term obligations are reported as liabilities in the Statement of Net
Position. Bond/Warrant premiums and discounts are 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.
All non-instructional employees earn annual leave at a rate which varies from 12 to 24 days per
year depending on duration of employment, with accumulation limited to 60 days. Instructional
employees do not earn annual leave. Payment is made to employees for unused leave at
termination or retirement.

Huntsville, Alabama

7. Deferred Inflows of Resources
Deferred inflows of resources are reported in the Statement of Net Position. Deferred inflows of
resources are defined as an acquisition of net assets by the government that is applicable to a
future reporting period. Deferred inflows of resources decrease net position, similar to liabilities.
8. Unearned Tuition and Fee Revenue
Tuition and fee revenues received for Fall Term but related to the portion of the term that occurs
in the subsequent fiscal year have been disclosed as unearned revenue.
9. 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 Colleges 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 Board of
Trustees.

Huntsville, Alabama
10

10. 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
Organizations, and the Office of Management and Budget (OMB) Compliance Supplement.
11. 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 as
prescribed by the National Association of College and University Business Officers (NACUBO)
in their Advisory Report 2000-05, to determine the amount of scholarship allowances and
discounts.
12. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred
inflows of resources related to pensions, and pension expense, the Teachers Retirement System
of Alabama (the Plan) financial statements are prepared using the economic resources
measurement focus and accrual basis of accounting. Contributions are recognized as revenues
when earned, pursuant to plan requirements. Benefits and refunds are recognized as revenues
when due and payable in accordance with the terms of the plan. Expenses are recognized when
the corresponding liability is incurred, regardless of when the payment is made. Investments are
reported at fair value. Financial statements are prepared in accordance with requirements of the
Governmental Accounting Standards Board (GASB). Under these requirements, the Plan is
considered a component unit of the State of Alabama and is included in the States
Comprehensive Annual Financial Report.

Huntsville, Alabama
11

Note 2 Deposits and Investments
A. Deposits
The Colleges deposits at year-end were held by financial institutions in the State of Alabamas
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 Treasurers
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 and cash equivalents includes all readily
available cash such as petty cash, demand deposits, and certificates of deposits with maturities of
three months or less.
B. Investments
The College may invest its funds in securities and investments authorized by the
Code of Alabama 1975, Section 16-13-2, Sections 27-1-8 and 27-1-9, and Sections 27-41-1
through 27-41-41. These laws provide that the College may 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 of the United States of America that meet specified criteria. The
Colleges investment policy permits investments in the following: 1) U. S. Treasury bills, notes,
bonds, and stripped Treasuries 2) U. S. Agency notes, bonds, debentures, discount notes and
certificates, 3) certificates of deposit (CDs), checking and money market accounts of savings and
loan associations, mutual savings banks, or commercial banks whose accounts are insured by
FDIC/FSLIC, and who are designated a Qualified Public Depository (QPD) under the SAFE
Program; 4) mortgage backed securities (MBSs), 5) mortgage-related securities including
collateralized mortgage obligations (CMOs) and real estate mortgage investment conduits
(REMIC) securities, 6) repurchase agreements, and 7) stocks and bonds which have been
donated to the institution.

Huntsville, Alabama
12

As of September 30, 2015, the College had the following investments and maturities:
Investment Type
U. S. Treasuries
Total
Fair Value
$295,777.71
$295,777.71
Less Than 1
$295,777.71
$295,777.71
15
$
$
6 10
No Maturity
$
$
$
$
The Federated Investors U. S. Treasury Cash Reserves Money Market Fund investments
are the funds invested by US Bank, Bond Trustee for the Revenue Bonds Series 2003 funds.
US Bank is required, per the bond agreement, to invest monies of the Reserve Fund in Federal
Securities. The Federated Investors U. S. Treasury Cash Reserves Money Market Fund invests
only in U. S. Government Obligations.
Interest Rate Risk Is the risk that changes in interest rates will adversely affect the fair value of
an investment. As a means of limiting its exposure to fair value losses arising from rising
interest rates, the Colleges investment policy limits its investment maturities as follows:
Investment
Maximum Maturity
U. S. Treasury Bills, Notes, Bonds and Stripped Treasuries

U. S. Agencies
Certificates of Deposit
Mortgage Backed Securities and
Mortgage-Related Securities
10 yrs.
10 yrs.
5 yrs.
7 yrs. (aggregate average life)
10 yrs. (average life maturity of any one security)
Credit Risk The Colleges investments in Federated U. S. Treasury Cash Reserves were rated
Aaa-mf by Moodys Investors Services and AAAm by Standard and Poors Fitch Ratings.
Custodial Credit Risk For an investment, this is the risk that, in the event of the failure of the
counterparty, the government will not be able to cover the value of its investments or collateral
securities that are in the possession of an outside party. The College does not have an investment
policy that limits the amount of securities that can be held by counterparties.
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the
magnitude of a governments investment in a single issuer. The College does not have a formal
investment policy which limits an investment in any one issuer than five percent or greater of the
Colleges total investments.

Huntsville, Alabama
13

Note 3 Receivables
Receivables are reported net of uncollectible amounts and are summarized as follows:
Accounts Receivable:
Federal
State
Auxiliary
Third Party
Returned Checks
Local
Total Accounts Receivable, Net
$1,128,575.14
192,896.64
197,367.86
122,077.02
30,148.03
1,330.43
1,672,395.12
Student Receivables:
Current
Less: Allowance for Doubtful Accounts
Total Student Receivables, Net
793,957.55
(737,495.82)
56,461.73
Total Receivables
$1,728,856.85
Note 4 Capital Assets

Capital asset activity for the year ended September 30, 2015, was as follows:
Land
Buildings
Equipment
Library Holdings
Total
Less: Accumulated Depreciation
Buildings
Equipment
Library Holdings
Total Accumulated Depreciation
Capital Assets, Net

Huntsville, Alabama
Beginning
Balance
Additions
2,375.05
9,768,576.40
958,791.15
2,140,288.25
888,527.13
13,758.557.98
3,327,095.15
643,199.89
1,462,360.77
477,759.86
5,910,415.67
$ 7,848,142.31
14
42,936.48
274,849.62
35,541.30
353,327.40
208,767.61
40,069.11
199,003.50
34,239.16
482,079.38
$(128,751.98)
Ending
Balance
Deductions
(31,082.00)
(4,621.08)
(35,703.08)
(31,082.00)
(4,621.08)
(35,703.08)
$
2,375.05
9,811,512.88
958,791.15
2,384,055.87
919,447.35
14,076,182.30
3,535,862.76
683,269.00
1,630,282.27
507,377.94
6,356,791.97
$ 7,719,390.33

Note 5 Defined Benefit Pension Plan
A. Plan Description
The Teachers Retirement System of Alabama (TRS), a cost-sharing multiple-employer public
employee retirement plan, was established as of September 15, 1939, under the provisions of
Act 419 of the Legislature of 1939 for the purpose of providing retirement allowances and other
specified benefits for qualified persons employed by State-supported educational institutions.
The responsibility for the general administration and operation of the TRS is vested in its Board
of Control. The TRS Board of Control consists of 15 trustees. The plan is administered by the
Retirement Systems of Alabama (RSA). The Code of Alabama 1975, Section 16-25-2, grants
the authority to establish and amend the benefit terms to the TRS Board of Control. The Plan
issues a publicly available financial report that can be obtained at www.rsa-al.gov.
B. Benefits Provided
State law establishes retirement benefits as well as death and disability benefits and any ad hoc
increase in postretirement benefits for the TRS. Benefits for TRS members vest after 10 years of
creditable service. TRS members who retire after age 60 with 10 years or more of creditable
service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit,
payable monthly for life. Service and disability retirement benefits are based on a guaranteed
minimum or a formula method, with the member receiving payment under the method that yields
the highest monthly benefit. Under the formula method, members of the TRS are allowed
2.0125% of their average final compensation (highest 3 of the last 10 years) for each year
of service.
Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired
on or after January 1, 2013. Tier 2 TRS members are eligible for retirement after age 62 with
10 years or more of creditable service and are entitled to an annual retirement benefit, payable
monthly for life. Service and disability retirement benefits are based on a guaranteed minimum
or a formula method, with the member receiving payment under the method that yields the
highest monthly benefit. Under the formula method, Tier 2 members of the TRS are allowed
1.65% of their average final compensation (highest 5 of the last 10 years) for each year of
service. Members are eligible for disability retirement if they have 10 years of credible service,
are currently in-service, and determined by the RSA Medical Board to be permanently
incapacitated from further performance of duty. Preretirement death benefits are calculated and
paid to the beneficiary based on the members age, service credit, employment status and
eligibility for retirement.

Huntsville, Alabama
15

C. Contributions
Covered members of the TRS contributed 5% of earnable compensation to the TRS as required
by statute until September 30, 2011. From October 1, 2011 to September 30, 2012, covered
members of the TRS were required by statute to contribute 7.25% of earnable compensation.
Effective October 1, 2012, covered members of the TRS are required by statute to contribute
7.50% of earnable compensation. Certified law enforcement, correctional officers, and
firefighters of the TRS contributed 6% of earnable compensation as required by statute until
September 30, 2011. From October 1, 2011 to September 30, 2012, certified law enforcement,
correctional officers, and firefighters of the TRS were required by statute to contribute 8.25% of
earnable compensation. Effective October 1, 2012, certified law enforcement, correctional
officers, and firefighters of the TRS are required by statute to contribute 8.50% of earnable
compensation.
Tier 2 covered members of the TRS contribute 6% of earnable compensation to the TRS as
required by statute. Tier 2 certified law enforcement, correctional officers, and firefighters of the
TRS are required by statute to contribute 7% of earnable compensation.
Participating employers contractually required contribution rate for the year ended
September 30, 2015, was 11.71% of annual pay for Tier 1 members and 11.05% of annual pay
for Tier 2 members. These required contribution rates are a percent of annual payroll, actuarially
determined as an amount that, when combined with member contributions, is expected to finance
the costs of benefits earned by members during the year, with an additional amount to finance
any unfunded accrued liability. Total employer contributions to the pension plan from the
College was $576,209.75 for the year ended September 30, 2015. The percentage of the
contributions and the amount of contributions made by the College and its employees equal the
required contributions for each year as follows:
Fiscal Year Ended September 30,

Total Percentage of Covered Payroll
Contributions:
Percentage Contributed by College
Percentage Contributed by Regular Employees
Percentage Contributed by Law Enforcement Employees
Contributed by College
Contributed by Employees
Total Contributions

Huntsville, Alabama
16
Tier 1
2015
Tier 2
2015
Tier 1
2014
Tier 2
2014
19.21%
17.05%
19.21%
17.08%
11.71%
7.50%
8.50%
11.05%
6.00%
7.00%
11.71%
7.50%
8.50%
11.08%
6.00%
7.00%
$497,105.11
318,384.99
$815,490.10
$ 79,104.64
42,952.75
$122,057.39
$520,987.46
333,681.28
$854,668.74
$48,138.37
26,067.69
$74,206.06

D. Pension Liabilities, Pension Expense, and Deferred Resources Related to Pensions
At September 30, 2015, the College reported a liability of $6,961,000 for its proportionate share
of the collective net pension liability. The collective net pension liability was measured as of
September 30, 2014, and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation as of September 30, 2013. The Colleges proportion of the
collective net pension liability was based on the employers shares of contributions to the
pension plan relative to the total employer contributions of all participating TRS employers. At
September 30, 2014, the Colleges proportion was 0.076619%, which was an increase of
0.002036% from its proportion measured as of September 30, 2013.
For the year ended September 30, 2015, the College recognized pension expense of $581,868.93.
At September 30, 2015, the College reported deferred outflows of resources and deferred inflows
of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Differences between expended
and actual experience
Changes of assumptions
Net difference between projected
and actual earnings on pension
plan investments
Changes in proportion and differences
between employer contributions and
proportionate share of contributions
Employer contributions subsequent
to the measurement date
Total

Huntsville, Alabama
17
Deferred
Inflows of
Resources
522,000.00
162,000.00
558,350.11
$720,350.11
$522,000.00

Fiscal year 2015 employer contributions applied to pension liability $558,350.11 reported as
deferred outflows of resources related to pensions resulting from College contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability
in the year ended September 30, 2016. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized in pension expense
as follows:
Year Ending:
September 30, 2016
2017
2018
2019
2020
Thereafter
$(92,000.00)
$(92,000.00)
$(92,000.00)
$(92,000.00)
$ 8,000.00
$
E. Actuarial Assumptions
The total pension liability was determined by an actuarial valuation as of September 30, 2013,
using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation
Investment Rate of Return (*)
Projected Salary Increases
3.00%
8.00%
3.5%-8.25%
(*) Net of pension plan investment expense
The actuarial assumptions used in the actuarial valuation as of September 30, 2013, were based
on the results of an investigation of the economic and demographic experience for the TRS based
upon participant data as of September 30, 2010. The Board of Control accepted and approved
these changes on January 27, 2012, which became effective at the beginning of fiscal year 2012.
Mortality rates for TRS were based on the RP-2000 Combined Mortality Table for Males or
Females, as appropriate, with adjustments for mortality improvements based on Scale AA
projected to 2015 and set back one year for females.

Huntsville, Alabama
18

The long-term expected rate of return on pension plan investments was determined using a
log-normal distribution analysis in which best-estimate ranges of expected future real rates of
return (expected returns, net of pension plan investment expense and inflation) are developed for
each major asset class. These ranges are combined to produce the long-term expected rate of
return by weighting the expected future real rates of return by the target asset allocation
percentage and by adding expected inflation. The target asset allocation and best estimates of
geometric real rates of return for each major asset class are as follows:
Long-Term
Target
Expected
Allocation Rate of Return (*)
Fixed Income
U. S. Large Stocks
U. S. Mid Stocks
U. S. Small Stocks
International Developed Market Stocks
International Emerging Market Stocks
Real Estate
Cash
Total
25.00%
34.00%
8.00%
3.00%
15.00%
3.00%
10.00%
2.00%
100.00%
5.00%
9.00%
12.00%
15.00%
11.00%
16.00%
7.50%
1.50%
(*) Includes assumed rate of inflation of 2.50%.
F. Discount Rate
The discount rate used to measure the total pension liability was 8%. The projection of cash
flows used to determine the discount rate assumed that plan member contributions will be made
at the current contribution rate and that the employer contributions will be made at rates equal to
the difference between actuarially determined contribution rates and the member rate. Based on
those assumptions, components of the pension plans fiduciary net position were projected to be
available to make all projected future benefit payments of current plan members. Therefore, the
long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.

Huntsville, Alabama
19

G. Sensitivity of the Colleges Proportionate Share of the Net Pension Liability to Changes in
the Discount Rate
The following table presents the Colleges proportionate share of the net pension liability
calculated using the discount rate of 8%, as well as what the Colleges proportionate share of the
net pension liability would be if it were calculated using a discount rate that is 1-percentage point
lower (7%) or 1-percentage-point higher (9%) than the current rate:
Colleges proportionate share of

collective net pension liability
1% Decrease
(7.00%)
Current Rate
(8.00%)
1% Increase
(9.00%)
$9,482,000
$6,961,000
$4,823,000
H. Pension Plan Fiduciary Net Position

Detailed information about the pension plans fiduciary net position is available in the separately
issued RSA Comprehensive Annual Report for the fiscal year ended September 30, 2014. The
supporting actuarial information is included in the GASB Statement Number 67 Report for the
TRS prepared as of September 30, 2014. The auditors report dated May 1, 2015, on the total
pension liability, total deferred outflows of resources, total deferred inflows of resources, total
pension expense for the sum of all participating entities as of September 30, 2014, along with
supporting schedules is also available. The additional financial and actuarial information is
available at www.rsa-al.gov.

Huntsville, Alabama
20

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 Education Employees
Health Insurance Plan website, http://www.rsa-al.gov/index.php/members/peehip under the
Financial Reports tab. The provisions of GASB Statement Number 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other than Pensions were
implemented prospectively.

Huntsville, Alabama
21

B. Funding Policy
The Public Education Employees Health Insurance Fund (PEEHIF) was established in 1983
under the provisions of the 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 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
2015
Individual Coverage Non-Medicare Eligible
Individual Coverage Medicare Eligible
Family Coverage Non-Medicare Eligible Retired Member and Non-Medicare Eligible Dependent(s)
Family Coverage Non-Medicare Eligible Retired Member and Dependent Medicare Eligible
Family Coverage Medicare Eligible Retired Member and Non-Medicare Eligible Dependent(s)
Family Coverage Medicare Eligible Retired Member and Dependent Medicare Eligible
Surviving Spouse Non-Medicare Eligible
Surviving Spouse Non-Medicare Eligible and Dependent Non-Medicare Eligible
Surviving Spouse Non-Medicare Eligible and Dependent Medicare Eligible
Surviving Spouse Medicare Eligible
Surviving Spouse Medicare Eligible and Dependent Non-Medicare Eligible
Surviving Spouse Medicare Eligible and Dependent Medicare Eligible
$151.00
$ 10.00
$391.00
$250.00
$250.00
$109.00
$700.00
$934.00
$907.00
$354.00
$595.00
$568.00
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 who use tobacco products.

Huntsville, Alabama
22

The College is required to contribute at a rate specified by the State for each active employee.
The Colleges 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,
2015
2014
2013
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
$780.00
$714.00
$714.00
$180.76
$220.09
$216.90
23.17%
30.83%
30.38%
$193,955.21
$249,332.17
$227,928.58
100%
100%
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 On-Behalf Payments
The U. S. Department of Health and Human Services makes employer group waiver program
(EGWP) payments under the provisions of Medicare Part D directly to the Public Education
Employees Health Insurance Plan (PEEHIP) on behalf of the College. The Early Retiree
Reinsurance Program (ERRP) was created as part of the Patient Protection and Affordable Care
Act of 2010. This program provides reimbursements to employers for eligible healthcare costs
for certain early retirees. EGWP and ERRP reimbursements are considered to be voluntary
non-exchange transactions between the federal government and the employers. For the period
October 1, 2014 through September 30, 2015, these payments totaled $53,650.29.
Note 8 Other Significant Commitments
As of September 30, 2015, J. F. Drake State Technical College had been awarded approximately
$1,218,172.60 in contracts and grants on which performance had not been accomplished and
funds had not been received. These awards, which represent commitments of sponsors to
provide funds for specific purposes, have not been reflected in the financial statements.

Huntsville, Alabama
23

Note 9 Contingent Liabilities
On September 30, 2014, J. F. Drake State Community and Technical College received a letter
from the National Science Foundation requesting information regarding the 2012-2013 and
2013-2014 SPIN-UP grant. The National Science Foundation reviewed the information and
identified questioned costs relating to the information. J. F. Drake State Community and
Technical College repaid $327,885.70 relating to these questioned costs on March 21, 2016.
The College has also received a subpoena from the National Science Foundation regarding the
DIGITEC grant. At the time of this report, the College has provided the information to the
National Science Foundation, but has not received a report affiliated with the review. The
amount that may be questioned and repaid cannot be presently determined.
The College received federal financial assistance from the National Science Foundation. The
programs were audited for federal compliance for the period October 1, 2014 through
September 30, 2015. Of the $994,449.31 grant expenditures reported for the audit period,
$74,456.19 of the expenditures were questioned. The amount of questioned costs, if any, which
may be disallowed by the federal agency, cannot be determined at this time.
Note 10 Accounts Payable
Accounts payable and accrued liabilities represent amounts due at September 30, 2015, for goods
and services received prior to the end of the fiscal year.
Salaries and Wages
Benefits
Interest Payable
Bond Surety Fee Payable
Supplies
Total

Huntsville, Alabama
24
$166,680.10
17,561.46
21,310.63
7,269.98
497,352.71
$710,174.88

Note 11 Long-Term Liabilities
Long-term liabilities activity for the year ended September 30, 2015, was as follows:
Beginning
Balance
Revenue Bonds
Total Long-Term Liabilities
$2,135,000.00
221,378.14
$2,356,378.14
Additions
$
52,800.32
$52,800.32
Ending
Balance
Reductions
$200,000.00
18,742.18
$218,742.18
$1,935,000.00
255,436.28
$2,190,436.28
Current
Portion
$210,000.00
27,643.74
$237,643.74
The Revenue Bonds were issued in July 2003 by the Board of Trustees to provide funds for
construction of the Library/Technical Center.
A trustee holds sinking fund deposits, including earnings on investments of these deposits.
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 bond debt are as follows:
Fiscal Years
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
Totals

Huntsville, Alabama
Principal
Payments
Interest
Payments
$ 210,000.00
215,000.00
225,000.00
235,000.00
245,000.00
255,000.00
270,000.00
280,000.00
$1,935,000.00
$ 85,242.50
76,632.50
67,602.50
58,040.00
47,817.50
36,915.00
25,440.00
13,020.00
$410,710.00
25
Totals
$ 295,242.50
291,632.50
292,602.50
293,040.00
292,817.50
291,915.00
295,440.00
293,020.00
$2,345,710.00

Pledged Revenues
The College has pledged student tuition and fee revenue to repay the $3,990,000 in Revenue
Bond Series 2003 issued in July 2003, for the purpose of providing funds to pay the costs of
constructing the Library and Technology Center. Future revenues in the approximate amount of
$2,345,710.00 are pledged to repay principal and interest. During the 2015 fiscal year, pledged
tuition and fee revenue in the amount of $2,574,743.11 were received with $293,242.50, or
11.4% of pledged revenues, being used to pay principal and interest. These bonds are scheduled
to mature in fiscal year 2023.
Note 12 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 Colleges president and business manager, 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 plans 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 employees premiums for the
coverage selected and the employee pays any remaining premium.
Settled claims resulting from these risks have not exceeded the Colleges coverage in any of the
past three fiscal years.

Huntsville, Alabama
26

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 13 Net Position Restatement
In fiscal year 2015, the College adopted Governmental Accounting Standards Board (GASB)
Statement Number 68, Accounting and Financial Reporting for Pensions. The provisions of this
Statement establish accounting and financial reporting standards for pensions that are provided to
the employees of state and local governmental employers through pension plans that are
administered through trusts. The adoption of this statement has a significant impact on the
Colleges financial statements. For fiscal year 2015, the College made prior period adjustments
due to the implementation of GASB Statement Number 68 which required the restatement of the
September 30, 2014, net position in governmental activities. The result is a decrease in net
position at October 1, 2014, of $6,756,000.00.
Prior period adjustments have been made as outlined below:
Beginning Net Position September 30, 2014
Adjustments Due to Accounting Change:
GASB 68 Adjustment of Net Pension Liability
Other Prior Period Adjustments:
To Correct Accounts Receivable
Funds Due Back to the Federal Government
Net Position October 1, 2014, as Restated
$10,826,183.60
(6,756,000.00)
(209,466.64)
(327,885.70)
$3,532,831.26
Note 14 Subsequent Events

In November 2015, the Board voted unanimously to authorize the issuance of its approximately
$1,712,000 J. F. Drake State Community and Technical College Revenue Refunding Bonds,
Series 2015, for the purpose of refunding the State Board of Educations J. F. Drake State
Technical College Revenue Bonds, Series 2003, currently outstanding in the amount
of $1,935,000.

Huntsville, Alabama
27

Huntsville, Alabama
28
Schedule of the College's Proportionate Share of the

Net Pension Liability
(dollar amounts in thousands)
2015
College's proportion of the net pension liability
0.076619%
College's proportionate share of the net pension liability
6,961
College's covered-employee payroll during the measurement period (*)
4,884
College's proportionate share of the collective net pension liability as

a percentage of its covered-employee payroll
Plan fiduciary net position as a percentage of the total collective pension liability
142.53%
71.01%
(*) College's covered-employee payroll during the measurement period is the total payroll paid
to covered employees (not just pensionable payroll). For fiscal year 2015, the measurement
period is October 1, 2013 through September 30, 2014.
This schedule is intended to show information for 10 years. Additional years will be displayed
as they become available.

Huntsville, Alabama
29
Exhibit #4
Schedule of the College's Contributions

(dollar amounts in thousands)
2015
Contractually required contribution
558
Contributions in relation to the contractually required contribution
558
Contribution deficiency (excess)
College's covered-employee payroll
Contributions as a percentage of covered-employee payroll
4,961
11.25%
This schedule is intended to show information for 10 years. Additional years will be displayed
as they become available.

Huntsville, Alabama
30
Exhibit #5
This Page Intentionally Blank

Huntsville, Alabama
31

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

U. S. Department of Education
Direct Programs
Federal Supplemental Educational Opportunity Grants
Federal Supplemental Educational Opportunity Grants
Sub-Total Federal Supplemental Educational
Opportunity Grants
Pass-Through
Grantor's
Number
84.007
84.007
Federal Work-Study Program

Sub-Total Federal Work-Study Program
84.033
84.033
Federal PELL Grant Program

Federal PELL Grant Program
Federal PELL Grant Program Administrative Allowance
Sub-Total Federal PELL Grant Program
84.063
84.063
84.063
Total Student Financial Assistance Cluster (M)

Research and Development Cluster
National Science Foundation
Passed Through Clark Atlanta University
Education and Human Resources
Passed Through Gadsden State Community College
Total Research and Development Cluster (M)
TRIO Cluster
Direct Programs
TRIO - Student Support Services
TRIO - Student Support Services
Total TRIO Cluster

Huntsville, Alabama
47.076
RSP-09-13-215045-003
47.076
N.A.
84.042
84.042
32
Exhibit #6
Budget
Assistance
Period
07/01/2015-06/30/2016
07/01/2014-06/30/2015
Federal
Share
Total
45,463.00
43,950.00
45,463.00
43,950.00
Revenue
Recognized
15,000.00
29,616.50
Expenditures
15,000.00
29,616.50
44,616.50
44,616.50
07/01/2015-06/30/2016
07/01/2014-06/30/2015
35,707.00
35,249.00
35,707.00
35,249.00
11,212.14
24,570.56
35,782.70
11,212.14
24,570.56
35,782.70
07/01/2015-06/30/2016
07/01/2014-06/30/2015
07/01/2014-06/30/2015
1,272,389.00
3,345,993.00
5,160.00
1,272,389.00
3,345,993.00
5,160.00
1,272,389.00
1,785,561.00
5,160.00
3,063,110.00
1,272,389.00
1,785,561.00
5,160.00
3,063,110.00
3,143,509.20
3,143,509.20
09/15/2013-08/31/2015
72,876.00
72,876.00
29,271.56
29,271.56
09/01/2014-08/31/2015
72,870.00
72,870.00
4,518.07
33,789.63
4,518.07
33,789.63
09/01/2015-08/31/2016
09/01/2010-08/31/2015
220,000.00
989,077.00 $
220,000.00
989,077.00
$

Huntsville, Alabama
33
19,554.04
202,707.41
222,261.45 $
19,554.04
202,707.41
222,261.45
Exhibit #6

Federal Grantor/
Pass-Through Grantor/
Program Title
Federal
CFDA
Number
Other Federal Awards

Direct Programs
Higher Education-Institutional Aid
Higher Education-Institutional Aid
Total Higher Education-Institutional Aid
Pass-Through
Grantor's
Number
84.031
84.031
Passed Through Alabama Department of Education

Career and Technical Education - Basic Grants to States
Career and Technical Education - Basic Grants to States
Total Career and Technical Education Basic Grants to States (M)
College Access Challenge Grant Program
Passed Through Alabama Community College System
Adult Education - Basic Grants to States
Total Adult Education - Basic Grants to States
National Science Foundation
Direct Programs
84.048
84.048
V048A140001
V048A130001
84.378
N.A.
84.002
84.002
84.002
84.002
N.A.
V002A150001
V002A150001
N.A.
47.076
47.076
Passed Through Alabama A&M University

Total Education and Human Resources (M)
47.076
SUB-DUE-1238192-DSTC
Total Federal Awards

(M) = Denotes Major Program
N.A. = Not Available
The accompanying Notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.

Huntsville, Alabama
34
Exhibit #6
Budget
Assistance
Period
10/01/2012-09/30/2015
10/01/2010-09/30/2015
Total
10/01/2014-09/30/2015
10/01/2013-09/30/2014
4,020,110.00 $
2,502,655.00
271,076.02
184,431.14
Federal
Share
Revenue
Recognized
4,020,110.00 $
2,502,655.00
271,076.02
184,431.14
1,061,359.39 $
473,473.45
1,534,832.84
Expenditures
1,061,359.39
473,473.45
1,534,832.84
259,421.58
28,220.24
259,421.58
28,220.24
287,641.82
287,641.82
12/01/2013-06/01/2014
15,000.00
15,000.00
2,293.61
2,293.61
05/01/2015-09/30/2015
10/01/2014-09/30/2015
10/01/2014-09/30/2015
04/01/2014-09/30/2014
12,000.00
124,432.00
20,000.00
10,000.00
12,000.00
124,432.00
20,000.00
10,000.00
10,095.57
121,686.36
19,653.99
4,916.00
156,351.92
10,095.57
121,686.36
19,653.99
4,916.00
156,351.92
10/01/2012-09/30/2017
10/01/2012-09/30/2015
1,469,090.00
899,792.00
1,469,090.00
899,792.00
289,164.18
400,213.82
289,164.18
400,213.82
576,401.00
271,281.68
960,659.68
271,281.68
960,659.68
10/01/2012-09/30/2017
576,401.00 $

Huntsville, Alabama
35
6,341,340.15 $
6,341,340.15
Exhibit #6
Notes to the Schedule of Expenditures

of Federal Awards
Note 1 Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant
activity of J. F. Drake State Community and Technical College and is presented on the accrual
basis of accounting. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Therefore, some amounts presented in this schedule may differ from amounts
presented in or used in the preparation of the basic financial statements.
Note 2 Subrecipients
Of the federal expenditures presented in the schedule, J. F. Drake State Community and
Technical College provided federal awards to subrecipients as follows:
Federal CFDA
Number
Program Title

Huntsville, Alabama
47.076
36
Amount Provided
to Subrecipients
$162,644.63
Additional Information

Huntsville, Alabama
37
College Officials
Officials
Position
Dr. Mark Heinrich
Chancellor
Dr. Helen McAlpine
President
Ms. Teresa A. Hill
Dean of Fiscal Affairs

Beginning 02/09/2015
Mr. Horace Franklin
Business Manager
Until 12/05/2014

Huntsville, Alabama
38
Exhibit #7

Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance With
Government Auditing Standards
To: Dr. Mark A. Heinrich, Chancellor Alabama Community College System
Dr. Kemba Chambers, Interim President J. F. Drake State Community and
We have audited 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, the financial statements of
J. F. Drake State Community and Technical College as of and for the year ended
September 30, 2015, and related notes to the financial statements, which collectively comprise
J. F. Drake State Community and Technical Colleges basic financial statements and have issued
our report thereon dated June 1, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered J. F. Drake State
Community and Technical Colleges internal control over financial reporting (internal control) to
determine the audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of J. F. Drake State Community and Technical Colleges internal
control. Accordingly, we do not express an opinion on the effectiveness of J. F. Drake State
Community and Technical Colleges internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and was not designed to identify all deficiencies in internal
control over financial reporting that might be material weaknesses or significant deficiencies and
therefore, material weaknesses or significant may exist that were not identified. However, as
described in the accompanying Schedule of Findings and Questioned Costs, we identified certain
deficiencies in internal control that we consider to be a material weakness and a significant
deficiency.

Huntsville, Alabama
39
Exhibit #8

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 a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entitys financial statements will not be prevented,
or detected and corrected on a timely basis. We consider the deficiencies described in the
accompanying Schedule of Findings and Questioned Costs as items 2015-002 and 2015-003 to
be material weaknesses.
A significant deficiency is a deficiency or a combination of deficiencies in internal control that is
less severe than a material weakness, yet important enough to merit attention by those charged
with governance. We consider the deficiency described in the Schedule of Findings and
Questioned Costs as item 2015-001 to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether J. F. Drake State Community and
Technical Colleges 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.
J. F. Drake State Community and Technical Colleges Response to Findings
J. F. Drake State Community and Technical Colleges response to the findings identified in our
audit is described in the accompanying Auditee Response/Corrective Action Plan. J. F. Drake
State Community and Technical Colleges response was not subjected to auditing procedures
applied in the audit of the financial statements, and accordingly, we express no opinion on it.

Huntsville, Alabama
40
Exhibit #8

Purpose ofthis Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
~X,.,
Ronald L. Jones
Chief Examiner
Montgomery, Alabama
June 1, 2016

Huntsville, Alabama
41
Exhibit #8

and Report on Internal Control Over Compliance
Required by OMB Circular A-133
Independent Auditor's Report
To: Dr. Mark Heinrich, Chancellor Alabama Community College System
Dr. Kemba Chambers, Interim President J. F. Drake State Community and
We have audited J. F. Drake State Community and Technical Colleges compliance 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 J. F. Drake State Community
and Technical Colleges major federal programs for the year ended September 30, 2015.
J. F. Drake State Community and Technical Colleges major federal programs are identified in
the Summary of Examiners Results Section of the accompanying Schedule of Findings and
Questioned Costs.
Managements Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts,
and grants applicable to it federal programs.
Auditors Responsibility
Our responsibility is to express an opinion on compliance for each of J. F. Drake State
Community and Technical Colleges major federal programs based on our audit of the types of
compliance requirements referred to above. 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 J. F. Drake State Community and Technical Colleges 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 on compliance for each
major federal program. However, our audit does not provide a legal determination of J. F. Drake
State Community and Technical Colleges compliance.
Huntsville, Alabama
42
Exhibit #9

Basis for Qualified Opinion on CFDA 47.076 Education and Human Resources
As described in the accompanying schedule of findings and questioned costs, J. F. Drake State
Community and Technical College did not comply with the requirements regarding the
following:
Finding #
CFDA #
Program Name
Compliance Requirement
2015-004
2015-005
2015-006
47.076
47.076
47.076

Allowable Costs/Cost Principles

Compliance with such requirements is necessary, in our opinion, for J. F. Drake State
Community and Technical College to comply with the requirements applicable to that program.
Qualified Opinion on CFDA 47.076 Education and Human Resources
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion
paragraph, J. F. Drake State Community and Technical College complied, in all material
respects, with the types of compliance requirements referred to above that could have a direct
and material effect on the Education and Human Resources grant for the year ended
September 30, 2015.
Unmodified Opinion on Each of the Other Major Federal Programs
In our opinion, J. F. Drake State Community and Technical College complied, in all material
respects, with the types of compliance requirements referred to above that could have a direct
and material effect on each of its major federal programs identified in the summary of auditors
results section of the accompanying schedule of findings and questioned costs for the year ended
September 30, 2015.
Other Matters
The results of our auditing procedures disclosed other instances of noncompliance, which are
required to be reported in accordance with OMB Circular A-133 and which are described in the
accompanying schedule of findings and questioned costs as items 2015-007 and 2015-008. Our
opinion on each major federal program is not modified with respect to this matter.

Huntsville, Alabama
43
Exhibit #9

J. F. Drake State Community and Technical Colleges response to the noncompliance findings
identified in our audit is described in the accompanying Auditee Response/Corrective Action
Plan. J. F. Drake State Community and Technical Colleges response was not subjected to the
auditing procedures applied in the audit of compliance and, accordingly, we express no opinion
on the response.
Report on Internal Control Over Compliance
Management of J. F. Drake State Community and Technical College is responsible for
establishing and maintaining effective internal control over compliance with the types of
compliance requirements referred to above. In planning and performing our audit, we
considered J. F. Drake State Community and Technical Colleges internal control over
compliance with the requirements that could have a direct and material effect on a major federal
program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an 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 J. F. Drake State Community and Technical Colleges
internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in
the preceding paragraph and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. However, as discussed
below, we identified certain deficiencies in internal control over compliance that we consider to
be material weaknesses and significant deficiencies.
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 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. We consider the deficiencies in internal control over compliance described in the
accompanying Schedule of Findings and Questioned Costs as items 2015-004, 2015-005
and 2015-006 to be material weaknesses.

Huntsville, Alabama
44
Exhibit #9

A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance,
yet important enough to merit attention by those charged with governance. We consider the
deficiencies in internal control over compliance described in the accompanying Schedule of
Findings and Questioned Costs as items 2015-007 and 2015-008 to be significant deficiencies.
J. F. Drake State Community and Technical College's response to the internal control over
compliance findings identified in our audit are described in the accompanying Auditee
Response/Corrective Action Plan. J. F. Drake State Community and Technical College's
response was not subjected to the auditing procedures applied in the audit of compliance, and,
and accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing on internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other
purpose.
~()(~
Ronald L. Jones
Chief Examiner
Montgomery, Alabama
June 1, 2016

Huntsville, Alabama
45
Exhibit #9
Schedule of Findings and Questioned Costs

Section I Summary of Examiner's Results
Financial Statements
Type of opinion issued:
Internal control over financial reporting:
Material weakness(es) identified?
Unmodified
Significant deficiency(ies) identified?

Noncompliance material to financial
statements noted?
Yes
No
Yes
None reported
Yes
No
Federal Awards
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Type of auditors report issued on compliance
for major programs:
Any audit findings disclosed that are required
to be reported in accordance with
Section 510(a) of OMB Circular A-133?
Yes
No
Yes
None reported
Qualified
Yes
No
Identification of major programs:

CFDA Numbers
Name of Federal Program or Cluster

Student Financial Assistance Cluster
Federal Supplemental Educational
Opportunity Grants
Federal Pell Grant Program
84.007
84.033
84.063
84.048
Career and Technical Education Basic

Grants to States
47.076
Dollar threshold used to distinguish between

Type A and Type B programs:
$300,000.00
Auditee qualified as low-risk auditee?

Huntsville, Alabama
Yes
46
No
Exhibit #10

Section II Financial Statement Findings (GAGAS)
Ref.
No.
2015-001
Type of
Finding
Internal
Control
Questioned
Costs
Finding/Noncompliance
Finding:
In order to help ensure internal controls over
equipment, Institutions are required to maintain an
annual inventory of equipment and furniture with an
original cost over $5,000. Also, Board Policy 324.01
states, The inventory shall show the complete
description, manufacturers serial number, acquisition
cost, date of purchase, location, responsible office or
employee, and the college property control number.
The Colleges 2015 Fixed Asset Inventory listing
consists of 125 pieces of equipment. The list included
items that were deleted during the fiscal year and
excluded the additions to capital assets. The College
provided a separate listing showing all 18 items that
were added during the fiscal year. From both listings,
14 existing items and 6 additions were selected for the
test of equipment observation/location.
Of the items tested, 2 existing pieces of equipment and
all 6 of the additions to equipment did not have a
property control number placed on the item. The
College assigned property control numbers for the
fiscal year additions, but the equipment was not
tagged. Based on documentation obtained, it appears
that the College did not order the asset tags until
March 2, 2016.
Recommendation:
The College should ensure compliance with Board
Policies.

Huntsville, Alabama
47
Exhibit #10

Ref.
No.
2015-002
Type of
Finding
Internal
Control
Questioned
Costs
Finding:
Codification of Statements on Auditing Standards,
Section 319.06, defines internal control as a process
affected by an entitys board of directors,
management, and other personnel designed to provide
reasonable assurance regarding the achievement of
objectives in the reliability of financial reporting and
compliance with applicable laws and regulations.
During review of accounts payable, it was revealed
that the College did not properly pay expenses or
accrue accounts payable at fiscal year-end as noted
below:
Two October 2015 disbursements that were
recognized as expenditures in the 2015-2016 fiscal
year included $11,933.71 that should have been
recognized in fiscal year 2014-2015 expenditures.
This resulted in an understatement of accounts
payable of $11,933.71.
Nine checks dated September 30, 2015, were
actually prepared in October 2015. The payments
were for 2014-2015 fiscal year expenditures. This
resulted in accounts payable and cash being
understated by $184,128.43.
One check dated September 30, 2015 and
recognized as an expenditure in the 2014-2015
fiscal year, was actually prepared in October 2015.
The payment was made to cover an invoice dated
September 30, 2015 for services to be rendered in
the 2015-2016 fiscal year. This resulted in an
understatement of accounts payable, cash, and
prepaid expenses, and an overstatement of
2014-2015 fiscal year expenses of $9,000.00.

Huntsville, Alabama
48
Exhibit #10

Ref.
No.
Type of
Finding
Finding Continued:
Three checks dated September 30, 2015, and
recognized as an expenditure in the 2014-2015
fiscal year were actually prepared in October
2015. These payments were for goods and
services provided in the 2015-2016 fiscal year.
These payments should not have been recognized
as expenditures in the 2014-2015 fiscal year. This
resulted in an understatement of cash and an
overstatement of expenses of $66,190.43.
Questioned
Costs
The above errors were adjusted for the final financial

statements.
2015-003
Internal
Control
Recommendation:
The College should implement internal controls to
ensure that payments are accounted for in the proper
fiscal year.
Finding:
Internal controls should ensure that accounting
software is programed to post transactions to the
proper accounts in the general ledger. Due to
improper software implementation procedures,
transactions relating to bookstore purchases were
posted in a manner that overstated revenue and
expenditures and understated accounts payable. Audit
adjustments were made to correct the known errors.
Recommendation:
The College should design and implement a system of
internal controls that ensures that bookstore charges
and payments are recorded properly to the general
ledger.

Huntsville, Alabama
49
Exhibit #10

Section III Federal Awards Findings and Questioned Costs
Ref.
No.
2015-004
CFDA
No.
Program
47.076 Education and
Human
Resources
Contract
Numbers:
DUE1205169
for
10/01/2014 09/30/2015
HRD1238803 for
10/01/2014 09/30/2015
DUE1304036
for
09/01/2014 08/31/2015
passed
through
Gadsden State
Community
College

Huntsville, Alabama
Finding:
Grant funds may be used only for
allowable costs of the grantee. Allowable
costs are those costs identified in the
U. S. Office of Management and Budget
(OMB) Circular A-21, the grant contract,
and the Federal grantors guidelines. The
National Science Foundations Award
and Administration Guide, Chapter II
Grant Administration, B. Changes in
Project Direction or Management
statesNeither the phenomena under
study nor the objectives of the project
stated in the proposal or agreed
modifications thereto should be changed
without prior NSF approval. If approved
by NSF, the Grants and Agreements
Officer will amend the grant.
Questioned
Costs
$4,070.00
Payroll expenditures pertaining to the

NSF grants totaled $427,007.43 for the
year. During review of $34,588.81 in
payroll expenditures, it appears the
PI/PDs failed to notify NSF of the
changes in objectives or scope in the
DigiTEC, SPIN-UP and CARCAM
grants.
Audit tests revealed the
following payroll problems:
One student was paid $2,510, for
the months of January through
April 2015, for providing intern
services from DigiTEC grant funds.
There is no project budget
justification in this grant for those
services.
Therefore, the charges
appear to be unallowable.
50
Exhibit #10

Ref.
No.
CFDA
No.
Program
Finding Continued:
For the months of May through
September 2015, the same student
was paid $3,780, for providing the
same services, from SPIN-UP grant
funds.
Of that amount, $1,560
appears to be unallowable. The
projects budget restricted students to
10 hours per week. The PI/PD
approved 19 hours without obtaining
prior approval from NSF. Therefore,
156 hours appears to be unallowable.
One employees salary, under the
CARCAM grant, for $1,080 was
disallowed by the Director/PI of the
CARCAM Center. Although grant
funds were not used, the College
failed to remove the charge from the
CARCAM expenditures in the
general ledger and on the Schedule of
Expenditures of Federal Awards.
Questioned
Costs
The total questioned costs of these items

totaled $4,070.
Recommendation:
The College should implement key
internal controls to ensure grant funds are
used only for allowable costs and
activities.

Huntsville, Alabama
51
Exhibit #10

Ref.
No.
2015-005
CFDA
No.
Program
Human
Resources
Contract
Numbers:
HRD1238803 for
10/01/2014 09/30/2015
DUE1238192 for
10/01/2012 09/30/2017
Passed
through
Alabama
A&M
University
Finding:
OMB Circular A-21, Cost Principles for
Educational
Institutions,
requires
certification of labor effort contributed
by employees on Federal awards to
reasonably reflect the actual labor effort
contributed by the employee to meet the
objectives of the award. The effort
reporting system must provide for afterthe-fact confirmation of employee
activity by the employee conducting the
work being reported or by an official that
is in a position to know whether the work
was performed. The Circular also
requires Colleges to provide for periodic
independent internal evaluations to
ensure the effort reporting systems
effectiveness and compliance with
Federal standards. As such, the recipient
institution is responsible for ensuring that
costs charged to a sponsored agreement
are allowable, allocable, and reasonable
under these cost principles and must
provide for adequate documentation to
support costs charged to sponsored
agreements.
Questioned
Costs
$26,078.81
Time and effort reports were requested

for five employees hired under the
National Science Foundations Education
and Human Resources Grants. Audit
tests revealed:
College employees complete time
and effort reports on a monthly basis.
Some or all of the time and effort
forms for three of the five employees
tested could not be located.

Huntsville, Alabama
52
Exhibit #10

Ref.
No.
CFDA
No.
Program
Finding Continued:
For one of the employees above, the
College was able to provide a time
and effort form for the month of
October 2014; however, the report
was for another sponsored program.
This appears to indicate the costs
were charged to the wrong sponsored
program.
Questioned
Costs
Based on the procedures performed, it

was determined that the time and effort
reporting system at the College does not
adequately support the costs allocated to
the NSF grants. The total questioned
cost of these items totaled $26,078.81.
Recommendation:
The College should develop controls to
ensure that personnel service costs
charged to Federal awards are properly
supported in accordance with OMB
Circular A-21.

Huntsville, Alabama
53
Exhibit #10

Ref.
No.
2015-006
CFDA
No.
Program
Human
Resources
Contract
Numbers:
DUE1238192 for
10/01/2012 09/30/2017
Passed
through
Alabama
A&M
University
HRD1238803 for
10/01/2014 09/30/2015
DUE1205169
for
10/01/2014 09/30/2015

Huntsville, Alabama
Finding:
Grant funds may be used only for
allowable costs of the grantee. Allowable
costs are those costs identified in the
U. S. Office of Management and Budget
(OMB) Circular A-21, the grant contract,
and the Federal grantors guidelines. The
National Science Foundations Award
and Administration Guide, Chapter II
Grant Administration, B. Changes in
Project Direction or Management states,
Neither the phenomena under study nor
the objectives of the project stated in the
proposal or agreed modifications thereto
should be changed without prior NSF
approval. If approved by NSF, the
Grants and Agreements Officer will
amend the grant.
Questioned
Costs
$44,307.38
The College awarded a total of $41,877

in scholarships from APEX and
SPIN-UP grant funds. A total of eighteen
scholarship participants receiving awards
totaling $8,601 were selected from a
population of 81 scholarship recipients
for testing. The College also awarded
$46,005.28 in stipends paid from
DigiTEC, APEX and LSAMP grant
funds. Forty-three students received
stipends and six of those students with
stipends totaling $9,430.38 were selected
for testing. It appears that the PI/PDs
failed to notify NSF of the changes in
objectives or scope of certain grant
programs.
54
Exhibit #10

Ref.
No.
CFDA
No.
Program

Huntsville, Alabama
Finding Continued:
Audit tests revealed the following
problems:
Ten of the selected participants were
paid $4,230 in scholarships from the
APEX grant. There is no project
budget justification in this grant for
scholarships. Therefore, the charges
On
September 23, 2015, the College
invoiced the grantor $35,898.02
which included $9,306 for all of the
scholarships awarded.
As of
April 28, 2016, the College had not
received the $35,898.02.
Eight of the selected participants
were paid $4,371 in scholarships
from the SPIN-UP grant. There is no
project budget justification in this
grant for scholarships. Therefore, the
charges appear to be unallowable.
The total grant funds received and
disbursed by the College for
scholarships from the SPIN-UP grant
was $32,571.
Two students who participated under
the LSAMP grant were paid $568 in
stipends from the DigiTEC grant
funds. There is no project budget
justification in this grant for student
stipends.
Therefore, the charges
55
Questioned
Costs
Exhibit #10

Ref.
No.
CFDA
No.
Program
Finding Continued:
Two high school administrators who
participated
in
the
Summer
Technology Institute (STI) program
under the SPIN-UP grant were paid
$1,862.38 in stipends from the APEX
grant funds. Stipends for STI
participants may not be an allowable
cost for the APEX grant funds. On
August 27, 2015, the College
invoiced the grantor $44,321.02
which included the stipends sampled.
As of April 28, 2016, the College had
not received the $44,321.02.
Questioned
Costs
The total questioned costs of these items

totaled $44,307.38.
Recommendation:
The College should implement key
internal controls to ensure grant funds are
used only for allowable costs and
activities.

Huntsville, Alabama
56
Exhibit #10

Ref.
No.
2015-007
CFDA
No.
Program
Human
Resources
Contract
Numbers:
HRD1238803 for
10/01/2014 09/30/2015
DUE1205169
for
10/01/2014 09/30/2015
DUE1304036
for
09/01/2014 08/31/2015
passed
through
Gadsden State
Community
College
Finding:
OMB Circular A-110, Section 215.53(b)
states, Financial records, supporting
documents, statistical records, and all
other records pertinent to an award shall
be retained for a period of three years
from the date of submission of the final
expenditure report or, for awards that are
renewed quarterly or annually, from the
date of the submission of the quarterly or
annual financial report, as authorized by
the Federal awarding agency.
Questioned
Costs
During testing of National Science

Foundation Education and Human
Resources annual performance reports, it
was noted that the College did not
maintain supporting documentation for
the amounts and or percentages reported
or the information reported did not agree
with the supporting documentation.
Recommendation:
The College should comply with the
Federal Code of Regulations and retain
supporting documentation for annual
performance reports.
HRD1305041
for
09/15/2013
08/31/2014
passed
through Clark
Atlanta
University
Huntsville, Alabama
57
Exhibit #10

Ref.
No.
2015-008
CFDA
No.
Program
84.031 Higher
Education
Institutional
Aid
Contract
Number:
P031B120506
-14 for
10/01/201209/30/2017
Finding:
A-110 Section 215.22 requires that
payment methods should minimize the
time elapsing between the transfer of
funds from the United States Treasury
and the issuance or redemption of
checks, warrants, or payments by other
means by the recipients.
Questioned
Costs
During fiscal year 2014-2015 the College

prepared a comparison of G5 drawdowns
at September 30, 2014 to the amount of
expenses on the general ledger at the
same date. Based on this comparison the
College prepared an entry to book a
$216,860.10 receivable from the Higher
Education Institutional Aid grant.
Due to a lack of internal controls, the
current employees were unaware that the
College had drawn $211,778.45 from the
prior grant cycle. That draw(s) should
have been taken into account when
determining the proper receivable. The
College drew the $211,778.45 down for
the second time in January 2015.
After an analysis of the account, it was
determined that the College was not
overdrawn at September 30, 2015 due to
2014-2015 expenses that had not been
drawn down at year end.
Recommendation:
The College should implement internal
controls to ensure compliance with
federal cash management requirements.

Huntsville, Alabama
58
Exhibit #10
Summary Schedule of Prior Audit Findings

Huntsville, Alabama
59
Exhibit #11
J.F. DRAKE STATE COMMUNI1Y AND TECHNICAL COLLEGE

3421 MERIDIAN STREET, NORTH HUNTSVILLE, AL 35811
P: 256.539.8161 F: 256.539.6439
Summary Schedule ofPrior Audit Findings

For the Year Ended September 30,2015
As required by the Office ofManagement and Budget (OMB) Circular No. A-l33,Audits ofStates, Local
Governments, and Non-Profit Organizations Section _.315(b), J. F. Drake State Community &
Technical College has prepared and hereby submits the following Summary Schedule of Prior Audit
Findings as of September 30, 2015.
Finding
Ref.
No.
Status of Prior Audit Finding
2014-002
The college is in the process of drafting a manual to implement internal controls for grant
and budget management. The college plans to have this process implemented by June 30,
2016.
2014-003
The Grant Manager will thoroughly review the grants to identify allowable costs in
regards to scholarships and student stipends to ensure the College is in compliance. The
Grant Manager, Dean of Instruction and Human Resource Department will work together
to verify an instructor's qualifications and credentials prior to classes being taught. The
college plans to have this process implemented by June 30, 2016.
2011-01
Corrective action was taken
2014-001
Corrective action was taken
OUR GRADUATES WORK
Auditee Response/Corrective Action Plan

Huntsville, Alabama
60
Exhibit #12
J.F. DRAKE STATE COMMUNITY AND TECHNICAL COLLEGE

3421 MERIDIAN STREET, NORTH HUNTSVILLE,
P: 256.551.3117 F: 256.551.3133
OFFICE OF THE
AL 35811
PRESIDENT
VIA U.S. Regular Mail and Electronic Mail
June 21, 2016
Mr. Ronald L. Jones, ChiefExaminer

State of Alabama
Post Office Box 302251
Re:
J.F. Drake State Community and Technical College Response and Corrective Action
Plan for audit period October 1, 2014 through September 30, 2015
Dear Mr. Jones:

Enclosed please find the Response and Corrective Action Plan of J. F. Drake State
Community and Technical College, as required by the Office of Management and Budget
(OMB) Circular o. A-133, Audits of States, Local Governments, and Non-Profit
Organizations, Section .315(c), 1. F. Drake State Community and Technical College has
prepared and hereby submits the following Auditee Response/Corrective Action Plan for the
findings included in the Schedule of Findings and Questioned Costs for the year ended
September 30, 2015 . Should you have any questions or concerns please let us know.
Sincerely,
Kemba Chambers, Ed. D.

Interim President
Enclosure
OUR GRADUATES WORK
J.F.
DRAKE STATE
COMMUNITY &TECHNICAL COLLEGE
Auditee Response/Corrective Action Plan

For tlze Year Ended September 30, 2015
As required by the Office of Management and Budget (OMS) Circular No. A-133 , Audits of
States, Local Governments, and Non-Profit Organizations, Section .315(c), J. F. Drake State
Community and Technical College has prepared and hereby submits the following Auditee
Response/Corrective Action Plan for the findings included in the Schedule of Findings and
Questioned Costs for the year ended September 30, 2015.
Finding
Ref.
No.
2015-001
Corrective Action Plan Details

Finding: In order to help ensure internal controls over equipment, Institutions are
required to maintain an annual inventory of equipment and furniture with an
original cost over $5,000. Also. Board Policy 324.01 states, "The inventory shall
show the complete description, manufacturer's serial number, acquisition cost, date
of purchase, location, responsible office or employee, and the college property
control number."
The College's 2015 Fixed Asset Inventory listing consists of 125 pieces of
equipment. The list included items that were deleted during the fiscal year and
excluded the additions to capital assets. The College provided a separate listing
showing all 18 items that were added during the fiscal year. From both listings, 14
existing items and 6 additions were selected for the test of equipment
observation/ location.
Of the items tested, 2 existing pieces of equipment and all 6 of the additions to
equipment did not have a property control number placed on the item. The College
assigned property control numbers for the fiscal year additions, but the equipment
was not tagged. Based on documentation obtained, it appears that the College did
not order the asset tags until March 2, 2016.
2015-001
Recommendation: The College should ensure compliance with Board Policies.
2015-001
College Response: The College has prepared a plan to ensure compliance with
Board Policies as described more fully below. Under the leadership of the College ' s
former President and her administration, the College 's Business Office and
Infom1ation Technology divisions were permitted to separately and independently
J.F.
DRAKE STATE
COMMUNITY & TECHNICAL COLLEGE
distribute inventory tags during this audit year, and as a result, some confusion
existed between the departments regarding the management and reporting of
College asset inventories. The Chief Accountant in the College 's Business Office
is now assigned to be the point of contact for this corrective action. The Chief
Accountant is now the only authorized person at the College to maintain custody
of the inventory tags and has sole control over the tag distribution. A reconciliation
procedure has been implemented in the Business Office to update the inventory
listing on a quarterly basis. This procedure includes an analysis of the general
ledger to account for disposals, additions, and posting errors, which may occur
during each quarter. Additionally, a complete physical inventory of existing fixed
assets will be taken to ensure that all assets are located and are appropriately tagged.
Implementation began in June 2016 and is anticipated to be completed by
September 30, 2016.
2015-002
Finding: Codification of Statements on Auditing Standards, Section 319.06,

defines intemal control as a process affected by an entity' s board of directors,
management, and other personnel designed to provide reasonable assurance
regarding the achievement of objectives in the reliability of financial reporting and
compliance with applicable laws and regulations. During review of accounts
payable, it was revealed that the College did not properly pay expenses or accrue
accounts payable at fiscal year-end as noted below:
Two October 2015 disbursements that were recognized as expenditures in the
2015-16 fiscal year included $11 ,933.71 that should have been recognized in
fiscal year 2014-15 expenditures. This resulted in an understatement of
accounts payable of$11 ,933.71.
Nine checks dated September 30, 2015 , were actually prepared in October
2015 . The payments were for 2014-15 fiscal year expenditures. This resulted in
accounts payable and cash being understated by $184,128.43 .
One check dated September 30, 2015 and recognized as an expenditure in the
2014-15 fiscal year, was actually prepared in October 2015 . The payment was
made to cover an invoice dated September 30, 2015 for services to be rendered
in the 2015-16 fiscal year. This resulted in an understatement of accounts
payable, cash, and prepaid expenses, and an overstatement of 2014-15 fiscal
year expenses of $9,000.00.
Three checks dated September 30, 2015 , and recognized as an expenditure in
the 2014-15 fiscal year were actually prepared in October 2015 . These
payments were for goods and services provided in the 2015-16 fiscal year.
These payments should not have been recognized as expenditures in the 201415 fiscal year. This resulted in an understatement of cash and an overstatement
of expenses of $66,190.43.
J.F.
DRAKE STATE
The above errors were adjusted for the final financial statements.
2015-002
Recommendation: The College should implement intemal controls to ensure that

payments are accounted for in the proper fiscal year.
2015-002
College Response: The College has implemented intemal control plans to ensure
that payments are accounted for in the proper fiscal year as described more fully
below. The Chief Accountant in the Business Office is the contact person for this
conective action plan. In order to minimize issues related to the proper posting of
expenditures within their appropriate time periods, the Business Office will
implement an early cut-off of requisitions and purchase orders prior to the end of
each fiscal year. This will enable the Accounts Payable Clerk to receive and
process most of the current year invoices prior to September 30t11 In addition, all
invoices processed in September will be reviewed by an accountant as well as
Accounts Payable to determine whether or not the expenditure was incuned prior
to the end of the fiscal year. If not, appropriate adjustments will be made to record
any applicable prepayments. After September 30th all system processing will be
recorded in the current fiscal year and appropriate entries will be made to accrue
payables for any invoices paid in October for previous year expenditures. These
previous year expenditures will be identified by reviewing all invoices paid in
October to determine if the goods were received or services rendered prior to
October and noted on the check register to be used as documentation for the journal
entry recording the previous year payables. This corrective action will be
implemented by the Chief Accountant effective September, 2016.
2015-003
Finding: Internal controls should ensure that accounting software is programed to

post transactions to the proper accounts in the general ledger. Due to improper
software implementation procedures, transactions relating to bookstore purchases
were posted in a manner that overstated revenue and expenditures and understated
accounts payable. Audit adjustments were made to correct the known errors.
2015-003
Recommendation: The College should design and implement a system of internal

controls that ensures that bookstore charges and payments are recorded properly to
the general ledger.
2015-003
College Response: The College has planned and implemented a system of intemal
controls to ensure that bookstore charges and payments are recorded properly to the
general ledger as more fully described below. The College inadvertently copied
another institution' s accounting codes in the bookstore detail code, which resulted
in this error. The Chief Accountant is the contact for this corrective action plan.
The accounting attached to the bookstore detail code has been changed from a
revenue to a bookstore liability prior to the summer 2016 semester. All future
J.F.
DRAKE STATE
payments to the bookstore vendor will be paid from the bookstore liability. A
journal entry will be prepared to conect the inconect entries for the activity in the
15-16 fiscal year prior to the summer semester. This corrective action began in
June 2016 and is anticipated to be completed by September 2016.
2015-004
Finding:
Grant funds may be used only for allowable costs of the grantee.
Allowable costs are those costs identified in the U.S. Office of Management and
Budget (OMB) Circular A-21, the grant contract, and the Federal grantor' s
guidelines. The National Science Foundation's Award and Administration Guide,
Chapter II- Grant Administration, B. Changes in Project Direction or Management
states: "Neither the phenomena under study nor the objectives of the project stated
in the proposal or agreed modifications thereto should be changed without prior
NSF approval. If approved by NSF, the Grants and Agreements Officer will amend
the grant."
Payroll expenditures pertaining to the NSF grants totaled $427,007.43 for the
year. During review of $34,588.81 in payroll expenditures, it appears the PI/PDs
failed to notify NSF of the changes in objectives or scope in the DigiTEC, SPINUP and CARCAM grants. Audit tests revealed the following payroll problems:
../ One student was paid $2,510, for the months of January through April 2015 , for
providing intem services from DigiTEC grant funds. There is no project budget
justification in this grant for those services. Therefore the charges appear to be
unallowable.
../ For the months of May through September 2015, the same student was paid $3 ,780,
for providing the same services, from SP1N-UP grant funds. Of that amount, $1,560
appears to be unallowable. The project's budget restricted students to I 0 hours per
week. The PUPD approved 19 hours without obtaining prior approval from
NSF. Therefore, 156 hours appears to be unallowable .
../ One employee's salary, under the CARCAM grant, for $1,080 was disallowed by the
Director/PI of the CARCAM Center. Although grant funds were not used, the College
failed to remove the charge from the CARCAM expenditures in the general ledger and
on the Schedule of Expenditures of Federal Awards.
The total questioned costs of these items totaled $4 070.
2015-004
Recommendation: The College should implement key internal controls to ensure

grant funds are used only for allowable costs and activities.
2015-004
College Response: The College has implemented key internal controls to ensure grant
funds are used only for allowable costs and activities as described more fully below.
(1) The College agrees with the finding that one student was paid $2,510, for the
months of January through April 2015 , for providing intern services from
J.F.
DRAKE STATE
COMMUNI1Y & TECHNICAL COLLEGE
DigiTEC grant funds. This payment was not allowed or identified in the
objectives or budget justification of the DigiTEC grant. The previous grant
administrator, who was placed on administrative leave pending an internal
review of the College's grant programs in December 2015 and ultimately
resigned his position, has not managed the DigiTEC grant for the College since
December 2015. The College's review determined that the previous PI failed to
request and receive approval for the modifications from the funding agencies.
Beginning December 2015, the College seemed another PI and the cmrent grant
administrator has thoroughly reviewed the grants of the college and intends to
request and obtain approval from the funding agencies before making any
internal modifications of grant activities, including budget justifications, in the
futme. The College will reimburse the DigiTEC grant account for the
disallowable expenditures. This corrective action plan is in process; the College
will work with and in coordination with funding agencies to remediate; and the
College anticipates to be complete with this plan by September 30, 2016. The
grant administrator is the contact person for this corrective action plan.
(2) The College agrees with the finding that $1,560 of $3,780 paid to one student
between May and September 2015 under the SPINUP grant is disallowable
because the budget restricted the student to l 0 hours per week but he was paid
for 19 hours. The previous grant administrator, who was placed on
administrative leave pending an internal review of the College's grant programs
in December 2015 and ultimately resigned his position, has not managed the
SPINUP grant for the College since December 2015. The College ' s review
determined that the previous PI failed to request and receive approval for the
modifications from the funding agencies. Beginning December 2015, the
current grant administrator reviewed the grants of the college and made the
necessary adjustments and removed all personnel that were not identified in the
grant(s). The grants office will continue to request and obtain approval from the
funding agencies before making any internal modifications of grant activities,
including budget justifications. The College will reimburse the SPINUP grant
account for the disallowable expenditures. This corrective action plan is in
process; the College will work with and in coordination with funding agencies
to remediate; and the College anticipates to be complete with this plan by
September 30, 2016. The grant administrator is the contact person for this
corrective action plan.
(3) The College agrees with the finding that one employee ' s salary, under the
CARCAM grant, for $1 ,080 was disallowed by the Director/PI of the
CARCAM Center and no grant funds were used by the College. Upon
notification of the errors in the general ledger and the SEFA, an adjusting
journal entry was posted to the general ledger and a revised SEFA was provided
to the audit team. The College will monitor all costs of restricted funds and
J.F.
DRAKE STATE
upon notification of disallowed costs by the granting agency, the reports will be
revised and updated accordingly. This conective action plan is in process; and
the College anticipates to be complete with this plan by September 30, 2016.
The grant administrator is the contact person for this conective action plan.
2015-005
Finding: OMB Circular A-21 , Cost Principles for Educational Institutions,

requires certification of labor effort contributed by employees on Federal awards to
reasonably reflect the actual labor effort contributed by the employee to meet the
objectives of the award. The effort reporting system must provide for after-the-fact
confirmation of employee activity by the employee conducting the work being
repmted or by an official that is in a position to know whether the work was
perfmmed. The Circular also requires Colleges to provide for periodic independent
internal evaluations to ensure the effort reporting system' s effectiveness and
compliance with Federal standards. As such, 'the recipient institution is responsible
for ensuring that costs charged to a sponsored agreement are allowable, allocable,
and reasonable under these cost principles" and .. must provide for adequate
documentation to support costs charged to sponsored agreements."
Time and effmt repmts were requested for five employees hired under the National
Science Foundation 's Education and Human Resources Grants. Audit tests
revealed :
./ College employees complete time and effort reports on a monthly basis. Some
or all of the time and effort forms for three of the five employees tested could
not be located .
./ For one of the employees above, the College was able to provide a time and
effort form for the month of October 20 I 4; however, the report was for another
sponsored program. This appears to indicate the costs were charged to the
wrong sponsored program.
Based on the procedures performed, it was determined that the time and effort
repmting system at the College does not adequately support the costs allocated to
the NSF grants. The total questioned cost of these items totaled $26,078 .81.
2015-005
Recommendation: The College should develop controls to ensure that personnel

service costs charged to Federal awards are properly supported in accordance with
OMB Circular A-21 .
2015-005
College Response: The College has developed controls to ensure that persmmel
service costs charged to Federal awards are properly supported in accordance with
OMB Circular A-21 as discussed more fully below. The College was notified by
J.F.
DRAKE STATE
the National Science Foundation s audit team of specific concerns related and
pertaining to the administration and management of NSF grants, including items
for lack of documentation and/or inaccuracies in the College's time and effort
reporting documentation in November 2015. The College's former President and
previous grant administrator were placed on administrative leave pending an
internal review of the College's NSF grant programs. Both employees ultimately
resigned their positions and have not managed the NSF grants for the College since
December 2015. The College is currently overseen by the Chancellor of the
Alabama Community College System through an assigned Interim President and it
has designated a new grant administrator. While the College agrees that some time
and reporting records could not be located for the specified time period, the College
has made considerable progress in addressing the its own internal NSF grant review
findings and it does maintain other adequate documentation to support costs
charged to sponsored agreements. The College currently has an effective tracking
system and process in place for time and effort reporting. Beginning January 2016.
the grants administrator has maintained a filing system for all T&E reports and
makes necessary payroll adjustments to percentages that are not aligned with the
payroll distribution that is generated by the restricted fund accountant.
Additionally, the College enlisted the services of a regional CPA firm to assist with
developing an enhanced system of T&E reporting and monitoring. Training
sessions have been held with all College personnel to review the improved
procedures and time rep011ing forms. The grant administrator is the contact person
in charge of this conecti ve action.
2015-006
Finding: Grant fimds may be used only for allowable costs of the grantee.
Allowable costs are those costs identified in the U.S. Office of Management and
Budget (OMB) Circular A-21, the grant contract, and the Federal grantor's
guidelines. The National Science Foundation s Award and Administration Guide,
Chapter II-Grant Administration. B. Changes in Project Direction or Management
states, "Neither the phenomena under study nor the objectives of the project stated
in the proposal or agreed modifications thereto should be changed without prior
NSF approval. If approved by NSF, the Grants and Agreements Officer will amend
the grant."
The College awarded a total of $41,877 in scholarships from APEX and SPIN-UP
grant funds. A total of eighteen scholarship participants receiving awards totaling
$8,601 were selected from a population of81 scholarship recipients for testing. The
College also awarded $46,005.28 in stipends paid from DigiTEC, APEX and
LSAMP grant funds. Forty-three students received stipends and six of those
students with stipends totaling $9,430.38 were selected for testing. It appears that
J.F. DRAKE STATE

the PI/PDs failed to noti fy NSF of the changes in objectives or scope of certain
grant programs. Audit tests revealed the following problems:
./ Ten of the selected participants were paid $4,230 in scholarships from the
APEX grant. There is no project budget justification in this grant for
scholarships. Therefore, the charges appear to be unallowable. On September
23 , 2015, the College invoiced the grantor $35,898 .02 which included $9,306
for all of the scholarships awarded. As of April28 , 2016, the College had not
received the $35,898.02 .
./ Eight of the selected participants were paid $4,3 71 in scholarships from the
SPIN-UP grant. There is no project budget justification in this grant for
scholarships. Therefore, the charges appear to be unallowable. The total grant
funds received and disbursed by the College for scholarships from the SPINUP grant was $32,571 .
./ Two students who participated under the LSAMP grant were paid $568 in
stipends from the DigiTEC grant funds. There is no project budget
justification in this grant for student stipends. Therefore, the charges appear
to be unallowable .
./ Two high school administrators who participated in the Summer Technology
Institute (STI) program under the SPIN-UP grant were paid $1 ,862.38 in
stipends from the APEX grant funds. Stipends for STI participants may not be
an allowable cost for the APEX grant funds. On August 27, 2015 , the College
invoiced the grantor $44,321.02 which included the stipends sampled. As of
April 28, 2016, the College had not received the $44,321.02.
The total questioned costs ofthese items totaled $44,307.38.
2015-006
Recommendation: The College should implement key internal controls to ensure

grant funds are used only for allowable costs and activities.
2015-006
College Response: The College is working to ensure grant funds are used only for
allowable costs and activities. The College was notified by the National Science
Foundation's audit team of specific concerns related and pertaining to the
administration and management ofNSF grants, including items of questioned costs
and documentation and/or inaccuracies in the College ' s accounting for such items
in November 2015 . The College 's former President and previous grant
adminishator were placed on administrative leave pending an internal review of the
College's NSF grant programs. Both employees ultimately resigned their positions
and have not managed the NSF grants for the College since December 2015. The
College has a new grant administrator in place.
J.F.
DRAKE STATE
( 1) The College agrees with the finding that ten of the selected participants were
paid $4,230 in scholarships from the APEX grant and that there is no project
budget justification approval in this grant for scholarships. The previous grant
administrator provided a letter of permission to staff, which was not sufficient
to support this expenditure. The funding agencies should have been given an
opportunity to approve the costs before the College permitted the costs.
Beginning December 2015 , the cunent grant administrator reviewed the grants
of the college and discontinued all unallowable activities and costs that were
active tmder the previous grants administrator leadership. The grants office will
continue to request and obtain approval from the funding agencies before
making any internal modifications of grant activities, including budget
justifications. The College will reimburse the APEX grant account for the
disallowable expenditures and will prepare a corrected invoice for the funding
agency that will reflect the removal of the unallowable costs. This conective
action plan is in process; the College will work with and in coordination with
funding agencies to remediate; and the College anticipates to be complete with
this plan by September 30, 2016.The grant administrator is the contact person
for this corrective action plan.
(2) The College agrees with the finding that eight of the selected participants were
paid $4,371 in scholarships from the SPIN-UP grant and that there is no project
budget justification in this grant for scholarships. The previous grant
administrator provided a letter of permission to staff, which was not sufficient.
The funding agencies should have approved the costs before the College
permitted this costs. Beginning December 2015, the current grant administrator
reviewed the grants of the college and discontinued all unallowable activities
and costs that were active under the previous grants administrator leadership.
The grants office will continue to request and obtain approval from the funding
agencies before making any internal modifications of grant activities, including
budget justifications. The College will reimburse the SPINUP grant account for
the disallowable expenditures and will prepare a corrected invoice for the
funding agency that will reflect the removal of the unallowable costs. This
corrective action plan is in process; the College will work with and in
coordination with funding agencies to remediate; and the College anticipates to
be complete with this plan by September 30, 2016. The grant administrator is
the contact person for this conective action plan.
(3) The College agrees that two students who participated under the LSAMP grant
were paid $568 in stipends from the DigiTEC grant, but the College does not
agree this was a disallowable cost. This was an inadvertent coding error where
the DigiTEC account code was used rather than the proper LSAMP account
J.F.
DRAKE STATE
(4)
2015-007
code. The College will correct the booking of the expense to reflect the proper
grant assignment. The College will further return the funds to the DigiTEC
grant and properly book the expense to the LSAMP grant. This corrective
action plan is in process and anticipated to be complete by September 30, 2016.
The grant administrator and the Chief Accountant are the contact persons for
this corrective action plan.
The College agrees with the finding that two high school administrators who
participated in the Summer T.echnology Institute (STI) program under the
SPIN-UP grant were paid $1,862.38 in stipends from the APEX grant funds
and that stipends for STI participants may not be an allowable cost for the
APEX grant funds. Beginning December 2015, the current grant administrator
reviewed the grants of the college and discontinued all unallowable activities
andcosts that were active under the previous grants administrator leadership.
The grants office will continue to request and obtain approval from the funding
agencies before making any internal modifications of grant activities,
including budget justifications. The College will reimburse the APEX grant
account and will prepare a corrected invoice for the funding agency that will
reflect the removal of the unallowable costs. This cotTective action plan is in
process; the College will work with and in coordination with funding agencies
to remediate; and the College anticipates to be complete with this plan by
September 30, 2016.
Finding: OMB Circular A-ll 0, Section 215.53(b) states, 'Financial records,

supp011ing documents, statistical records, and all other records pertinent to an
award shall be retained for a period of three years from the date of submission of
the final expenditure report or, for awards that are renewed quarterly or annually,
from the date of the submission of the quarterly or annual financial report, as
authorized by the Federal awarding agency."
During testing of National Science Foundation Education and Human Resources

annual performance reports, it was noted that the College did not maintain
suppm1ing documentation for the amounts and or percentages reported or the
information reported did not agree with the supporting documentation.
2015-007
Recommendation: The College should comply with the Federal Code of

Regulations and retain supporting documentation for annual performance repmis.
2015-007
College Response: The College desires to be in compliance with the Federal Code
of Regulations and retain suppmiing documentation for annual performance
reports. The College was notified by the National Science Foundation's audit team
of specific concerns related and pertaining to the administration and management
J.F.
DRAKE STATE
of NSF grants, including items of documentation in the College s grant accounting

in November 2015. The College ' s former President and previous grant
administrator were placed on administrative leave pending an internal review of the
College ' s NSF grant programs. Both employees ultimately resigned their positions
and have not managed the NSF grants for the College since December 2015. The
College is currently overseen by the Chancellor of the Alabama Community
College System through an assigned Interim President and it has designated a new
grant administrator. The College agrees with this finding because supporting
documentation was not attached to the annual reports. Percentages/numbers could
not be identified without supporting information! formulas that were used by the
previous grants administrator. Beginning February 2015, the new grant
administrator has completed annual reports related to DigiTEC, LSAMP, and
APEX, and has attached supporting documentations to annual reports in an
electronic and manual file. The grants office will continue these best practices for
tracking supporting documentation of annual reports.
2015-008
Finding: A-ll 0 Section 215.22 requires that payment methods should minimize
the time elapsing between the transfer offunds from the United States Treasury and
the issuance or redemption of checks, warrants, or payments by other means by the
recipients.
During fiscal year 2014-2015 the College prepared a comparison of 05 drawdowns .
at 9/30/2014 to the amount of expenses on the general ledger at the same date .
Based on this comparison the College prepared an entry to book a $216,860.10
receivable from the Higher Education - Institutional Aid grant.
Due to a lack of internal controls, the current employees were unaware that the
College had drawn $211 ,778.45 from the prior grant cycle. That draw(s) should
have been taken into account when determining the proper receivable. The College
drew the $211 ,778.45 down for the second time in January 2015.
After an analysis of the accow1t, it was determined that the College was not
overdrawn at 9/30115 due to 2014-2015 expenses that had not been drawn down at
year end .
2015-008
Recommendation: The College should implement internal controls to ensure

compliance with federal cash management requirements.
2015-008
College Response: The College has implemented an internal control plan to ensure
compliance with federal cash management requirements as more fully described
below. This accounting event was the result of a non-recurring situation that
J.F.
DRAKE STATE
occurred when the College was without a Grant Accountant. Drawdowns were
confused between two separate Title III awards. At the time, reconciliation
procedures, which would have revealed the error, were not in place. The Grant
Accountant will be the contact person on this corrective action. Currently, grant
reconciliations are prepared on a monthly basis and reviewed.
These
reconciliations compare GeneraJ Ledger expenditures with Federal drawdowns, in
order to determine any discrepancies. These reconciliations are reviewed and
approved by the Chief Accountant. In addition, the cunent accounting system
automatically records matching revenue and receivable as grant expenditures are
posted. This process enhances accuracy in the recording of revenues and
receivables by reducing human input. Corrective actions are in place as of June,
2016.

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Audit of Drake State Community and Technical College

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Report on the

J. F. Drake State Community

Filed: July 1, 2016

Examiners of Public Accounts

Honorable Ronald L. Jones

Sworn to and subscribed before me this

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Contains items pertaining to state and federal legal compliance, College

Contains information pertaining to the history of the College.

Reports on whether the financial information constitutes a fair presentation of

Provides information required by the Governmental Accounting Standards Board

Provides the minimum combination of financial statements and notes to the

Statement of Net Position

Statement of Revenues, Expenses and Changes in Net Position

Statement of Cash Flows

Notes to the Financial Statements

J. F. Drake State Community

Provides information required by the GASB to supplement the basic financial

Schedule of the Colleges Proportionate Share of the

Schedule of the Colleges Contributions

Contains financial information and notes relative to federal financial assistance.

Schedule of Expenditures of Federal Awards

Notes to the Schedule of Expenditures of Federal Awards

College Officials a listing of the College officials.

Report on Internal Control Over Financial Reporting and on

J. F. Drake State Community

Report on Compliance for Each Major Federal Program

Schedule of Findings and Questioned Costs a schedule

Summary Schedule of Prior Audit Findings a report, prepared

Auditee Response/Corrective Action Plan a response by the

J. F. Drake State Community

Examiners of Public Accounts

J. F. Drake State Community and Technical College (the College) is a comprehensive

Examiners of Public Accounts

Independent Auditors Report

Independent Auditors Report

To: Dr. Mark Heinrich, Chancellor - Alabama Community College System

Report on the Financial Statements

Other Reporting Required bv Government Auditing Standards

Managements Discussion and Analysis

J. F. DRAKE STATE COMMUNITY & TECHNICAL COLLEGE

Condensed Statement of Revenues, Expenses, and Changes in Net Position

Income before Other

Other Revenues and

Net Position, Beginning

Net Position, End of Year $3,241,098

Statement of Cash Flows

Cash Flows from NonOperating Financing

Cash Flows from (used) in

Cash Flows from Investing

Net Increase (Decrease) in

Basic Financial Statements

Statement of Net Position

Total Noncurrent Assets

J. F. Drake State Community

DEFERRED INFLOW OF RESOURCES

Total Net Position

J. F. Drake State Community

This Page Intentionally Blank

Statement of Revenues, Expenses and Changes in Net Position

Operating Income (Loss)

NONOPERATING REVENUES (EXPENSES)

J. F. Drake State Community