PIEDMONT TECHNICAL COLLEGEAudited Financial Statements and Other Financial InformationYear Ended June 30, 2009WithIndependent Auditor's Report

PIEDMONT TECHNICAL COLLEGETable of ContentsJune 30, 2009PageNumber. iOrganizational Information . .Report of Independent Auditor . 1Required Supplementary InformationManagement's Discussion and Analysis . .························ . 3Basic Financial StatementsStatement of Net Assets . 11Non-governmental Component UnitStatement of Financial Position . . 12Statement of Revenues, Expenses and Changes in Net Assets . . 13Non-governmental Component UnitStatement of Activities . . 14Statement of Cash Flows . . 15Notes to Financial Statements . .16other Financial InformationSchedule of Reconciliation of Revenues and CashReimbursements Received from State Board . . . 32Schedule of Local Government Support . . . 33State Compliance SectionIndependent Auditor's Report on Lottery Compliance . 34Single Audit Act RequirementsSchedule of Expenditures of Federal Awards . 36Notes to Schedule of Expenditures of Federal Awards . 37Report on Schedule of Expenditures of Federal Awards . .Report on Internal Control and on Compliance . .Schedule of Findings and Questioned Costs . .Summary Schedule of Prior Audit Findings . . . 38············ . 40. 42. .44

PIEDMONT TECHNICAL COLLEGEOrganizational InformationJune 30, 2009PIEDMONT TECHNICAL EDUCATION COMMISSIONWilliam A. WhitfieldRandy E. GarrettJane J. HerlongY. J. AhnCherry Houston BrownGeorge P. Cone, Jr., MDEmma GoodwinStephen M. LambPeter J. ManningH. George Piersol, IIRufus C. SherardWilliam I. Saluda2010LaurensVice 'pending re-appointmentby the Governor's OfficeKEY ADMINISTRATIVE STAFFL Rayburn Brooks, Ed. D.James S. Klauber, Esq.Susan G. TimmonsRebecca R McintoshK. Paige Childs, CPAPresidentSenior Vice PresidentVice President for Academic AffairsVice President of Student DevelopmentVice President of Business and FinanceAREA SERVED BY THE COMMISSIONCounties of:Abbeville, Edgefield, Greenwood, Laurens,McCormick, Newberry and SaludaENTITIES PROVIDING FINANCIAL SUPPORT FOR THE INSTITUTIONCounties of:S.C. State Budget and Control BoardU.S. Department of EducationU.S. Department of LaborAbbeville, Edgefield, Greenwood, Laurens,McCormick, Newberry and Saluda

DELOACH&WILLIAMSON, L.L.P.CERTIFIED PUBLIC ACCOUNTANTSI40I MAIN STREET, SUITE 660COLUMBIA, SOUTH CAROLINA 2920IPHONE: (803) 77I-8855FAX: (803) 77I-600IREPORT OF INDEPENDENT AUDITORSMembers of the Area Commission for Piedmont Technical CollegePiedmont Technical CollegeGreenwood, South CarolinaWe have audited the accompanying basic financial statements of Piedmont Technical College, (the"College") a member institution of the South Carolina Technical College System, as of and for theyear ended June 30, 2009, as listed in the table of contents. These financial statements are theresponsibility of the College's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit. We did not audit the financial statements of the componentunit, Piedmont Technical College Foundation (the "Foundation"), which statements reflect totalassets of 10,840,347 as of June 30, 2009 and total revenue of 3,642,822 for the year then ended.Those statements were audited by other auditors whose report has been furnished to us, and ouropinion, insofar as it relates to the amounts included for the Foundation, is based solely on the reportof the other auditors.We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the basic financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the basic financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall basic financial statement presentation. We believe that our audit provides areasonable basis for our opinion.In our opinion the basic financial statements referred to above present fairly, in all material respects,the financial position of Piedmont Technical College at June 30, 2009, and the results of itsoperations and the cash flows of its business type activity for the year then ended, in conformity withaccounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued a report dated September15, 2009, on our consideration of the College's internal control over financial reporting and our testsof its compliance with provisions of laws, regulations, contracts and grants. That report is anintegral part of an audit performed in accordance with Government Auditing Standards and shouldbe read in conjunction with this report in considering the results of our audit.Management's Discussion and Analysis is not a part of the basic financial statements but issupplementary information required by accounting principles generally accepted in the United Statesof America. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods of measurement and presentation of the supplementaryinformation. However, we did not audit the information and express no opinion on it.Our audit was performed for the purpose of forming an opinion on the basic financial statements ofthe Piedmont Technical College taken as a whole. The accompanying schedule of expenditures offederal awards is presented for the purpose of additional analysis as required by U.S. Office ofManagement and Budget Circular A-133, Audits of States, Local Governments, and Non-ProfitOrganizations, and is not a required part of the financial statements. This information has beensubjected to the auditing procedures applied in the audit of the financial statements and, in ouropinion, is fairly stated in all material respects, in relation to the financial statements taken as awhole.Our audit was conducted for the purpose of forming an opinion on the College's basic financialstatements. The other financial information as listed in the accompanying table of contents arepresented for purposes of additional analysis and are not a required part of the basic financialstatements. This information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements and, in our opinion, is fairly stated in all material respects in relation tothe basic financial statements taken as a whole.September 15, 2009

lEDMONTP.O. Box 1467 Greenwood, South Carolina 29648-1467 Telephone: (864) 941-8324 Fax (864) 941-8669 Web site: www.ptc.eduMANAGEMENT DISCUSSION AND ANALYSISWe present management's discussion and analysis of the College's financial performance during thefiscal year ended June 30, 2009 to assist the reader in understanding the College's operations. This discussionshould be read in conjunction with the financial statements and the accompanying note disclosures.Financial Highlights The assets of Piedmont Technical College exceeded its liabilities at June 30, 2009 by 32,642,276.Of this amount, 9,021,308 may be used to meet the College's ongoing obligations. The College's net assets, after restatement, increased by 1,009,751 or 3.2%, primarily due toincreases in operating revenues and controlled spending. The College operates in a debt free environment. The College experienced an operating loss of 9,925,957 as reported in the Statement of Revenues,Expenses, and Changes in Net Assets. However, this operating loss was offset by Stateappropriations of 7,729,418, local appropriations of 2,205,696 and other non-operating revenues.Overview of the Financial StatementsThe College is engaged only in Business -Type Activities (BTA) financed in part by fees charged tostudents for educational services. Accordingly, its activities are reported using the three financial statementsrequired for proprietary funds: Statement of Net Assets; Statement of Revenues, Expenses, and Changes inNet Assets; and Statement of Cash Flows.3

The Statement of Net Assets is a point-in-time financial statement that presents the financial positionof the College at the end of the fiscal year and classifies assets and liabilities into current and non-currentcomponents. The difference between total assets and total liabilities is net assets, which are displayed in threebroad categories: invested in capital assets (net of related debt), restricted, and unrestricted. Net Assets is oneindicator of the current financial condition of the College, while the change in net assets is an indicator that theoverall financial condition has improved or worsened during the year.The Statement of Revenues, Expenses, and Changes in Net Assets is basically a statement of netincome that presents the College's · results of operations. Revenues and expenses are categorized byoperating and non-operating, and expenses are reported by natural classification.The Statement of Cash Flows will aid readers in identifying the sources and uses of cash by the majorcategories of operating, non-capital financing, capital and related financing, and investing activities. Thisstatement also emphasizes the College's dependence on State and County appropriations by separating themfrom operating cash flows.Financial Analysis of the College as a wholeComparative of Net Assets Fiscal Years 2009 and t Investment inRestrictedCapital Assets4Unrestricted

The following schedule is a condensed version of the College's assets, liabilities and net assets and isprepared from the Statement of Net Assets.Net Assets As of June 30(in mill ions)Current AssetsNoncurrent (a pi tal Assets, NetTotal AssetsIncrease/Decrease1.6 (0.5)1.1PercentChangeFY200918.4 18.336.7FY2008 4%8.4%2.2%Current LiabilitiesNon-Current LiabilitiesTota I Li a bi liti es9.5%-2.7%3.1%Net AssetsInvested in Capital AssetsRestrictedUnrestrictedTota I Net Assets This schedule is prepared from the College's Statement of Net Assets, (page 12) which is presentedon an accrual basis of accounting whereby assets are capitalized and depreciated. Total net assets at June30, 2009 increased to 32.6 million from 31.9 million in fiscal year 2008.The Change in Net Assets is shown on page 10 in the Analysis of Net Assets chart. Net assets mayserve over time as a useful indicator of an entity's financial position. In the case of the College, assetsexceeded liabilities by 32,642,276 at the close of the most recent fiscal year.By far the largest portion of the College's net assets (56 percent) reflects its investment in capitalassets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assetsthat is still outstanding. The College uses these capital assets to provide services to students; consequently,these assets are not available for future spending.Approximately 16 percent of the College's net assets represent resources that are subject to externalrestrictions on how they may be used. Unrestricted net assets of 9,021,308 or approximately 28 percent maybe used to meet the College's ongoing obligations.Cash increased by 3,045,157. Overall cash provided from non-capital financial activities includedstate and local appropriations, grants and gifts, and other income of approximately 10.2 million, which wereused to fund operating activities.5

Cash Flows FY 09a Net Cash Used byOperating ActivitiesIllNet Cash Provided byNon-capital FinancingActivitiess Net Cash Used by Capitaland Related FinancingActivities" Net Cash Provided byInvesting Activities58.4%--------The following schedule is a summary of the College's operating results for the fiscal year:Operating Results(in mill ions)FY2009Operating RevenueTuition and FeesGrants and ContractsTotal Operating Revenues7. Operating ExpensesNet Operating Loss35.1(10.0) AuxiliaryOtherFY2008 Increase/Decrease ating RevenueState Appropriationslocal AppropriationsOtherTotal Non-Operating Revenue4.8%-25.0%-17.7%Income Before Other Revenues, Expenses,Gains or lossesOther Revenues, Expenses,Gains or lossesNet Assets, Beginning of Year, RestatedNet Assets, End of Year 6 7.8%

A large portion of the revenue included in the Grants and Contracts category represents studentfinancial assistance, which is used to pay tuition and fees for students to attend the College. Anapproximation of tuition and fees paid from this source of funds has been recognized as a reduction oftuition and fees in the form of scholarship allowances in order to eliminate duplication of revenues.The following are graphic illustrations of revenues by source:Revenues by SourceOperating Revenues for FY2009DWJJ1%1!11170%Non-Operating Revenues for FY200922%IIIli State AppropriationsIIIli Gifts1%D Investment IncomeDGo.untyAppropriations1%76%7

Operating Expense(in millions)FY2009Operating ExpenseInstructionAcademic SupportStudent ServicesOperation and MaintenanceInstructional SupportScholarshipsAuxiliary EnterprisesDepreciationTotal Operating Expense 1.6 34.30.0%(0.7) 0.0%1.5 PercentChange Overall operational expenditures increased 2.3% for the current fiscal year. The increase is a result of theCollege's continued efforts to provide our students with the best educational environment possible throughimproved student services, increased opportunities and programs.The following is a graphic of operating expenses:Operating ExpensesInstitutional Support12%Operation andMainenance of Plant9%Auxiliary ips14%Student Services9%Academic Support15%In excess of 18,026,586 or 51%, of the College's operating expenses occurred in the instruction andacademic support classifications.8

14121086420-.:r ca0.,:!w 0,c,0;::l.-C/)CJ).-Q.Q.0 · .,., :::1 c;·:::10,c !!!:t.0"C0m:::1 ) -c(/)C/):r!!:.iii; ::I :r!!!.0 -·-· ."C -g·,.,Cil0 0:::1Analysis of Net Assets(in millions)Invested in Capital AssetsRestrictedUnrestrictedFY 2008 18.35.3 32.6 31.9 9.0Tota I Net AssetsIncrease/DecreaseFY2009The following is a graphic illustration of net assets:Analysis of Net Assets28%Restricted16%Net Investment inCapital Assets - - 56%.9(0.5)

Economic FactorsThe current recession has impacted the college through reductions in state funding for currentoperations. Reductions in state operational funding in excess of 25% affected current operations withadditional cuts projected for next year. As during past recessions, student enrollment has increased at a fasterpace than in good economic times, requiring greater expenditures for services rendered. The Collegecontinues to offer tuition rates that are appealing to students, and management believes the College's financialhealth will remain stable. The fiscal improvement during 2008-2009 enhanced the College's financial position,and management believes the College is well positioned to continue to maintain and provide sufficientresources to successfully serve its students.Component UnitsPiedmont Technical College includes the financial statements of the Piedmont Technical CollegeFoundation within the financials of the College in accordance with GASB Statement No. 34 paragraph 10.Financial statements for the Foundation can be obtained by mailing a request to Piedmont Technical CollegeFoundation, P.O. Box 1467, Greenwood, SC, 29648.Sincerely,cl r?E Dr. Luther R. BrooksPresident\.L . (- ·K. Paige ChildsVice President of Business and Finance10

PIEDMONT TECHNICAL COLLEGEStatement of Net AssetsJune 30, 2009(with comparative amounts for the year ended June 30, 2008)ASSETSCURRENT ASSETSCash and cash equivalents (Note 1)Certificates of deposit (Note 3)Accounts receivable (Note 4)Other assetsTotal current assetsNON-CURRENT ASSETSNon-depreciable capital assets (Note 5)Capital assets, net of accumulated depreciation (Note 5)Total non-current assetsTotal Assets20092008 14,646,471 4,835,1328,028,393 32,642,276 31,632,525LIABILITIESCURRENT LIABILITIESAccounts payable (Note 11)Long term liabilities- current portion (Note 12)Deferred revenueTotal current liabilitiesNON-CURRENT LIABILITIESAccrued compensated absences (Note 12)Total non-current liabilitiesTotal LiabilitiesNET ASSETSInvested in capital assets, net of related debtRestricted for:Expendable:Capital improvementsUnrestrictedTotal Net AssetsSee accompanying notes11

PIEDMONT TECHNICAL COLLEGENon-governmental Discretely Presented Component UnitStatement of Financial PositionPiedmont Technical College FoundationJune 30, 2009(with comparative amounts for the year ended June 30, 2008)ASSETS20082009Current AssetsCash and cash equivalentsInvestmentsPledges receivable, net of allowance for uncollectible pledges of 0Grant receivableConstruction in progressTotal current assets 147,8361,623,541197,550206,05796,9262,271,910 105,3011,470,643270,895174,4412,021,280Property, furniture and equipment, net of accumulateddepreciation of 905,1787,489,0704,958,982Other AssetsEndowment investmentsPledges receivable, net of allowance for uncollectible pledges of 0Cash surrender value of life insuranceTotal other 196,6921,551,402Total assets 10,840,347 8,531,664851,285218,7131,069,998 356,38923,334379,723LIABILITIES AND NET ASSETSCurrent LiabilitiesCurrent portion of notes payableAccounts payable and accrued liabilitiesTotal current liabilities Long-term LiabilitiesAnnuity payableNotes payableTotal long-term liabilities62,098Total liabilitiesNet AssetsUnrestrictedTemporarily restrictedPermanently restrictedTotal net assetsTotal liabilities and net 8,032,2831' 387,559 10,840,347See accompanying notes12 8,531,664

PIEDMONT TECHNICAL COLLEGEStatement of Revenues, Expenses and Changes in Net AssetsFor the Year Ended June 30, 2009(with comparative amounts for the year ended June 30, 2008)20082009OPERATING REVENUESStudent tuition and fees (net of scholarship allowances of 8, 783,370)Federal grants and contractsState grants and contractsNon-governmental contractsAuxiliary enterprisesOther operating revenues Total Operating RevenuesOPERATING EXPENSESSalariesBenefitsScholarships (net of scholarship allowances of 8,783,370)UtilitiesSupplies and other 2,319346,601244,610 74,4061,593,7861,544,892Total Operating Expenses35,104,75034,333,929Operating ,6962,115,234NON-OPERATING REVENUES (EXPENSES)State appropriationsCounty appropriationsFederal grants and contractsState and local grants and contractsGiftsInterest income12,386115,000133,377Interest expense on capital asset-related debtNet Non-operating RevenuesIncome Before Other Revenues, Expenses, Gains or LossesCapital donationsCapital grants - stateLoss on disposal of fixed ,809145,000640,520(33,303)Increase in Net AssetsNet Assets- Beginning of Year, as Restated (Note 16)Net Assets- End of Year, as Restated See accompanying 299,94232,642,276 31,632,525

PIEDMONT TECHNICAL COLLEGENon-governmental Discretely Presented Component UnitStatement of ActivitiesPiedmont Technical College FoundationFor the Year Ended June 30, 2009(with comparative amounts for the year ended June 30, 2008)UnrestrictedTemporarilyRestricted tedRevenues, Gains, and Other SupportContributionsGrant revenueDiscount AdjustmentInvestment incomePlanned giving incomeSpecial events47,4572,826,440114,0703,110 164,6372,826,440 400,63921,50682,4751,735Golf tournament incomeCobra incomeIn-kind contributionsDistance learning 4216,50043,600418,100Other income288,742(637,157)(443,739)4,516,667Support ServicesManagement and generalFundraisingTotal support servicesTotal 0,484416,6561,322,1301,322,130993,834(430, 6319,57492,818577,178107,856Change in net assets3,194,537Net Assets - beginning of year4,837,7461,557,7698,032,283 1,114,030 27ExpensesProgram servicesDistance learning programScholarships and grantsOther program servicesTotal program services(70,995)9,6101,73511,530Loss on sale of assetsNet assets released from restrictionsTota! revenus, gains, and other supportNet Assets - end of year (443,739)See accompanying notes14 561,938 9,708,251335,78480,872 7,387,559

PIEDMONT TECHNICAL COLLEGEStatement of Cash FlowsFor the Year Ended June 30,2009(with comparative amounts for the year ended June 30, 2008)20082009CASH FLOWS FROM OPERATING ACTIVITIESTuition and FeesFederal, State and Local Grants· and ContractsAuxiliary Enterprise ChargesOther ReceiptsPayments to VendorsPayments to EffiployeesStudent Loan receipts from lendersDisbursements to students on behalf of lendersNet Cash Used by Operating Activities CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESState AppropriationsCounty AppropriationsState, Local and Federal Grants, Gifts and Contracts- Non-OperatingOther non-operating receiptsNet Cash Provided by Non-capital Financing ,524)(16,348,061)7,709,673(7,657,272)(6,767,915) ,073,347CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESCounty AppropriationsFederal, State and Other Grants for CapitalPurchase of Capital AssetsPrincipal Paid on Capita! DebtInterest Paid on Capita! DebtNet Cash Provided (Used) by Capital and Related Financing Activities7,655,39116,122,768307,396429,667(16, 67)(337,747)CASH FLOWS FROM INVESTING ACTIVITIESInterest on InvestmentsPurchase of InvestmentsProceed from maturity of certificatesNet Cash Provided (Used) by Investing Activities133,377(1 ,704,957)1,649,05277,472346,100(1 ,591 ,602)Net Increase in CashCash - Beginning of YearCash- End of Year 3,045,15711,601,31414,646,471 1,858,1779,743,13711,601,314 (9,925,957) ,667(1,038)(39,200)(1 ,245,502)Reconciliation of Net Operating Revenue (Expenses) to Net CashUsed by Operating Activities:Operating LossAdjustments to Reconcile Net Income (Loss) to Net CashProvided {Used) by Operating ActivitiesDepreciation ExpenseNon-cash receivable adjustmentsChange in Assets and LiabilitiesReceivables, NetDeferred Charges and Prepaid ExpensesAccounts PayableCompensated AbsencesDeferred RevenueNet Cash Used by Operating Activities (6,767,915) (8,137,162)Non-Cash Activities: The College recognized a loss on disposal of assets in the amount of 33,303 for assets returned to Surplus Property.See Accompanying Notes15

PIEDMONT TECHNICAL COLLEGENotes to Financial StatementsJune 30, 2009NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESA. Nature of OperationsPiedmont Technical College (the "College"), a member institution of the South Carolina Technical College System,provides a range of educational programs to meet the needs of the adult population of Greenwood, Abbeville,McCormick, Saluda, Laurens, Newberry and Edgefield counties. Included in this range of programs are technical andoccupational associate degree, diploma and certificate curricula that are consistent with the needs of employers in theCollege's service area. As an integral part of this mission, the College provides a program of continuing educationdesigned to satisfy the occupational demands of employers through retraining and upgrading the skills of individualemployees. The College also provides a variety of developmental education programs, support services and offeringsto assist students in meeting their personal and professional educational objectives.B. Reporting EntityThe financial reporting entity, as defined by the Governmental Accounting Standards Board (GASB) consists of theprimary government, organizations for which the primary government is financially accountable and other organizations forwhich the nature and significance of their relationship with the primary government are such that exclusion could causethe financial statements to be misleading or incomplete. Accordingly, the financial statements include the accounts ofPiedmont Technical College, as the primary government, and the accounts of Piedmont Technical College Foundation(the "Foundation"), its component unit. The College is part of the primary government of the State of South Carolina.However, based on the nature and significance of the Foundation's relationship with the State of South Carolina, theFoundation is not a component unit of the State of South Carolina.The Foundation is a legally separate, tax-exempt organization with a self-perpetuating Board of Directors. TheFoundation acts primarily as a fund-raising organization to supplement the resources that are available to the College insupport of its programs. The 35 member board of the Foundation is composed of members from the College's sevencounty region. Although the College does not control the timing or amount of receipts from the Foundation, the majority ofresources, or income thereon, which the Foundation holds and invests is restricted by the donors to benefiting the Collegeor its students. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, theCollege, the Foundation is considered a discretely presented component unit of the College. The Foundation's financialinformation is presented in separate financial statements because of the difference in its reporting model, as furtherdescribed below.The Foundation is a private not-for-profit organization that reports its financial results under Financial AccountingStandards Board (FASB) Statements. Most significant to the Foundation's operations and reporting model are FASBStatement (SFAS) No. 116, Accounting for Contributions Received and Contributions Made, and FASB Statement No.117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentationfeatures are different from GASB revenue recognition criteria and presentation features. The financial information hasbeen obtained from the Foundation and presented for the same periods. Significant note disclosures to the Foundation'sfinancial statements have been incorporated into the College's notes.A complete set of the financial statements for the Foundation can be obtained by mailing a request to Piedmont TechnicalCollege Foundation, P.O. Box 1467, Greenwood, SC, 29648.C. Financial StatementsThe College's financial statements are presented in accordance with Governmental Accounting Standards Board("GASB") Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State andLocal Governments, and GASB Statement No. 35, Basic Financial Statements and Management's Discussion andAnalysis for Public Colleges and Universities. The financial statement presentation required by GASB Statements No.34 and No. 35 provides a comprehensive, entity-wide perspective of the College's net assets, revenues, expensesand changes in net assets and cash flows. During the fiscal year ended June 30, 2008, the College was required toimplement GASB Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment BenefitsOther Than Pensions and GASB Statement No. 50 Pension Di

PIEDMONT TECHNICAL COLLEGE Audited Financial Statements and Other Financial Information Year Ended June 30, 2009 With Independent Auditor's Report . PIEDMONT TECHNICAL COLLEGE . The Statement of Cash Flows will aid readers in identifying the sources and uses of cash by the major categories of operating, non-capital financing, capital and .