Northern Oklahoma College

              NORTHERN
OKLAHOMA COLLEGE
June 30, 2009
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
AUDITED FINANCIAL STATEMENTS
Independent Auditors’ Report ....................................................................................................................... 1
Management’s Discussion and Analysis ...................................................................................................... 3
Statements of Net Assets ................................................................................................................................ 9
Statements of Revenues, Expenses and Changes in Net Assets.............................................................10
Statements of Cash Flows.............................................................................................................................11
Notes to Financial Statements......................................................................................................................13
Separately Presented Component Unit
Northern Oklahoma College Foundation, Inc............................................................................Exhibit I
REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report on Internal Control over Financial
Reporting and Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with Government Auditing Standards...................33
REPORTS REQUIRED BY OMB CIRCULAR A-133
Independent Auditor’s Report on Compliance with Requirements
Applicable to Each Major Program and Internal Control Over
Compliance in Accordance with OMB Circular A-133.........................................................................35
Schedule of Expenditures of Federal Awards ..........................................................................................38
Notes to Schedule of Expenditures of Federal Awards ...........................................................................39
Schedule of State Awards.............................................................................................................................40
Schedule of Findings and Questioned Costs .............................................................................................41
Summary Schedule of Prior Audit Findings..............................................................................................44
Independent Auditors’ Report
To the Board of Regents
Northern Oklahoma College
We have audited the accompanying statements of net assets of Northern Oklahoma College
(the “College”), a component unit of the State of Oklahoma, as of and for the year ended
June 30, 2009 and 2008, and the related statements of revenues, expenses and changes in net
assets and cash flows for the years then ended. These financial statements are the
responsibility of the College’s management. Our responsibility is to express an opinion on
these financial statements based on our audits. We have also audited the financial
statements of the separately presented component unit, the Northern Oklahoma College
Foundation, Inc. (the “Foundation”). The financial statements of the College referred to
above do not include the financial information of the Foundation. Rather, a complete set of
financial statements of the Foundation are presented separately.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America, and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The financial
statements of the Foundation were not audited in accordance with Government Auditing
Standards. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the College and the separately presented
component unit as of June 30, 2009 and 2008, and the respective changes in its net assets
and, where applicable, cash flows thereof for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
1
2
In accordance with Government Auditing Standards, we have also issued our report dated
December 7, 2009, on our consideration of the College’s internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contract 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 and compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing results of our audit.
Management’s Discussion and Analysis is not a required part of the basic financial statements,
but is supplementary information required by the Governmental Accounting Standards Board.
We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the College’s basic financial statements. The accompanying schedule of
state awards is presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects, in relation to the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
December 7, 2009
Northern Oklahoma College
Management’s Discussion and Analysis
June 30, 2009 and 2008
3
The following discussion and analysis of the financial performance of Northern Oklahoma
College (the College) provides an overview of the College’s financial activities for the fiscal years
ended June 30, 2009 and 2008. The analysis is intended to provide you, the reader, with a
summary of significant financial activities and information and should be read in conjunction
with the College’s financial statements that begin on page 3.
Discussion of the Basic Financial Statements
The 2009 and 2008 financial statements were prepared in accordance with Governmental
Accounting Standards Board Statements No. 34, Basic Financial Statements and Management’s
Discussion and Analysis (GASB 34). GASB 34 provides not only for the presentation of
management’s discussion and analysis but also provides for the following statements.
Statement of net assets: This is a financial statement of the College as a whole. It is
prepared on the accrual basis of accounting and presents all assets, liabilities and net
assets of the College.
Statement of revenues, expenses and changes in net assets: This statement is also
prepared on the accrual basis of accounting and presents the overall operations of the
College for the years ended June 30, 2009 and 2008.
Statement of cash flows: This statement is presented to provide a summary of how the
College generated cash during the current year. This is basically done by taking the
statement of revenues, expenses and changes in net assets and presenting it on a cash
basis. In accordance with GASB 34, the direct method of presentation is used to prepare
this statement.
The College is presenting all of its financial statements as a business-type activity and has no
“Fund” financial statements, as defined by GASB 34. The statement of net assets is similar to a
business balance sheet, which presents assets, liabilities and equity. In the College’s case, equity is
considered net assets. The statement of revenues, expenses, and change in net assets is equivalent
to a business income statement, i.e., the results of operations for the current year. The statement
of cash flows is very similar to that being used by businesses, in that it presents the cash activity of
the College for the current year.
Northern Oklahoma College
Management’s Discussion and Analysis (Continued)
June 30, 2009 and 2008
4
Statements of Net Assets
Increase Percent
2009 2008 (Decrease) Change
Current assets $ 8,798,865 $ 6,763,372 $ 2,035,493 30%
Noncurrent assets 28,782,124 30,146,922 (1,364,798) -5%
Total Assets 37,580,989 36,910,294 670,695 2%
Liabilities
Current liabilities 2,219,372 2,258,366 (38,994) -2%
Noncurrent liabilities 15,185,071 15,725,995 (540,924) -3%
Total liabilities 17,404,443 17,984,361 (579,918) -3%
Net assets:
Investment in capital assets,
net of related debt 11,920,688 12,757,621 (836,933) -7%
Restricted for expendable 2,904,481 2,105,694 798,787 38%
Unrestricted 5,351,377 4,062,618 1,288,759 32%
Total net assets $ 20,176,546 $ 18,925,933 $ 1,250,613 7%
June 30
During the period July 1, 2008 to June 30, 2009, the College’s net assets increased by $1,250,613. A
significant increase in current assets of $2,035,493 and decrease of $1,364,798 in noncurrent assets
resulted in a total increase of $670,695 in total assets. The decrease in the noncurrent assets
resulted from acquisitions of capital assets of $2,081,836, offset by depreciation expense of
$3,018,035, and a decrease in construction in progress of $3,916,643. These transactions resulted
primarily from projects in conjunction with the OCIA Bond Issue 2005F and 2005G capital
improvement projects. The increase in current assets resulted primarily from cash and cash
equivalents.
Statements of Cash Flows
2009 2008
Cash provided (used) by:
Operating activities $ (15,394,779) $ (16,554,644)
Noncapital financing activities 17,477,559 17,183,196
Capital and related financing activities (61,331) (2,286,024)
Investing activities 208,088 444,003
Net change in cash 2,229,537 (1,213,469)
Cash, beginning of the year 5,867,709 7,081,178
Cash, end of year $ 8,097,246 $ 5,867,709
Northern Oklahoma College
Management’s Discussion and Analysis (Continued)
June 30, 2009 and 2008
5
Operating Results
Increase Percent
2009 2008 (Decrease) Change
Operating revenues:
Tuition and fees, net $ 7,232,492 $ 6,530,330 $ 702,162 11%
Grants and contracts 1,906,207 770,767 1,135,440 147%
Auxiliary 5,026,653 3,800,531 1,226,122 32%
Other 161,904 31,390 130,514 416%
Total operating revenues 14,327,256 11,133,018 3,194,238 29%
Less operating expenses 33,861,288 31,739,758 2,121,530 7%
Net operating income (loss) $ (19,534,032) $ (20,606,740) $ 1,072,708 5%
June 30
During the period July 1, 2008 to June 30, 2009, the College’s operating expenses increased by
$2,121,530, while the total operating revenues increased $3,194,238. The increase in operating
revenues is attributable to an increase in tuition and fees, grants and contracts, and auxiliary
services. The increase in operating expenses is primarily attributable to an increase in
compensation expenses of $1,625,404 and financial aid of $430,421.
Increase Percent
2009 2008 (Decrease) Change
Nonoperating revenues
(expenses):
State appropriations $ 11,159,900 $ 11,337,493 $ (177,593) -2%
On-behalf payments
(teachers' retirements) 850,669 923,519 (72,850) -8%
Grants and contracts 6,376,344 6,007,506 368,838 6%
Investment income 219,074 490,773 (271,699) -55%
Interest expense (751,411) (778,837) 27,426 4%
Total nonoperating revenues $ 17,854,576 $ 17,980,454 $ (125,878) -1%
June 30
During the period July 1, 2008 to June 30, 2009, the College’s nonoperating revenues and expenses
decreased by $125,878. The change is attributable primarily to a decrease of $177,593 in the
Oklahoma State Finance appropriations the College received during 2009, a increase in grants and
contracts of $368,838, and a decrease in on-behalf payments of $72,850. Investment income
decreased by $271,699 due primarily to a decrease in the available balance to invest on the OCIA
Series 2005F & 2005G Bond Issue funds because of the substantial drawdown totals utilized for
capital projects in 2009. Interest expense decreased $27,426 primarily from the interest payments
for the OCIA Series 2005F & 2005G Bond Issue and ODFA Revenue Bonds.
Northern Oklahoma College
Management’s Discussion and Analysis (Continued)
June 30, 2009 and 2008
6
Operating Results--Continued
Percent
2009 2008 (Decrease) Change
Net increase in net assets $ 1,250,613 $ 104,759 $ 1,145,854 1094%
Net assets, beginning of year 18,925,933 18,821,174 104,759 1%
$ 20,176,546 $ 18,925,933 $ 1,250,613 7%
June 30
Current assets consist primarily of cash and cash equivalents totaling $7,678,977. Included in cash
equivalents are short-term investments that the College makes with the state treasurer. These
dollars are invested in short-term repurchase agreements, and the College can use the monies on
a daily basis. As such, these are considered cash equivalents. Also included in current assets is
$208,423 of accounts receivable and $466,160 due from federal grants. Inventories of
approximately $352,000, which consists primarily of the bookstore, are also included current
assets. Noncurrent assets consist primarily of capital assets (land, buildings, structures, etc.) net
of depreciation totaling $25,490,037, along with endowment funds of $749,744, capital lease
proceeds held by OCIA of $2,174,250 and restricted cash and cash equivalents of approximately
$325,000. The restricted cash is cash that cannot be used by the College for operating activities
and consists primarily of cash being held by a trustee from outstanding bonds. Current liabilities
include $1,118,217 of accounts payable, $97,988 of accrued payroll, $228,475 of accrued
compensated absences, and approximately $559,000 of amounts due on principal of bonds and
capitalized lease obligations in the next 12 months. Noncurrent liabilities consist entirely of
capital lease obligations and revenue bonds less the current portion.
Net assets totaled $20,176,546, with $11,920,688 as investment in capital assets, i.e., this is property
and equipment less bonded indebtedness. There is $715,086 restricted for scholarships and
$1,222,234 restricted for capital projects, along with $418,269 restricted for debt service and
$548,892 restricted for loans. Approximately $5,351,000 of the net assets in unrestricted.
Operating revenues consist primarily of tuition and fees and federal grants and contracts. There
is also $5,026,653 included in operating revenues from sales and services of the auxiliary
enterprises (i.e., bookstore, dormitories, etc.). Operating expenses are presented in their natural
classification, with the largest expense being compensation. Nonoperating revenues and
expenses consist primarily of state appropriations of approximately $11,159,900, and on-behalf
contributions for OTRS of $850,669, along with investment income of $219,074 and interest
expense of $751,411. Nonoperating revenues also include federal grants and contracts such as Pell
and SEOG totaling $6,376,344. For the year ended June 30, 2009, the College had an increase in
net assets of $1,250,613. Included in the increase in net assets are $702,162 increase in tuition and
fees, $1,226,122 increase in auxiliary services, and increase of $1,135,440 in federal grants and
contracts, and a $2,121,530 increase in operating expenses.
Northern Oklahoma College
Management’s Discussion and Analysis (Continued)
June 30, 2009 and 2008
7
Capital Assets
As of June 30, 2009, the College had a net book value of fixed assets of $25,490,037 compared to
$26,426,024 at June 30, 2008. In the current year, additions to construction in progress, land,
improvements, infrastructure and buildings were approximately $915,220, while purchases of
machinery and equipment were $1,166,616. Depreciation recorded for 2009 and 2008, was
$3,017,823 and $2,909,582 respectively.
Capital Financing
The College has two revenue bond issues outstanding, along with two capital leases.
In fiscal year 2006, the Oklahoma Capital Improvement Authority issued State Facilities Revenue
Bonds (Higher Education Projects) Series 2005F and 2005G for which the College entered into a
lease agreement with OCIA for a portion of these bond proceeds totaling $14,293,235. The
revenue bond projects for Northern Oklahoma College include Wilkin Hall – Phase II Renovation,
Nursing and Communications Building, Enid Campus Renovations, Vineyard
Library/Administration Renovation and Expansion, and New Classroom Building-Stillwater.
The Series 2005 Bonds bear interest payable on July 1 and January 1 of each year, beginning July 1,
2006 and the initial principal payment is July 1, 2007. The Series 2005F provides for monthly
payments to OCIA for 24 years through July 1, 2030, or until the OCIA bonds and related interest
are paid. The Series 2005G provide for monthly payments to OCIA for one year through July 1,
2007, or until the OCIA bonds and related interest are paid. Interest rates on these bonds range
from 3.75 percent to 5.00 percent. A bond issuance premium of approximately $410,000 is being
amortized utilizing the effective interest method. The Oklahoma State Legislature appropriates
monies to the College for the monthly lease payments. During 2009, $304,233 principal payment
was paid on the lease and $624,790 in related interest was paid. Interest income in the amount of
$41,232 was earned on invested bond funds.
During fiscal 2004, the Oklahoma Development Authority (the Authority) issued The Oklahoma
Development Finance Authority Public Facilities Financing program Revenue Refunding Bonds,
Series 2004 (Northern Oklahoma College) in the amount of $3,365,000. The bonds were issued to
refinance the outstanding series 1999 Revenue Bonds. The revenue bonds (Oklahoma
Development Finance Authority Revenue Bond, Series 1999) were issued by the College to
purchase the Phillips College Campus in Enid. Unamortized bond issuance costs and the
discounts on the old bonds were written-off and are included in the other nonoperating revenues
and expenses in 2004. The bonds are due in annual installments ranging from $180,000 to
$300,000 through July 1, 2019. Interest rates on these bonds range from 3.00 percent to 5.40
percent. Funds used to repay these bonds come from the College’s beneficial interest in the
“Section Thirteen Fund State Education Institutions” and the “New College Fund.” For the years
ended June 30, 2009 and 2008, the net revenue from pledged sources before debt service payments
was $1,988,334 and $1,771,020. Required principal payments for the years ended June 30, 2009
and 2008, amounted to $195,000 and $190,000 respectively.
Northern Oklahoma College
Management’s Discussion and Analysis (Continued)
June 30, 2009 and 2008
8
Capital Financing--Continued
The capital lease obligation to the Oklahoma Capitol Improvement Authority (OCIA) originated
during the year ended June 30, 2000. The second lease is to the Oklahoma Development Finance
Authority (ODFA) which originated during the year ended June 30, 2002.
Proceeds from the OCIA lease were used to construct the Wellness Center. The Oklahoma State
legislature appropriates revenues each year to fund the amount of principal interest due for that
year. The College is required to pay any principal and interest due and not appropriated by the
legislature because of lack of funding. For the years ended June 30, 2009 and 2008, the legislature
appropriated $39,215 and $39,797 for the total principal and interest due for the year.
Accordingly, the College did not make any payments this year.
Proceeds from the ODFA lease were used to purchase two busses. Required principal payments
for the years ended June 30, 2009 and 2008, amounted to $30,000 and $25,000 respectively.
Description of Currently Known Facts, Decisions, or Conditions that are Expected to Have a
Significant Effect on the Financial Position or Results of Operations
The operating budget for the year July 1, 2009 to June 30, 2010, has been approved, and the
estimated amount of state appropriations to be received is approximately $10,994,639 of which
$10,294,639 is designated for Northern Oklahoma College and $700,000 designated for University
Center in Ponca City. These amounts reflect a 2.16% decrease in the amount that was received for
Northern Oklahoma College and a 40% increase for the University Center as compared to the year
ended June 30, 2009. The decrease for Northern Oklahoma College, however, was offset with
$799,310 of American Recovery and Reinvestment Act (ARRA) – Fiscal Stabilization Fund
Program which resulted in a 5.44% increase in funding for Northern Oklahoma College. As a
result, the College did not implement tuition or fee increases for the fiscal year ended June 30,
2010 in order keep costs stable for students in a financially challenging national economy. In
August 2009, the College received notification that monthly state appropriations would be cut 5%
each month for the remaining months of the fiscal year due to short falls in state revenues. State
officials will continue to monitor incoming revenue levels throughout the rest of the fiscal year in
order to notify state agencies if further reductions are required. In the event that further
reductions are required, appropriate budget adjustments will be made in order to maintain
adequate reserve balances as required. Presently, the College does not anticipate any other
significant change in operations, nor are there any items pending that could have a significant
effect on the financial position or operating results of the College.
Request for Information
This financial report is designed to provide a general overview of the College’s finances for all
those with an interest. Questions concerning any of the information provided in this report
should be addressed to the Vice President of Financial Affairs c/o Northern Oklahoma College,
1220 East Grand, P.O. Box 310, Tonkawa, Oklahoma 74653-0310.
STATEMENTS OF NET ASSETS
NORTHERN OKLAHOMA COLLEGE
2009 2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7 ,678,977 $ 5 ,453,756
Restricted cash and cash equivalents 93,702 86,575
Accounts receivable, net 2 08,423 4 18,357
Federal grants receivable 4 66,160 4 07,475
Inventories 3 51,603 3 97,209
TOTAL CURRENT ASSETS 8 ,798,865 6 ,763,372
NONCURRENT ASSETS
Restricted cash and cash equivalents 3 24,567 3 27,378
Investments 7 49,744 7 38,758
Capital lease proceeds held by OCIA 2 ,174,250 2 ,610,016
Capital assets, net 2 5,490,037 2 6,426,024
Other assets 43,526 44,746
TOTAL NONCURRENT ASSETS 2 8,782,124 3 0,146,922
TOTAL ASSETS $ 3 7,580,989 $ 3 6,910,294
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1 ,118,217 $ 1 ,306,313
Accrued payroll 97,988 50,826
Accrued compensated absences 2 28,475 2 15,709
Deposits held in custody for others 2 16,164 1 33,094
Current portion of capital leases payable to OCIA 3 28,528 3 27,424
Current portion of capital leases payable to ODFA 3 0,000 30,000
Current portion of revenue bonds 2 00,000 1 95,000
TOTAL CURRENT LIABILITIES 2 ,219,372 2 ,258,366
NONCURRENT LIABILITIES
Capital leases payable to OCIA, net 1 2,907,154 1 3,218,078
Capital leases payable to ODFA, net 2 7,917 57,917
Revenue bonds, net 2 ,250,000 2 ,450,000
TOTAL NONCURRENT LIABILITIES 1 5,185,071 1 5,725,995
TOTAL LIABILITIES $ 1 7,404,443 $ 1 7,984,361
NET ASSETS
Invested in capital assets, net of related debt $ 1 1,920,688 $ 1 2,757,621
Restricted for:
Expendable
Debt service 4 18,269 4 13,953
Capital projects 1 ,222,234 6 85,608
Scholarships 7 15,086 5 61,049
Loans 5 48,892 4 45,084
Unrestricted 5 ,351,377 4 ,062,618
TOTAL NET ASSETS $ 2 0,176,546 $ 1 8,925,933
See notes to financial statements.
Year ended June 30
9
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
NORTHERN OKLAHOMA COLLEGE
2009 2008
OPERATING REVENUES
Tuition and student fees $ 7,232,492 $ 6,530,330
(net of scholarship allowance of $3,669,000
and $3,758,000, respectively)
Auxiliary services 5,026,653 3,800,531
(net of scholarship allowance of $2,683,000
and $2,188,000, respectively)
Federal and state grants and contracts 1,906,207 770,767
Other sources 161,904 31,390
TOTAL OPERATING REVENUE 14,327,256 11,133,018
OPERATING EXPENSES
Compensation 18,595,258 16,969,771
Contractual services 327,750 280,760
Supplies and materials 6,891,341 7,310,253
Depreciation and amortization 3,018,035 2,909,582
Utilities 1,477,056 1,277,792
Communications 269,139 323,186
Financial Aid 1,674,963 1,244,542
Other 1,607,746 1,423,872
TOTAL OPERATING EXPENSES 33,861,288 31,739,758
OPERATING LOSS ( 19,534,032) ( 20,606,740)
NONOPERATING REVENUES (EXPENSES)
State appropriations 11,159,900 11,337,493
On-behalf contributions for OTRS 850,669 923,519
Federal and state grants and contracts 6,376,344 6,007,506
Investment income 219,074 490,773
Interest expense ( 751,411) ( 778,837)
NET NONOPERATING REVENUES (EXPENSES) 17,854,576 17,980,454
GAIN (LOSS) BEFORE OTHER REVENUES, EXPENSES,
GAINS AND LOSSES ( 1,679,456) ( 2,626,286)
State appropriations restricted for capital purposes 1,988,334 1,771,020
OCIA on-behalf appropriations 941,735 960,025
CHANGE IN NET ASSETS 1,250,613 104,759
NET ASSETS AT BEGINNING OF YEAR 18,925,933 18,821,174
NET ASSETS AT END OF YEAR $ 20,176,546 $ 18,925,933
See notes to financial statements.
Years ended June 30
10
STATEMENTS OF CASH FLOWS
NORTHERN OKLAHOMA COLLEGE
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 7,442,426 $ 6,619,174
Federal and state grants and contracts 1,053,616 7 70,767
Payments to suppliers ( 11,394,717) ( 11,751,279)
Payments to employees ( 17,684,661) ( 16,025,227)
Auxiliary enterprises sales and services 5,026,653 3 ,800,531
Other operating receipts (payments) 1 61,904 3 1,390
NET CASH USED IN OPERATING ACTIVITIES ( 15,394,779) ( 16,554,644)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
State appropriations 1 1,159,900 1 1,337,493
Non-operating grants 6,317,659 5,845,703
NET CASH PROVIDED BY NONCAPITAL
FINANCING ACTIVITIES 17,477,559 17,183,196
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Purchases of capital assets ( 2,142,155) ( 10,408,979)
Principal paid on capital leases and bonds ( 225,000) ( 215,000)
Interest paid on capital leases and bonds ( 99,986) ( 124,917)
Capital appropriations received 1,970,044 1 ,771,020
Proceeds from OCIA capital lease 4 35,766 6,691,852
NET CASH USED IN FINANCING ACTIVITIES ( 61,331) ( 2,286,024)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 2 08,088 4 90,773
Proceeds from sales and maturities of investments - 5 13,703
Purchase of investments - ( 560,473)
NET CASH PROVIDED BY INVESTING ACTIVITIES 2 08,088 4 44,003
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,229,537 ( 1,213,469)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,867,709 7,081,178
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 8,097,246 $ 5,867,709
Years ended June 30
11
STATEMENTS OF CASH FLOWS--Continued
NORTHERN OKLAHOMA COLLEGE
2009 2008
RECONCILIATION OF OPERATING LOSS TO NET
CASH USED IN OPERATING ACTIVITIES
Operating loss $ ( 19,534,032) $ (20,606,740)
Adjustments to reconcile net operating loss
to net cash used in operating activities:
Depreciation and amortization expense 3,018,035 2,909,582
Loss of disposal of fixed assets 60,107 -
On-behalf payments 850,669 923,519
Changes in assets and liabilities:
Receivables, net 209,934 88,844
Inventories 45,606 ( 59,510)
Accounts payable and accrued liabilities (140,934) 111,970
Compensated absences and employee accruals 12,766 21,025
Deposits held in custody for others and
other liabilities 83,070 56,666
NET CASH USED IN OPERATING ACTIVITIES $ (15,394,779) $ (16,554,644)
NONCASH INVESTING CAPITAL
AND FINANCING ACTIVITIES
State appropriations for on-behalf capital lease payments $ 939,315 $ 960,025
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENT OF NET ASSETS
Current assets
Cash and cash equivalents $ 7,678,977 $ 5,453,756
Restricted cash and cash equivalents 93,702 86,575
Noncurrent assets
Restricted cash and cash equivalents 324,567 327,378
$ 8,097,246 $ 5,867,709
See notes to financial statements.
Years ended June 30
12
NOTES TO FINANCIAL STATEMENTS
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
13
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: Northern Oklahoma College (the College) is a two-year, state supported
college operating under the jurisdiction of the Board of Regents of Northern Oklahoma College
(the Board of Regents) and the Oklahoma State Regents for Higher Education. The College is a
component unit of the State of Oklahoma and is included in the general-purpose financial
statements of the State of Oklahoma. The College has three campuses located in Tonkawa, Enid
and Stillwater.
Reporting Entity: The financial reporting entity, as defined by Governmental Accounting Standards
Board (GASB) Statement No. 14, The Financial Reporting Entity, includes the accounts and funds of
the College.
The Northern Oklahoma College Foundation, Inc. (the “Foundation”) is a legally separate, tax-exempt
component unit of the College. The Foundation acts primarily as a fund-raising
organization to supplement the resources that are available to the College in support of its
programs. Although the College does not control the timing and amount of receipts from the
Foundation, the majority of resources, or income thereon, that the Foundation holds and invests
are restricted to the activities of the College by the donors. Because these restricted resources held
by the Foundation can only be used by, or for the benefit of the College, the Foundation is
considered a component unit of the College and is discretely presented immediately following the
College’s financial.
Measurement Focus and Basis of Accounting: The College’s financial statements are presented in
accordance with the requirements of GASB Statement No. 34, Basic Financial Statements and
Management’s Discussion and Analysis for State and Local Governments, and GASB Statement No. 35,
Basic Financial Statements and Management’s Discussion and Analysis for Public College and Universities.
Under GASB Statements No. 34 and 35, the College is required to present a statement of net assets
classified between current and noncurrent assets and liabilities, a statement of revenues, expenses
and changes in net assets, with separate presentation for operating and nonoperating revenues and
expenses, and a statement of cash flows using the direct method.
Measurement Focus and Basis of Accounting: For financial reporting purposes, the College is
considered a special-purpose government engaged only in business-type activities. Accordingly,
the College’s financial statements have been presented using the economic resources measurement
focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when
earned, and expenses are recorded when an obligation has been incurred. All significant intra-agency
transactions have been eliminated.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
14
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Measurement Focus and Basis of Accounting, Continued: The College has the option to apply all
Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989,
unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements
issued after the applicable date.
Cash Equivalents: For purposes of the statements cash flows, the College considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. Funds
invested through the State Treasurer’s Cash Management Program are considered cash equivalents.
Deposits and Investments: The College accounts for its investments at fair value, as determined by
quoted market prices, in accordance with GASB Statement No. 31 Accounting and Financial Reporting
for Certain Investments and for External Investment Pools. In accordance with GASB Statement No. 40,
Deposit and Investment Risk Disclosures, the College has disclosed its deposit and investment policies
related to the risks identified in GASB Statement No. 40. Changes in unrealized gains (losses) on
the carrying value of the investments are reported as a component of investment income in the
statements of revenues, expenses, and changes in net assets.
Accounts Receivable: The College’s accounts receivable primarily relate to tuition and fee charges
to students and to auxiliary enterprise services provided to students, faculty and staff, the
majority of each residing in the state of Oklahoma. Other receivables relate to reimbursements of
expenditures from various federal, state and private sources. Receivables are carried at original
amounts less an estimate made for doubtful receivables based on a review of all outstanding
amounts. Management determines the allowance for doubtful accounts by identifying troubled
accounts and by using historical experience applied to an aging of accounts. Receivables are
written-off for financial reporting purposes when deemed uncollectible. Recoveries of receivables
previously written-off are recorded as revenue when received.
Inventories: Inventories, mainly bookstore inventories, are stated at the lower of the cost or
market. Cost is determined using the first-in, first-out method.
Noncurrent Cash and Investments: Cash and investments that are externally restricted to make
debt service payments, maintain sinking or reserve funds, or to purchase capital or other
noncurrent assets, are classified as noncurrent assets in the statements of net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
15
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Capital Assets: Capital assets are recorded at cost on the date of the acquisition or fair value if
acquired by gift. For equipment, the College’s capitalization policy includes all items with a unit
cost of $500 or more and an estimated useful life of greater than one year. Renovations to
buildings, infrastructure and land improvements that significantly increase the value or extend
the useful life of the structure are capitalized. Routine repairs and maintenance are charged to
operating expense in the year in which the expense was incurred. Depreciation is computed
using the straight-line method over the estimated useful life of each asset. The following
estimated useful lives are being used by the College:
Land improvements 5-20 years
Buildings 40 years
Furniture, fixtures and equipment 5 years
Infrastructure 5-20 years
Compensated Absences: Employees of the College earn accrued vacation or leave at the rate of 8
to 12 hours per month, depending on the length of employment. The liability for and expense
incurred are recorded at year-end as accrued compensated absences in the statements of net
assets, and as a component of compensation and benefit expense in the statements of revenues,
expenses and changes in net assets.
Net Assets: The College’s net assets are classified as follows:
Invested in capital assets net of related debt: This represents the College’s total investment in
capital assets, net of outstanding debt obligations related to those capital assets. To the extent
debt has been incurred but not yet expended for capital assets, such amounts are not included
as a component of invested in capital assets, net of related debt.
Restricted net assets – expendable: Restricted expendable net assets include resources in which
the College is legally or contractually obligated to spend resources in accordance with
restrictions imposed by external third parties.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition
and fees, state appropriations, and sales and services of educational departments and
auxiliary enterprises. These resources are used for transactions relating to the education and
general operations of the College, and may be used at the discretion of the governing board to
meet current expenses for any purpose. These resources also include auxiliary enterprises,
which are substantially self-supporting activities that provide services for students, faculty
and staff.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
16
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Net Assets--Continued: When an expense is incurred that can be paid using either restricted or
unrestricted resources, the College’s policy is to first apply the expense towards restricted
resources, and then towards unrestricted resources.
Classification of Revenues: The College has classified its revenues as either operating or
nonoperating revenues according to the following criteria:
Operating Revenues: Operating revenues include activities that have the characteristics of
exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and
allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and
allowances, and (3) certain federal, state and local grants and contracts.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics
of nonexchange transactions, such as gifts and contributions, student aid revenues, and other
revenue sources that are defined as nonoperating revenues by GASB Statement No. 9,
Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That
Use Proprietary Fund Accounting, and GASB Statement No. 34, such as state appropriations and
investment income.
Scholarship Discounts and Allowances: Student tuition and fee revenues, and certain other
revenues from students, are reported net of scholarship discounts and allowances in the
statements of revenues, expenses, and changes in net assets. Scholarship discounts and
allowances are the difference between and stated charge for goods and services provided by the
College, and the amount that is paid by students and/or third parties making payments on the
students’ behalf. Certain governmental grants, such as Pell grants, and other federal, state or
nongovernmental programs, are recorded as either operating or nonoperating revenues in the
College’s financial statements. To the extent that revenues from such programs are used to satisfy
tuition and fees and other student charges, the College has recorded a scholarship discount and
allowance.
Income Taxes: The College, as a political subdivision of the State of Oklahoma, is exempt from
federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. However, the
College may be subject to income taxes or unrelated business income under Internal Revenue Code
Section 511(a)(2)(b).
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
17
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The significant estimates used in the preparation
these financial statements include the depreciation of capital assets and the allowance for doubtful
accounts for accounts receivable.
Reclassifications: Certain amounts in the 2008 financial statements have been reclassified to
conform to the current year presentation.
NOTE B--DEPOSITS AND INVESTMENTS
Deposits: Custodial credit risk for deposits is the risk that in the event of a bank failure, the
College’s deposits may not be returned or the College will not be able to recover collateral
securities in the possession of an outside party. Generally, the College deposits its funds with the
Office of the State Treasurer (OST) and those funds are pooled with funds of other state agencies
and then, in accordance with statutory limitations, are placed in financial institutions or invested
as the OST may determine, in the state’s name. State statutes require the OST to ensure that all
state funds are either insured by Federal Deposit Insurance, collateralized by securities held by
the cognizant Federal Reserve Bank, or invested in U.S. government obligations. The OST’s
responsibilities include receiving and collateralizing the deposit of State funds, investing State
funds in compliance with statutory requirements, and maintaining adequate liquidity to meet the
cash flow needs of the State and all its funds and agencies. If the College deposits funds directly
with financial institutions, those funds must be insured by Federal Deposit Insurance or
collateralized by securities held by the cognizant Federal Reserve Bank in the College’s name.
Some deposits with the OST are placed in the OST’s internal investment pool OK INVEST. OK
INVEST pools the resources of all state funds and agencies and invests them in (a) U.S. treasury
securities which are explicitly backed by the full faith and credit of the U.S. government; (b) U.S.
agency securities which carry an implicit guarantee of the full faith and credit of the U.S.
government; (c) money market mutual funds which participates in investments, either directly or
indirectly, in securities issued by the U.S. treasury and/or agency and repurchase agreements
relating to such securities; and (d) investments related to tri-party repurchase agreements which
are collateralized at 102% and, whereby, the collateral is held by a third party in the name of the
OST.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
18
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Deposits--Continued: At June 30, 2009 and 2008, the carrying amounts of all College deposits
with OST were $8,097,246 and $5,867,709, respectively. Of funds on deposit with the OST,
amounts invested in OK INVEST total $4,275,362 in 2009 and $2,161,627 in 2008.
For financial reporting purposes, deposits with the OST that are invested in OK INVEST are
classified as cash equivalents. The distribution of deposits in OK INVEST are as follows:
Cost Market Value
U.S. Agency Securities $ 1 ,881,622 $ 1 ,938,006
Money Market Mutual Fund 3 37,090 3 37,090
Certificates of Deposit 2 72,485 2 72,485
Tri-party Repurchase Agreements 3 33,950 3 33,950
Mortgage Backed Agency Securities 9 69,451 9 81,201
Municipal Bonds 6 8,752 6 9,316
Foreign Bonds 8 ,145 8 ,145
U.S. Treasury Obligations 4 03,867 4 17,980
Totals $ 4 ,275,362 $ 4 ,358,173
OK Invest Protfolio
Agencies and funds that are considered to be part of the State’s reporting entity in the State’s
Comprehensive Annual Financial Report are allowed to participate in OK INVEST. Oklahoma
statutes and the OST establish the primary objectives and guidelines governing the investment of
funds in OK INVEST. Safety, liquidity, and return on investment are the objectives which
establish the framework for the day to day OK INVEST management with an emphasis on safety
of the capital and the probable income to be derived and meeting the State and its funds’ and
agencies’ daily cash flow requirements. Guidelines in the Investment Policy address credit
quality requirements, diversification percentages and specify the types and maturities of
allowable investments, and the specifics regarding these policies can be found on the OST website
at http://www.treasurer.state.ok.us/. The State Treasurer, at his discretion, may further limit or
restrict such investments on a day to day basis. OK INVEST includes a substantial investment in
securities with an overnight maturity as well as in U.S. government securities with a maturity of
up to three years. OK INVEST maintains an overall weighted average maturity of less than two
years.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
19
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Deposits--Continued: Participants in OK INVEST maintain an interest in its underlying
investments and, accordingly, may be exposed to certain risks. As stated in the OST information
statement, the main risks are interest rate risk, credit/default risk, liquidity risk, and U.S.
government securities risk. Interest rate risk is the risk that during periods of rising interest rates,
the yield and market value of the securities will tend to be lower than prevailing market rates; in
periods of falling interest rates, the yield will tend to be higher. Credit/default risk is the risk that
an issuer or guarantor of a security, or a bank or other financial institution that has entered into a
repurchase agreement, may default on its payment obligations.
Liquidity risk is the risk that OK INVEST will be unable to pay redemption proceeds within the
stated time period because of unusual market conditions, an unusually high volume of
redemption requests, or other reasons.
U.S. Government securities risk is the risk that the U.S. government will not provide financial
support to U.S. government agencies, instrumentalities or sponsored enterprises if it is not
obligated to do so by law. Various investment restrictions and limitations are enumerated in the
State Treasurer’s Investment Policy to mitigate those risks; however, any interest in OK INVEST is
not insured or guaranteed by the State of Oklahoma, the Federal Deposit Insurance Corporation
or any other government agency.
Restricted Cash and Cash Equivalents: Restricted cash includes cash held by a bank trust
department in compliance with the College’s outstanding bond issue. In addition, there are other
cash balances restricted as to their use. A summary of the restricted cash as of June 30 is as
follows:
2009 2008
Accounts held by Trustee
Debt Service:
Debt service account $ 3 24,567 $ 327,378
Interest account - -
Revenue account 2 7,803 27,654
Earnings account 6 5,899 58,921
Total restricted cash $ 4 18,269 $ 413,953
Restricted cash and cash equivalents per the statement of net assets:
Current $ 9 3,702 $ 86,575
Noncurrent 3 24,567 327,378
$ 4 18,269 $ 413,953
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
20
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Investments: Investment credit risk is the risk that an issuer or other counterparty to an
investment will not fulfill its obligations. Generally, the College’s investments are managed by
the State Treasurer. In accordance with state statutes the State Treasurer may only purchase and
invest in (a) obligations of the United States government, its agencies and instrumentalities; (b)
prime banker’s acceptances; (c) investment grade obligations of state and local governments; (d)
money market funds; (e) collateralized or insured certificates of deposits; (f) negotiable certificates
of deposits; (g) prime commercial paper; and (h) repurchase agreements. Interest rate risk is the
risk that changes in interest rates will adversely affect the fair value of an investment.
Investments that are held for longer periods of time are subject to increased risk of adverse
interest changes.
Neither the College nor state statutes limit investment maturities as a means of managing
exposure to fair value losses arising from increasing interest rates; however, the OST Investment
Policy limits the average maturity on its portfolio to four (4) years, with certain individual
securities having more restrictive limits as defined in the policy. Concentration of credit risk is the
risk of loss attributed to the magnitude of the College’s investment in a single issuer. Neither the
College’s investment policy nor state statutes place limits on amounts that can be invested in any
one issuer; however, the OST Investment Policy states that, with the exception of U.S. Treasury
securities, no more than 50% of the State’s total funds may be invested in a single security type or
with a single financial institution, with diversification percentages being more restrictive on
individual securities. Custodial credit risk for investments is the risk that, in the event of failure of
the counterparty, the College will not be able to recover the value of its investments or collateral
securities in the possession of an outside party. As of June 30, 2009 and 2008, none of the
College’s investments were subject to custodial credit risk.
At June 30, 2009 and 2008, the College had investments in funds totaling $749,744 and $738,758,
respectively. At June 30 the market value of such securities was:
2009 2008
Certificates of deposit $ 155,000 $ 174,000
Money market fund 594,744 399,193
Federal Home Loan Bank bonds, rated AAA
by Standard & Poor's, 3.7%-5.0% - 165,565
$ 749,744 $ 738,758
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
21
NOTE B--DEPOSITS AND INVESTMENTS--Continued
All the securities are held in the College’s name by a custodial bank. The investments are
designated by the Board of Regents to use for scholarships. The investments are carried at market
value in compliance with GASB Statement No. 31, Accounting and Reporting for Certain Investments
and for External Investment Pools.
Bond Fund Cash and Investments: Certain non-pooled cash and investments are restricted in
purpose by policies incorporated in applicable bond indentures. Credit risk policy generally
restricts investing to cash, investments fully insured by the FDIC and U.S. government and
agency securities or mutual funds investing in these types of securities. There may be some
variance among the investments authorized by the specific bond indentures of College bond
issues. The OST and/or a trustee bank generally provide the management of restricted, non-pooled
investments. Custodial credit risk is not addressed by bond indentures. Interest rate risk in
bond indentures provide that investments mature in no more than six to sixty months depending
on the purpose of the funds and the requirements of the account in which the funds are deposited
(i.e. construction, reserve, operations and maintenance, etc.) Concentration of credit risk is not
addressed.
NOTE C--ACCOUNTS RECEIVABLE
The College’s accounts receivable primarily relate to tuition and fee charges to students and to
auxiliary enterprise services to students, faculty and staff. Total accounts receivable is shown on
the accompanying statement of net assets net of related allowances for doubtful accounts of
approximately $1,457,000 and $2,081,000 at June 30, 2009 and 2008, respectively.
NOTE D--LOANS RECEIVABLE
Student loans made through Federal Perkins Loans Program (the Program) comprise all of the
loans receivable at June 30, 2009 and 2008. There were no federal or institutional contributions to
the Program during 2009 and 2008.
As the College determines loans are uncollectible and not eligible for reimbursement by the
federal government, the loans are written off and assigned to the U.S. Department of Education.
The College has provided an allowance for uncollectible loans, which in management’s opinion, is
sufficient to absorb loans, which will ultimately be written off. The allowance for uncollectible
loans was approximately $233,000 at June 30, 2009 and 2008, respectively. The net carrying
amount of loans receivable was approximately $5,000 at June 30, 2009 and 2008, respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
22
NOTE E--CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2009 was as follows:
Beginning Transfers/ Ending
Balance Increases Retirements Balance
Capital assets not being depreciated:
Land $ 1 ,314,041 $ 6 3,500 $ - $ 1 ,377,541
Construction in progress 3 ,505,596 6 07,745 (3,916,643) 1 96,698
Total capital assets not being depreciated 4 ,819,637 6 71,245 (3,916,643) 1 ,574,239
Capital assets being depreciated:
Land improvements 8 21,238 1 3,689 - 8 34,927
Infrastructure 1 ,752,994 1 2,771 1 6,102 1 ,781,867
Buildings and building improvements 3 9,568,302 2 77,834 3 ,840,434 4 3,686,570
Machinery and equipment 1 8,167,768 1 ,166,616 - 1 9,334,384
Total capital assets being depreciated 6 0,310,302 1 ,470,910 3 ,856,536 6 5,637,748
Less accumulated depreciation for:
Land improvements 6 58,793 2 8,825 - 6 87,618
Infrastructure 7 25,630 1 24,343 - 8 49,973
Buildings and building improvements 2 2,573,898 1 ,367,011 - 2 3,940,909
Machinery and equipment 1 4,745,594 1 ,497,856 - 1 6,243,450
Total accumulated depreciation, net 3 8,703,915 3 ,018,035 - 4 1,721,950
Total capital assets being depreciated, net 2 1,606,387 (1,547,125) 3 ,856,536 2 3,915,798
Capital assets, net $ 2 6,426,024 $ (875,880) $ (60,107) $ 2 5,490,037
2009
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
23
NOTE E--CAPITAL ASSETS--Continued
Capital asset activity for the year ended June 30, 2008 was as follows:
Beginning Transfers/ Ending
Balance Increases Retirements Balance
Capital assets not being depreciated:
Land $ 1 ,275,041 $ 3 9,000 $ - $ 1 ,314,041
Construction in progress 3 ,735,341 7 ,483,857 (7,713,602) 3 ,505,596
Total capital assets not being depreciated 5 ,010,382 7 ,522,857 (7,713,602) 4 ,819,637
Capital assets being depreciated:
Land improvements 7 90,200 3 1,038 - 8 21,238
Infrastructure 1 ,270,297 1 91,590 2 91,107 1 ,752,994
Buildings and building improvements 3 1,387,070 7 80,037 7 ,401,195 3 9,568,302
Machinery and equipment 1 6,263,011 1 ,883,457 2 1,300 1 8,167,768
Total capital assets being depreciated 4 9,710,578 2 ,886,122 7 ,713,602 6 0,310,302
Less accumulated depreciation for:
Land improvements 6 26,633 3 2,160 - 6 58,793
Infrastructure 6 03,827 1 21,803 - 7 25,630
Buildings and building improvements 2 1,101,795 1 ,472,103 - 2 2,573,898
Machinery and equipment 1 3,462,078 1 ,283,516 - 1 4,745,594
Total accumulated depreciation, net 3 5,794,333 2 ,909,582 - 3 8,703,915
Total capital assets being depreciated, net 1 3,916,245 (23,460) 7 ,713,602 2 1,606,387
Capital assets, net $ 1 8,926,627 $ 7 ,499,397 $ -$ 2 6,426,024
2008
Construction in progress relates to renovation projects on the Tonkawa campus from funding
received from the Oklahoma Capital Improvement Authority with the issuance of the Series
2005F and 2005G bonds (Note I).
NOTE F--FUNDS HELD IN TRUST BY OTHERS
The College has a beneficial interest in the “Section Thirteen Fund State Educational Institutions”
and the “New College Fund,” administered by the Commissioners of the Land Office, as trustees
for the various educational institutions entitled thereto. The College has the right to receive
annually approximately 3.33% of the distributions of income produced by “Section Thirteen Fund
State Education Institutions” assets and 100% of the distributions of income produced by the
Northern Oklahoma College “New College Fund.”
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
24
NOTE F--FUNDS HELD IN TRUST BY OTHERS—Continued
The College received $1,988,334 and $1,771,020, during the years ended June 30, 2009 and 2008,
respectively, which is restricted to the construction or acquisition of buildings, equipment, or
other capital items. These amounts are recorded as state appropriations restricted for capital
purposes. State law prohibits the distribution of any corpus of these funds to the beneficiaries.
The total trust reserve for the College held in the trust by the Commissioners of the Land Office
was $27,704,300 and $31,122,620, at June 30, 2009 and 2008, respectively.
The College has pledged future revenues from the “Section Thirteen Fund State Educational
Institutions” and the “New College Fund” as repayment on the revenue bonds.
NOTE G--LONG TERM LIABILITIES
Long-term liability activity for the years ended June 30, 2009 and 2008, is as follows:
Balance Balance Amounts
June 30, June 30, Due Within
2008 Additions Reductions 2009 One Year
Revenue bonds $ 2 ,645,000 $ - $ ( 195,000) $ 2 ,450,000 $ 200,000
1999 OCIA capital lease 3 36,624 - ( 5,586) 3 31,038 2 0,481
2005 OCIA capital lease 1 3,208,878 - ( 304,233) 1 2,904,645 308,047
ODFA capital lease 8 7,917 - ( 30,000) 5 7,917 3 0,000
Accrued compensated absences 2 15,709 225,319 ( 212,553) 2 28,475 2 12,553
Total long-term liabilities $ 1 6,494,128 $ 225,319 $ ( 747,372) $ 1 5,972,075 $ 771,081
Balance Balance Amounts
June 30, June 30, Due Within
2007 Additions Reductions 2008 One Year
Revenue bonds $ 2 ,835,000 $ - $ ( 190,000) $ 2 ,645,000 $ 195,000
1999 OCIA capital lease 3 58,724 - ( 22,100) 3 36,624 2 3,191
2005 OCIA capital lease 1 3,494,101 - ( 285,223) 1 3,208,878 304,233
ODFA capital lease 1 12,917 - ( 25,000) 8 7,917 3 0,000
Accrued compensated absences 1 98,171 189,863 ( 172,325) 2 15,709 2 15,709
Total long-term liabilities $ 1 6,998,913 $ 189,863 $ ( 694,648) $ 1 6,494,128 $ 768,133
Year ended June 30, 2009
Year ended June 30, 2008
Additional information regarding revenue bonds is included at Note H. Additional information
regarding capital lease obligations is included in Note I.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
25
NOTE H--REVENUE BONDS
During fiscal 2004, the Oklahoma Development Finance Authority (the Authority) issued The
Oklahoma Development Finance Authority Public Facilities Financing program Revenue
Refunding Bonds, Series 2004 (Northern Oklahoma College) in the amount of $3,365,000. These
bonds were issued to refinance the outstanding Series 1999 Revenue Bonds. The bonds were
issued to provide funds to the Board of Regents on behalf of the College to refinance the
acquisition of Phillips University campus in Enid and to pay certain costs of issuance of the
bonds. Unamortized bond issuance costs and the discount on the old bonds were written-off in
2004 and were included in other nonoperating revenues and expenses in the accompanying
statement of changes in net assets. The bonds are due in annual installments ranging from
$180,000 to $300,000 through July 1, 2019. Interest is payable semiannually at rates from 3% to
5.4%. The College’s beneficial interest in the “Section Thirteen Fund State Educational
Institutions” and the “New College Fund” administered by the Commissioners of the Land Office
is pledged to the repayment of this bond series. Certain minimum amounts at specified dates are
required to be maintained in a trust account for the payment of principal and interest. No transfer
was required in 2006. Bonds maturing on or after June 1, 2014, are callable at the Authority’s
option at specified premiums, depending on the redemption date. The bonds are shown on the
statement of net assets, net of discount of $0 at June 30, 2009 and 2008, respectively. The College
was in compliance with all significant debt covenants at June 30, 2009.
Principal and interest payments required to be made in accordance with the bonds are as follows:
Total
Year ending June 30 Principal Interest Payments
2010 200,000 112,533 312,533
2011 210,000 105,133 315,133
2012 215,000 96,733 311,733
2013 225,000 87,918 312,918
2014 235,000 78,355 313,355
2015-2019 1,365,000 205,966 1,570,966
$ 2,450,000 $ 686,638 $ 3,136,638
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
26
NOTE I--LEASE COMMITMENTS
The lease payable consists of bonds issued by the Oklahoma Capital Improvement Authority
(OCIA) to build, improve and remodel facilities at various higher education and other institutions
in Oklahoma. Funds are received from OCIA as needed to fund construction projects. The
College’s pro rata share of bonds has been recorded as a lease payable.
Oklahoma Capital Improvement Authority – Series 1999A
The College’s lease agreement with OCIA provides for monthly payments to OCIA of
approximately $3,412 for 20 years through August 31, 2019, or until the OCIA bonds and related
interest are paid. The Oklahoma State Legislature appropriates monies to the College for the
monthly lease payments, which for the years ended June 30, 2009 and 2008, amounted to $39,215
and $39,797, respectively. During 2009 and 2008, there was $23,375 and $22,100, respectively, in
principal paid on the lease and $15,839 and $17,697, respectively, in related interest paid.
The College’s property under the OCIA capital lease is summarized as follows:
Buildings
Cost $ 719,514
Less: Accumulated depreciation (389,902)
$ 329,612
The scheduled principal and interest payments related to the lease are as follows:
Total Lease
Year ending June 30 Principal Interest Payments
2010 $ 20,481 $ 15,258 $ 35,739
2011 25,564 14,235 39,799
2012 26,818 12,957 39,775
2013 28,140 11,616 39,756
2014 29,552 10,209 39,761
2015-2019 177,107 29,887 206,994
307,662 94,162 401,824
Premium 23,376 - 23,376
$ 331,038 $ 94,162 $ 425,200
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
27
NOTE I--LEASE COMMITMENTS--Continued
Oklahoma Capital Improvement Authority – Series 2005F and 2005G
The 2006 legislative session authorized the issuance of OCIA Bond Issue 2005F and 2005G, for
which the College entered into a lease agreement with OCIA for a portion of these bond proceeds
with varying terms of repayment. The Series 2005 Bonds bear interest payable on July 1 and
January 1 of each year, beginning July 1, 2006 and the initial principal payment is July 1, 2007.
The Series 2005F provides monthly payments to OCIA for 24 years through July 1, 2030, or until
the OCIA bonds and related interest are paid. The Series 2005G provide for monthly payments to
OCIA for one year through July 1, 2007, or until the OCIA bonds and related interest are paid. A
bond issuance premium of approximately $410,000 is being amortized utilizing the effective
interest method. The Oklahoma State Legislature appropriates monies to the College for the
monthly lease payments.
The College’s property under the OCIA capital lease is summarized as follows:
Buildings, cost $ 12,813,677
Infrastructure, cost 803,516
Equipment, cost 14,500
Less: Accumulated depreciation (1,020,505)
Construction in progress 196,697
Capital lease proceeds held by OCIA 2,174,250
$ 14,982,135
The scheduled principal and interest payments related to the lease are as follows:
Total Lease
Year ending June 30 Principal Interest Payments
2010 $ 308,047 $ 612,266 $ 920,313
2011 365,880 599,470 965,350
2012 381,554 583,881 965,435
2013 398,049 567,443 965,492
2014 417,041 5 48,666 965,707
2015-2019 2,481,130 2,421,083 4,902,213
2020-2024 3,183,519 1,737,570 4,921,089
2025-2030 4,999,566 905,742 5,905,308
12,534,786 7,976,121 20,510,907
Premium 369,859 - 369,859
$ 12,904,645 $ 7,976,121 $ 20,880,766
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
28
NOTE I--LEASE COMMITMENTS--Continued
Oklahoma Development Finance Authority
The College was a recipient of certain bond proceeds (Oklahoma Development Finance Authority
Master Lease Revenue Bonds, Series 2001B, dated March 1, 2001) from the Oklahoma
Development Finance Authority (ODFA) during 2002. The College received $260,000 in proceeds
for this lease.
The College entered into a lease agreement with ODFA in which the College will be required to
repay ODFA the monies received through May 25, 2011. The transaction has been accounted for
as a capital lease.
The College’s property under the ODFA capital lease is summarized as follows:
Transportation
Equipment
Cost $ 226,636
Less: Accumulated depreciation 181,310
$ 45,326
Principal and interest payments required to be made in accordance with the lease are as follows:
Total Lease
Year ending June 30 Principal Interest Payments
2010 $ 3 0,000 $ 2 ,445 $ 3 2,445
2011 2 7,917 1,186 2 9,103
$ 5 7,917 $ 3 ,631 $ 6 1,548
Operating Lease
During the year ended June 30, 2008, the College entered into a three-year agreement to lease
office space for $9,350 per month. On a monthly basis, the College is reimbursed for $3,100 of the
lease expense by a third party. The related rental expense, net of reimbursements, was $75,000 for
the year ended June 30, 2009. Future minimum lease payments are $112,200 annually for the
years ending June 30, 2009 and June 20, 2010.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
29
NOTE J--RETIREMENT PLAN
Oklahoma Teacher’s Retirement System (OTRS)
Plan Description: The College contributes to the OTRS, a cost-sharing, multiple employer,
defined benefit, public employee retirement system administered by a 13-member Board of
Trustees appointed by the Oklahoma State Governor. Pension expense is recorded for the
amount the College is required to contribute for the year as determined by the OTRS Board of
Trustees or Oklahoma State Statute. OTRS issues a publicly available financial report that
includes the financial statements and required supplementary information. This report may be
obtained by writing to the Oklahoma Teachers’ Retirement System at P.O. Box 53524, Oklahoma
City, Oklahoma 73152 or calling (405) 521-2387.
OTRS provides defined retirement benefits based on members’ final compensation, age, and term
of service for all qualified persons employed by state-supported educational institutions. In
addition, OTRS provides for benefits upon disability and to survivors upon death of eligible
members. OTRS does not provide for a cost-of-living adjustment. Oklahoma Statute, Title 70
O.S., Section 17-105, defines all retirement benefits under OTRS. The authority to establish or
amend benefit provisions rests with the Oklahoma State Legislature.
Funding Policy: The authority to define or amend employer contribution rates is given to the
OTRS Board of Trustees by Oklahoma Statute, Title 70, Section 17-106; all other contribution rates
are defined or amended by the Oklahoma State Legislature. OTRS members are required to
contribute 7% of their regular annual compensation, not to exceed the member’s maximum
compensation level. The College is required to contribute a fixed percentage of annual
compensation on behalf of active OTRS members. The contribution rate for 2008 was 7.85% in
July of 2007 with an increase to 8.35% on January 1, 2008. On January 1, 2009 the contribution rate
changed to 8.05%. The College’s contribution to OTRS for the years ended June 30, 2009, 2008 and
2007, was approximately $1,988,000 $1,775,000 and $1,139,000, respectively, which equaled the
required contributions for the year.
The State of Oklahoma is also required to contribute to OTRS on behalf of the participating
employers. For 2009, the State of Oklahoma contributed 5% of state revenues from sales and use
taxes and individual income taxes, to OTRS on behalf of participating employers. The College has
estimated the amounts contributed to OTRS by the State of Oklahoma on its behalf by multiplying
the ratio of its number of covered OTRS members to the number of total covered OTRS members
for the year by the applicable percentage of taxes collected during the year. The College’s
prorated share of these payments for the years ended June 30, 2009 and 2008, was approximately
$850,000 and $924,000, respectively, and is recognized in non-operating revenues and
compensation and employee benefit expenses.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
30
NOTE J--RETIREMENT PLAN--Continued
Deferred Compensation Agreements
The College has entered into various nonqualified deferred compensation agreements with
certain key executives. Under the terms of the agreements, a specified percentage of each
executive’s salary is deferred and remitted by the College to an account at a financial institution.
Upon retirement from active service, the executives may receive either a lump sum payment
based on the amount of compensation deferred plus interest or an actuarially determined
monthly income based on the lump sum amount payable.
During the years ended June 30, 2009 and 2008, the College remitted approximately $30,000 and
$46,000 to the deferred compensation accounts. The College has recorded these payments as
compensation expense.
NOTE K--POST EMPLOYMENT BENEFITS
The College is funding on a pay-as-you-go basis health and dental insurance premiums for eight
College retirees. In additions, the College pays for term life insurance for seven retirees. Cost of
the benefits for 2009 and 2008 was as follows:
2009 2008
Health and dental insurance $ 1 3,000 $ 1 2,429
Term life insurance $ 3 00 $ 3 06
NOTE L--RELATED PARTY TRANSACTIONS
The College provides certain administrative services and office space to Northern Oklahoma
College Foundation, Inc. (the Foundation) for $500 annually.
For substantially all scholarships awarded by the Foundation, amounts are remitted to the
College. Subsequently, the College makes payments directly to the award recipients. Such
amounts approximated $79,000 and $89,000 in 2009 and 2008, respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
31
NOTE M--RISK MANAGEMENT
The College is exposed to various risks of loss from torts; theft of, damage to and destruction of
assets; business interruptions; errors and omissions; employee injuries and illnesses; natural
disasters; and employee health, life and accident benefits. Commercial insurance coverage is
purchased for claims arising from such matters other than torts, property and workers’
compensation. Settled claims have not exceeded this commercial coverage in any of the three
preceding years.
The College, along with other state agencies and political subdivisions, participates in the State of
Oklahoma Risk Management Program and the state insurance fund, public entity risk pools
currently operating as a common risk management and insurance program for its members. The
College pays an annual premium to the pools for its torts, property and worker’s compensation
insurance coverage. The Oklahoma Risk Management Pool’s governing agreement specifies that
the Pool will be self-sustaining through member premiums and will reinsure through commercial
carriers for claims in excess of specified stop-loss amounts.
NOTE N--COMMITMENTS AND CONTINGENCIES
Federal Programs: The College conducts certain programs pursuant to various grants and
contracts which are subject to audit by federal and state agencies. Costs questioned as a result of
these audits, if any, may result in refunds to these government agencies from various sources of
the College.
The College participates in the Federal Family Education Loan Program (the Program), which
includes the Federal Stafford Loan Program, Federal Parents Loans for Undergraduate Students,
and Federal Supplemental Loans for Students. The Program does not require the College to draw
down cash; however, the College is required to perform certain administrative functions under
the Program. Failure to perform such functions may require the College to reimburse the loan
guarantee agencies. For the years ended June 30, 2009 and 2008, $8,848,724 and $8,450,865,
respectively, of program loans were provided to students.
Grant from Enid Economic Development Authority: In June 1999, the College received assistance
from the Enid Economic Development Authority (the Authority) to accomplish the purchase of
the Phillips College Campus in Enid. The assistance from the Authority is conditional. The
College is required to utilize the facilities primarily for higher education to benefit the Enid area
and is restricted from selling the campus. If the campus is sold, the College must repay the full
amount of the assistance received, $1,906,250, back to the Authority. A portion of the assets may
be sold if proceeds are used for maintenance or improvement of facilities or used to fund
academic programs or scholarships.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
32
NOTE O--ACCOUNTING STANDARDS ISSUED NOT YET ADOPTED
In 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets.
GASB No. 51 establishes standards of accounting and financial reporting for intangible assets and
requires that all intangible assets not specifically excluded by its scope provisions be classified as
capital assets. Accordingly, existing authoritative guidance related to the accounting and
financial reporting for capital assets should be applied to these intangible assets, as applicable.
This Statement also establishes guidance specific to intangible assets related to amortization. The
requirements of this Statement are effective for financial statements for periods beginning after
June 15, 2009 and generally are required to be applied retroactively. Management has not yet
determined the effect this Statement will have on the College’s financial condition or results of
operations.
In 2007, GASB issued Statement No. 52, Land and Other Real Estate Held as Investments by
Endowments. GASB No. 52 establishes consistent standards for the reporting of land and other
real estate held as investments by essentially similar entities. It requires endowments to report
their land and other real estate investments at fair value. Governments also are required to report
the changes in fair value as investment income and to disclose the methods and significant
assumptions employed to determine fair value, and other information that they currently present
for other investments reported at fair value. The requirements of this Statement are effective for
financial statements for periods beginning after June 15, 2008. Management has not yet
determined the effect this Statement will have on the College’s financial condition or results of
operations.
In 2008, GASB issued Statement No. 53, Accounting and Financial Reporting for Derivative
Instruments. GASB No. 53 addresses the recognition, measurement, and disclosure of information
regarding derivative instruments entered into by state and local governments. A key provision in
this Statement is that derivative instruments covered in its scope, with the exception of synthetic
guaranteed investment contracts (“SGIC’s”) that are fully benefit-responsive, are reported at fair
value. The requirements of this Statement are effective for financial statements for periods
beginning after June 15, 2009. Earlier application is encouraged. Management has not yet
determined the effect this Statement will have on the College’s financial condition or results of
operations.
EXHIBIT I
NORTHERN OKLAHOMA COLLEGE
FOUNDATION, INC.
NORTHERN
OKLAHOMA COLLEGE
FOUNDATION, INC.
June 30, 2009
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
June 30, 2009
Audited Financial Statements
Independent Auditors’ Report ....................................................................................................................... 1
Statement of Financial Position ...................................................................................................................... 2
Statement of Activities .................................................................................................................................... 3
Statement of Cash Flows................................................................................................................................. 4
Notes to Financial Statements........................................................................................................................ 5
Supplementary Information
Combining Statement of Activities .......................................................................................................14
Independent Auditors’ Report
Board of Trustees
Northern Oklahoma College Foundation, Inc.
Tonkawa, Oklahoma
We have audited the accompanying statement of financial position of Northern Oklahoma
College Foundation, Inc. (the “Foundation”) as of June 30, 2009, and the related statements
of activities and cash flows for the year then ended. These financial statements are the
responsibility of the Foundation’s management. 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. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluation of the overall
financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements present fairly, in all material respects, the financial
position of Northern Oklahoma College Foundation, Inc. at June 30, 2009, and the results of
its activities and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
December 3, 2009
1
STATEMENT OF FINANCIAL POSITION
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
June 30, 2009
ASSETS
Cash $ 1 01,387
Investments 2 ,139,844
Loans receivable 1 3,736
Other receivables 8 98
Property and equipment, net 1 03,075
TOTAL ASSETS 2 ,358,940
LIABILITIES
Accounts payable 5 50
TOTAL LIABILITIES 5 50
NET ASSETS
Unrestricted 5 23,561
Temporarily restricted 9 21,180
Permanently restricted 9 13,649
TOTAL NET ASSETS 2 ,358,390
TOTAL LIABILITIES AND NET ASSETS $ 2 ,358,940
See notes to financial statements.
2
STATEMENT OF ACTIVITIES
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
Year Ended June 30, 2009
Temporarily Permanently
Unrestricted Restricted Restricted Total
REVENUES AND SUPPORT
Investment income
Interest and dividend income $ 1 5 $ 2 9,972 $ - 2 9,987
Unrealized loss (307,580) (95,313) - (402,893)
Net investment income (307,565) (65,341) - (372,906)
Contributions 8 80 1 51,137 - 1 52,017
Other income - 6 4,680 - 6 4,680
Net assets released from restriction 1 96,462 (196,462) - -
TOTAL REVENUES AND SUPPORT (110,223) (45,986) - (156,209)
EXPENSES
Scholarships to Northern Oklahoma College 7 9,220 - - 7 9,220
General and administrative expense 1 1,355 - - 1 1,355
Program expense 1 01,415 - - 1 01,415
Fundraising expense 1 1,675 - - 1 1,675
TOTAL EXPENSES 2 03,665 - - 2 03,665
CHANGE IN NET ASSETS (313,888) (45,986) - (359,874)
NET ASSETS AT BEGINNING OF YEAR 5 78,992 1 ,528,666 6 10,606 2 ,718,264
RECLASSIFICATIONS - Note H 2 58,457 (561,500) 3 03,043 -
NET ASSETS AT END OF YEAR $ 5 23,561 $ 9 21,180 $ 9 13,649 $ 2 ,358,390
See notes to financial statements.
3
STATEMENT OF CASH FLOWS
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
Year Ended June 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Change in net assets $ (359,874)
Adjustments to reconcile change in net assets to net cash
provided by operating activities
Unrealized loss on investments 4 02,893
Depreciation 1 0,620
Changes in operating assets and liabilities:
Accrued interest receivable 3 25
Accounts payable (450)
NET CASH PROVIDED BY OPERATING ACTIVITIES 5 3,514
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 1 6,208
Purchase of investments (41,355)
Purchase of equipment (10,096)
Net change in loans receivable (328)
NET CASH USED IN INVESTING ACTIVITIES (35,571)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1 7,943
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8 3,444
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1 01,387
See notes to financial statements.
4
NOTES TO FINANCIAL STATEMENTS
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
5
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities: Northern Oklahoma College Foundation, Inc. (the Foundation) was
established for the benefit of Northern Oklahoma College (the College). The Foundation awards
scholarships and makes loans to students of the College and provides other general support to the
College.
The Board of Trustees, which governs the Foundation, is separate and distinct from the Board of
Regents, the governing body of the College.
Basis of Presentation: The financial statements of the Foundation have been prepared on the
accrual basis in accordance with accounting principles generally accepted in the United States of
America.
Net Asset Classification: In August 2008, The Financial Accounting Standards Board (FASB)
issued Staff Position No. 117-1: Endowments of Not-for-Profit Organizations: Net Asset Classification
of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act,
and Enhanced Disclosures for All Endowment Funds (“FAS 117-1”). FAS 117-1 provides guidance on
the net asset classification of donor-restricted endowment funds for a not-for-profit organization
that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds
Act of 2006 (“UPMIFA”). FAS 117-1 also improves disclosures about an organization’s
endowment funds (both donor-restricted endowment funds and board-designated endowment
funds) whether or not the organization is subject to UPMIFA.
Net assets of the Foundation are classified based on the existence or absence of donor-imposed
restrictions as follows:
Unrestricted net assets - Net assets for which no donor has imposed any restrictions that
the assets be used for a specific purpose or held for a certain period of time. Contributions
received with time and/or purpose restrictions which are fully expended in the same
period are classified as unrestricted.
Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that
may or will be met, either by actions of the Foundation and/or the passage of time. When
a restriction expires, temporarily restricted net assets are reclassified to unrestricted net
assets and reported in the statements of activities as net assets released from restrictions.
Permanently restricted net assets - Net assets subject to donor-imposed stipulations that
they be maintained permanently by the Foundation. Generally, the donors of these assets
permit the Foundation to use all or part of the income earned on any related investment
for general or specific purposes.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
6
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Cash and Cash Equivalents: The Foundation considers all highly liquid investments with an
initial maturity of three months or less to be cash equivalents.
Concentration of Credit Risk: The Foundation maintains cash in bank deposit accounts that, at
times, may exceed federally insured limits. The Foundation has not experienced any losses in such
accounts and believes that it is not exposed to any significant credit risk on cash or cash
equivalents.
Support and Expenses: Expenses are reported as decreases in unrestricted net assets. Expirations
of donor-imposed restrictions that simultaneously increase one class of net assets and decrease
another are reported as reclassifications between the applicable classes.
Contributions due in more than one year are recorded at present value, while amounts due in less
than one year are recorded at realizable value. Amortization of the discount is recorded as
additional contribution revenue.
Loans Receivable: The Foundation grants various students loans as directed by donor-imposed
stipulations. The Foundation considers all loans receivable to be fully collectible.
Income Taxes: The Internal Revenue Service has recognized the Foundation as exempt from
income taxes under Section 501(a) of the Internal Revenue Code (the Code) as an organization
described in Section 501 (c)(3) of the Code.
Accounting for Uncertain Tax Positions: In June 2006, the FASB issued Interpretation No. 48
(“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 provides detailed guidance for the
financial statement recognition, measurement and disclosure of uncertain tax positions
recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for
Income Taxes. FIN 48 requires an entity to recognize the financial statement impact of a tax
position when it is more likely than not that the position will be sustained upon examination. On
December 30, 2008, the FASB issued FASB Staff Position FIN 48-3 which deferred the effective
implementation date of FIN 48 to the Foundation’s annual financial statements ending on June 30,
2010 and the Foundation has elected to defer application of FIN 48. The Foundation does not
expect that the adoption of FIN 48 will have a material effect on its financial position, results of
operations or cash flows.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
7
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Investments and Investment Return: Investments in marketable equity securities with readily
determinable fair values and all debt securities are carried at fair value. Non-marketable
securities are stated at fair value or the best estimate of fair value as determined by the investment
manager and/or Foundation management. Realized gains and losses are computed on the first-in,
first-out basis.
Property and Equipment: Property and equipment are stated at cost or fair value at date of
donation. For equipment, the Foundation’s capitalization policy includes all items with a cost of
$500 or more and an estimated useful life of greater than one year. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets: ten years for
equipment.
Fair Value Measurements: On July 1, 2008, the Foundation adopted Statement of Financial
Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”) with respect to financial
assets and liabilities. SFAS 157 defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. Fair value under SFAS 157 is
defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. SFAS 157 establishes a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels. The following is a brief description of those three levels:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs that are derived principally from or corroborated by observable market data;
Level 3: Inputs that are unobservable and significant to the overall fair value measurement.
Use of Estimates: The preparation of the financial statements in conformity with accounting
principles generally accepted in the Unites States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent Events: The Foundation has evaluated subsequent events through December 3, 2009,
which is the date that the financial statements were available to be issued. There are no
subsequent events requiring recognition or disclosure in the 2009 financial statements.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
8
NOTE B--INVESTMENTS
The fair value of investments by type are as follows:
2009
Certificates of deposit $ 317,641
Equity securities 159,977
Pooled investment funds 1,662,226
$ 2,139,844
At June 30, 2009, the fair value of donor-restricted endowment fund investments was more than
the original corpus due to unrealized gains. The aggregate surplus totals $34,332.
NOTE C--PROPERTY AND EQUIPMENT
2009
Land $ 30,000
Equipment 106,203
136,203
Less accumulated depreciation (33,128)
Net property and equipment $ 103,075
NOTE D--RESTRICTED NET ASSETS
Temporarily restricted net assets at June 30, 2009 are restricted for the following purposes:
Scholarships $ 891,727
Loans 29,453
$ 921,180
Permanently restricted net assets at June 30, 2009 are restricted for the following purposes:
Scholarships $ 712,142
Loans 101,507
Lectureship 100,000
$ 913,649
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
9
NOTE E--RELATED-PARTY TRANSACTIONS
Based upon an exchange of service agreement, the College provides the Foundation with the
necessary staffing and office space at no cost to the Foundation. Thus, the Foundation has no
employees. In exchange, the College receives scholarships, funds for capital improvement, and
other services from the Foundation. The value of services provided by the College is not
reasonably estimated; therefore the Foundation has not recorded any amounts as contributions or
expenses.
During the year ended June 30, 2009, the Foundation awarded scholarships totaling
approximately $79,000 to students of the College.
NOTE F--ENDOWMENT DISCLOSURES
The Foundation’s endowment consists of 35 individual donor-restricted funds and 2 other funds
which are managed and controlled by the Foundation. As required by FAS 117-1, net assets
associated with endowment funds are classified and reported based on the existence or absence of
donor-imposed restrictions. Other endowment funds consist of contributions which were not
restricted by the donor for scholarships but have been endowed by the Foundation’s Board of
Directors to provide scholarships for future periods rather than fully expending such amounts in
the current year. All of the endowment funds held by the Foundation are managed and
controlled by the Foundation in accordance with the following policies.
The State of Oklahoma adopted UPMIFA effective November 1, 2007 (“OK UPMIFA”) and the
Foundation has adopted FAS 117-1 in its financial statements effective July 1, 2008. The Board of
Directors of the Foundation has interpreted OK UPMIFA as requiring the preservation of the fair
value of the original gift as of the gift date of the donor-restricted endowment funds absent
explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation
classifies as permanently restricted net assets (a) the original value of gifts donated to the
permanent endowment, (b) the original value of subsequent gifts to the permanent endowment,
and (c) accumulations to the permanent endowment made in accordance with the direction of the
applicable donor gift instrument at the time the accumulation is added to the fund. The
remaining portion of the donor-restricted endowment fund that is not classified in permanently
restricted net assets is classified as temporarily restricted net assets until those amounts are
appropriated for expenditure by the Foundation in a manner consistent with the standard of
prudence prescribed by OK UPMIFA.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
10
NOTE F--ENDOWMENT DISCLOSURES--Continued
In accordance with OK UPMIFA, the Foundation considers the following factors in making a
determination to appropriate or accumulate donor-restricted endowment funds.
(1) The duration and preservation of the fund
(2) The purposes of the Foundation and the donor-restricted endowment fund
(3) General economic conditions
(4) The possible effects of inflation and deflation
(5) The expected total return from income and the appreciation of investments
(6) Other resources of the Foundation
(7) The investment policies of the Foundation
Temporarily Permanently
Unrestricted Restricted Restricted Total
Donor-restricted
endowment funds $ (70,663) $ 99,345 $ 913,649 $ 942,331
Board-designated
endowment funds 27,650 - - 27,650
Total Funds Invested $ ( 43,013) $ 99,345 $ 913,649 $ 969,981
Endowment Net Asset Composition by Type of Fund as of June 30, 2009
Temporarily Permanently
Unrestricted Restricted Restricted Total
Endowment net assets,
beginning of year $ 12,063 $ 218,037 $ 913,649 $ 1,143,749
Investment return:
Investment income - 1,841 - 1,841
Net depreciation
(realized and unrealized) ( 55,076) (114,333) - (169,409)
Net investment return ( 55,076) ( 112,492) - (167,568)
Contributions - - - -
Appropriation of endowment
assets for expenditure - (6,200) - ( 6,200)
Endowment Net Assets $ ( 43,013) $ 99,345 $ 913,649 $ 969,981
Changes in Endowment Net Assets for the Year Ended June 30, 2009
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
11
NOTE F--ENDOWMENT DISCLOSURES--Continued
Description of amounts classified as Permanently Restricted Net Assets and Temporarily
Restricted Net Assets (Endowment Only) at June 30, 2009:
Permanently Restricted Net Assets
The portion of perpetual endowment funds that is required to be
retained permanently either by explicit donor stipulation or by OK UPMIFA $ 913,649
Total endowment funds classified as permanently restricted net assets $ 913,649
Temporarily Restricted Net Assets
The portion of perpetual endowment funds subject to time restriction
under OK UPMIFA with purpose restrictions $ 99,345
Total endowment funds classified as temporarily restricted net assets $ 99,345
Funds with Deficiencies
From time to time, the fair value of assets associated with individual donor-restricted endowment
funds may fall below the level that the donor requires the Foundation to retain as a fund of
perpetual duration. In accordance with accounting principles generally accepted in the United
States of America, deficiencies of this nature that are reported in unrestricted net assets were
approximately $70,663 at June 30, 2009. These deficiencies resulted from unfavorable market
fluctuations. As a result, appropriations were limited to appropriations that were deemed
prudent and necessary for the programs of the Foundation.
Return Objectives and Risk Parameters
The Foundation has adopted investment and spending policies for endowment assets that
attempt to provide a predictable stream of funding to programs supported by its endowments
while seeking to maintain the purchasing power of the endowment assets. Endowment assets
include those assets of donor-restricted funds that the organization must hold in perpetuity or for
a donor-specified period(s). The Foundation’s investment objective for the Endowment Fund (the
“Fund”) is ”Growth and Income”. The intent of the objective is to provide both current income
and future growth of the Fund sufficient to offset reasonable spending plus nominal inflation;
thereby, preserving the constant dollar value and purchasing power of the endowment for future
generations. Investment performance will be judged over a five-year horizon or market cycle.
The goal for equity investment performance is to exceed the price and yield results of the
Standard and Poor’s 500 Common Stock Index while maintaining a risk level similar to that of the
benchmark. The goal for fixed income investment performance is to exceed the Lehman Brothers
Intermediate Government/Corporate Bond Index while maintaining a risk level similar to that of
the benchmark.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
12
NOTE F--ENDOWMENT DISCLOSURES--Continued
Strategies Employed for Achieving Objectives
To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in
which investment returns are achieved through both capital appreciation (realized and
unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset
allocation that places an equal emphasis on equity and fixed income based investments to achieve
its long-term return objectives within prudent risk constraints.
Spending Policy and How the Investment Objectives Relate to Spending Policy
The Foundation has a policy of appropriating for distribution each year amounts up to, but not to
exceed actual investment performance for that year, as well as prior year accumulations. Since
the Foundation has a policy of designating unrestricted funds each year for investment, it feels
that this policy protects the purchasing power of the endowments as well as the original corpus of
the donor-restricted investment. In light of current market fluctuations and the future needs of
the Foundation, it will evaluate the spending policy to ensure that it remains in accordance with
the long-term objectives of the Foundation.
NOTE G--FAIR VALUE MEASUREMENTS
The following methods and assumptions were used to estimate the fair value of assets and
liabilities in the financial statements.
Cash and Cash Equivalents: The carrying amount of the asset approximates fair value due
to the short maturity of such amounts.
Investments: Investments in certificates of deposits and equity securities are stated at market
value based on quoted market prices when available and/or as determined by nationally
recognized independent third party pricing services and provided to the Foundation by the
investment manager. Pooled investment funds are stated at fair value as determined by the
fund manager.
Interest and Other Receivables: The carrying amount approximates fair value due to the
short maturity of such amounts.
Accounts Payable and Accrued Liabilities: The carrying amount of the liability approximates
fair value due to its short maturity.
NOTES TO FINANCIAL STATEMENTS--Continued
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
JUNE 30, 2009
13
NOTE G--FAIR VALUE MEASUREMENTS--Continued
Assets measured at fair value on a recurring basis are classified within the fair value hierarchy as
follows:
Level 1 Level 2 Level 3 Total
ASSETS
Investments $ 1 59,977 $ 3 17,641 $ 1 ,662,226 $ 2 ,139,844
As of June 30, 2009
Following is a description of the methodologies used for the classification of financial instruments
measured at fair value on a recurring basis:
Investments: When quoted prices are available in an active market, securities are classified
within Level 1 of the hierarchy. As such, equity securities are classified as Level 1. The fair
values of certificates of deposit are based on yield curves, interest rates, and other relevant
factors and are classified as Level 2. Pooled investment funds are classified within Level 3 of
the hierarchy and the fair values are determined by the fund manager.
The following table summarizes the changes in the fair value of the Foundation’s Level 3 financial
assets for the period ending June 30, 2009:
Investments
Balance at July 1, 2008 $ 1,984,565
Net unrealized loss (322,339)
Balance at June 30, 2009 $ 1,662,226
NOTE H--CLASSIFICATION OF NET ASSETS
In 2009 in conjunction with implementation of FAS 117-1, the Foundation’s management
performed an evaluation of the Foundation’s net asset classifications and reviewed substantially
all funds held by the Foundation. The Foundation reviewed donor restrictions, fund agreements,
and other relevant information to determine the proper net asset classification of each fund.
Performance of this evaluation and review resulted in an increase in unrestricted net assets and
permanently restricted net assets of $258,457 and $303,043, respectively, and a decrease in
temporarily restricted net assets of $561,500 as of July 1, 2008. Total net assets did not change.
COMBINING STATEMENT OF ACTIVITIES
NORTHERN OKLAHOMA COLLEGE FOUNDATION, INC.
Year Ended June 30, 2009
Tonkawa Tonkawa Enid Enid
Tonkawa Temporarily Permanently Enid Temporarily Permanently
Unrestricted Restricted Restricted Unrestricted Restricted Restricted Total
REVENUES AND SUPPORT
Investment income
Interest and dividend income $ 7 $ 22,136 $ - $ 8 $ 7,836 $ - 29,987
Unrealized gain (270,841) (104,824) - (36,739) 9,511 - (402,893)
Total investment income (270,834) (82,688) - (36,731) 17,347 - (372,906)
Contributions - 136,932 - 880 14,205 - 152,017
Other income - 53,114 - - 11,566 - 64,680
Net assets released from restriction 172,314 (172,314) - 24,148 (24,148) - -
TOTAL REVENUES AND SUPPORT (98,520) (64,956) - (11,703) 18,970 - (156,209)
EXPENSES
Scholarships to
Northern Oklahoma College 66,770 - - 12,450 - - 79,220
General and administrative expense 11,355 - - - - - 11,355
Program expense 91,624 - - 9,791 - - 101,415
Fundraising expense 11,675 - - - - - 11,675
TOTAL EXPENSES 181,424 - - 22,241 - - 203,665
CHANGE IN NET ASSETS (279,944) (64,956) - (33,944) 18,970 - (359,874)
NET ASSETS AT BEGINNING OF YEAR 581,174 1 ,409,620 431,729 (2,182) 119,046 178,877 2 ,718,264
RECLASSIFICATIONS - Note H 226,659 (535,515) 316,789 31,798 (25,985) (13,746) -
NET ASSETS AT END OF YEAR $ 5 27,889 $ 8 09,149 $ 7 48,518 $ (4,328) $ 1 12,031 $ 1 65,131 $ 2 ,358,390
14
Independent Auditors’ Report on Internal Control Over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Board of Regents
Northern Oklahoma College
We have audited the financial statements of Northern Oklahoma College (the “College”) as of
and for the year ended June 30, 2009, and the College’s separately presented component unit,
Northern Oklahoma College Foundation, Inc. (the “Foundation”) as of and for the year ended
June 30, 2009, which collectively comprise the College’s basic financial statements, and have
issued our report thereon dated December 7, 2009. The financial statements of the Foundation
were not audited in accordance with Government Auditing Standards. The financial statements of
the College referred to above do not include the financial statements of the Foundation. Rather,
a complete set of financial statements of the Foundation is presented separately. We conducted
our audit in accordance with auditing standards generally accepted in the United States of
America, and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the College’s internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the College’s internal control over financial reporting.
Accordingly, we do not express an opinion of the effectiveness of the College’s internal control
over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed below, we identified certain deficiencies in internal control
over financial reporting that we consider to be a significant deficiency.
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affect the entity’s ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of the entity’s
financial statements that is more than inconsequential will not be prevented or detected by the
entity’s internal control.
33
34
We consider the deficiency described in the accompanying schedule of findings and questioned
costs as Finding 2009-01 to be a significant deficiency in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
result in more than a remote likelihood that a material misstatement of the financial statement
will not be prevented or detected by the entity’s internal control.
Our consideration of the internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in the internal control that might be significant deficiencies or material weaknesses. However we
do not believe that the significant deficiency described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the College’s financial statements are
free of material misstatement, we performed tests of compliance with certain provisions of laws,
regulations, contracts, and grants 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.
The College’s response to the findings identified in our audit are described in the Schedule of
Findings and Questioned Costs. We did not audit the College’s response, and, accordingly, we
express no opinion on it.
This report is intended solely for the information and use of the governing body, management,
the Board of Regents, and federal awarding agencies and pass-through entities and is not
intended to be, and should not be, used by anyone other than these specified parties.
Oklahoma City, Oklahoma
December 7, 2009
Independent Auditors’ Report on Compliance with
Requirements Applicable to each Major Program and Internal Control
over Compliance in Accordance with OMB Circular A-133 and the
Schedule of Expenditures of Federal Awards
Board of Regents
Northern Oklahoma College
Compliance
We have audited the compliance of Northern Oklahoma College (the “College”) with the
types of compliance requirements described in the U.S. Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal
programs for the year ended June 30, 2009. The College’s major federal programs are
identified in the summary of auditors’ results section of the accompanying schedule of
findings and questioned costs. Compliance with the requirements of laws, regulations,
contracts and grants applicable to each of its major federal programs is the responsibility of
the College’s management. Our responsibility is to express an opinion on the College’s
compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally
accepted in the United States of America, the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the United
States and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 require that we plan and perform
the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a
major federal program occurred. An audit includes examining, on a test basis, evidence
about the College’s compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. Our audit does not provide a legal
determination on the College’s compliance with those requirements.
In our opinion, the College complied, in all material respects, with the requirements referred
to above that are applicable to its major federal programs for the year ended June 30, 2009.
35
36
Internal Control Over Compliance
The management of the College is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts and grants applicable to
federal programs. In planning and performing our audit, we considered the College’s internal
control over compliance with the requirements that could have a direct and material effect on a
major federal program in order to determine our auditing procedures for the purpose of
expressing our opinion on compliance 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 College’s internal control over compliance.
A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of
compliance requirement of a federal program on a timely basis. A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability
to administer a federal program such that there is more than a remote likelihood that
noncompliance with a type of compliance requirement of a federal program that is more than
inconsequential will not be prevented or detected by the entity’s internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
result in more than a remote likelihood that a material misstatement of the financial statement
will not be prevented or detected by the entity’s internal control.
Our consideration of the internal control over compliance was for the limited purpose described
in the first paragraph of this section and would not necessarily identify all deficiencies in the
internal control that might be significant deficiencies or material weaknesses. We did not identify
any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.
Schedule of Expenditures of Federal Awards
We have audited the basic financial statements of the College as of and for the year ended June 30,
2009, and have issued our report thereon dated December 7, 2009. Our audit was performed for
the purpose of forming an opinion on the basic financial statements taken as a whole. The
accompanying schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by OMB Circular A-133 and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
37
This report is intended solely for the information and use of the Board of Regents, management
and federal awarding agencies and pass-through entities and is not intended to be and should not
be used by anyone other than those specified parties.
Oklahoma City, Oklahoma
December 7, 2009
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
Fy 0809
Federal Agency/ CFDA Amount
Pass-Through Entity Number Expended
Student Financial Aid Cluster
Federal Supplemental Education
Opportunity Grant U.S. Department of Education 84.007 $ 88,375
Federal Family Education loans U.S. Department of Education 84.032 8,848,724
Federal Work Study U.S. Department of Education 84.033 57,725
Federal Pell Grant U.S. Department of Education 84.063 5,075,830
Academic Competitiveness Grants U.S. Department of Education 84.375 95,900
Total student financial aid cluster 14,166,554
Workforce Investment Act Department of Labor 17.259 23,641
Vocational Education National Centers Department of Education
for Career and Technical Education 84.051 51,300
Temporary Assistance to Needy Families Department of Health
93.558 293,905
Child Care and Development Block Grant Department of Health
93.575 210,478
AmeriCorps Corporation for National
94.006 12,844
Upward Bound U.S. Department of Education 84.047 267,663
$ 15,026,385
See notes to schedule of expenditures of federal awards.
Cluster/Program
38
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
39
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The schedule of expenditures of federal awards includes the federal awards activity of Northern
Oklahoma 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 B--FEDERAL FAMILY EDUCATION LOAN PROGRAM
The College participates in the Federal Family Education Loan Program (the “FFEL Program”),
CFDA number 84.032, which includes the Federal Stafford Loan Program and Federal Parents
Loans for Undergraduate students. The FFEL program does not require the College to draw down
cash; however, the College is required to perform certain administrative functions under the FFEL
program. Failure to perform such functions may require the College to reimburse the loan
guarantee agencies.
NOTE C--LOANS OUTSTANDING
The College had the following loan balances outstanding at June 30, 2009. The loan programs are
also included in the Schedule of Expenditures of Federal Awards.
CFDA Amount
Cluster/Program Number Outstanding
Federal Perkins Loan Program 84.038 $ 202,810
Nursing Student Loans 9 3.364 35,697
NOTE D--SUBRECIPIENTS
The College provided no federal awards to subrecipients.
SCHEDULE OF STATE AWARDS
NORTHERN OKLAHOMA COLLEGE
June 30, 2009
Contract Contract State
State Grantor/Program Title Number Period Expenditures
Oklahoma Higher Learning Access Program
(OHLAP) N/A 7/1/08-6/30/09 $ 594,564
State Regents Academic Scholarships N/A 7/1/08-6/30/09 11,650
Kaw Nation Avian Project N/A 7/1/08-6/30/09 -
Kaw Nation Wind Energy Project N/A 7/1/08-6/30/09 -
Indian Gaming Management Curriculum N/A 7/1/08-6/30/09 8,492
CSI Grant N/A 7/1/08-6/30/09 4,649
Language for Life N/A 7/1/08-6/30/09 -
Nursing Grant Fund N/A 7/1/08-6/30/09 4 0,481
Process Technology Fund N/A 7/1/08-6/30/09 570
Oklahoma Tuition Aid Grant Program (OTAG) N/A 7/1/08-6/30/09 480,428
Quality Initiative Grant, Institute for
Tribal Leadership N/A 7/1/08-6/30/09 51,851
OCAST - Science N/A 7/1/08-6/30/09 -
Teacher Education and Compensation Helps N/A 7/1/08-6/30/09 131,219
Total state expenditures N/A 7/1/08-6/30/09 $ 1,323,904
40
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
41
Section I--Summary of Auditors’ Results
Financial statements
Type of auditors’ report issued: Unqualified
Internal control over financial reporting:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified that are
not considered to be material weakness(es)? X yes none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs:
 Material weakness(es) identified? yes X no
 Significant deficiency(ies) identified that are
not considered to be material weakness(es)? yes X none reported
Type of auditors' report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of Circular A-133? yes X no
Identification of major programs:
Program CFDA Number
Student Financial Aid Cluster *
* See Schedule of Expenditures of Federal awards at for identification of CFDA numbers.
Dollar threshold used to distinguish between type A and type B programs: $450,792
Auditee qualified as low-risk auditee? X yes no
SCHEDULE OF FINDINGS AND QUESTIONED COSTS--Continued
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
42
Section II--Findings Required to be Reported in Accordance with Government Auditing Standards:
See Finding 2009-01.
Section III--Finding Required to be Reported in Accordance with OMB Circular A-133:
None to report for the June 30, 2009 period.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS--Continued
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
43
FINDING 2009-01
Criteria or Specific Requirement: Management is responsible for establishing and maintaining
effective internal control over financial reporting.
Condition: During the course of performing our audit of the College, we determined that it was
necessary to propose numerous audit adjustments. In addition, the College needed assistance in
preparing its financial statements and related disclosures, in accordance with accounting
principles generally accepted in the United States of America. We believe that the combination of
these deficiencies, when aggregated, represent a significant deficiency in internal controls over
financial reporting.
Context: Timely and accurate financial statements are critical to managing operations and
communicating financial position and results of operations to interested parties.
Effect: Potential material misstatements in the financial statements could occur and not be
prevented or detected in a timely manner.
Cause: Staffing levels may not be sufficient to support timely and accurate financial reporting.
Recommendation: We recommend that the College evaluate the current staffing levels in the
accounting department to determine whether additional resources or training is needed. One
option is to consider the use of a consultant to assist in the year-end financial statement
preparation process.
Views of Responsible Official and Planned Corrective Action:
Over the past years, Northern Oklahoma College has grown substantially with additional
locations and programs. As a result, several departments in the Office of Financial Affairs have
been affected with a considerable increase in workload specifically in the accounting and
reporting functions, human resources, purchasing and accounts payable. Management agrees
that the staffing levels are not adequate in relation to the abundance of work. In light of
economical challenges that our state is facing financially, hiring additional fulltime personnel
may not be feasible at the present time. The use of a consultant to assist in the year-end financial
statement preparation process would be the most cost effective measure available and would be
considered.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
44
FINDING 2008-01
Program CDFA No: 84.063
CFDA Program Title: Federal Pell Grant Program
Deficiency: In our file testing we noted that one student was administratively withdrawn from his
classes for the Spring semester because he never attended class, causing an institutional refund to
the Pell Grant Program. The refund was not returned to the Pell program within the required
time frame of 45 days of the date in which the institution became aware of the change in the
student’s status.
Requirement: In accordance with 34 CFR 668.22, the institution must make the disbursement as
soon the institution becomes aware of the student’s withdraw, but no later than 45 days after the
date of the institution's determination that the student withdrew.
Potential Effects: The institution did not meet the requirement for the timely submission of Pell
data; therefore the students may be more likely to become over-awarded.
Cause of the Condition: Student dropped from full-time to ¾ time during the semester. At that
time the students Pell award was adjusted from a full-time award to a three-fourths time award.
Later in the semester the financial aid department was notified that the student stopped attending
class which caused him to be totally withdrawn. The financial aid department failed to make the
final Pell adjustment to his account as they saw the previous adjustment on his account and
assumed it was the final adjustment.
Recommendation: We recommend the institution assign a financial aid staff member the
responsibility of reviewing the Return of Title IV calculations monthly to determine that the
College disbursed the refunds within the 45 day required timeframe.
Institution Response: The student in question did attend class, but was administratively
withdrawn because he ceased attending. Although the Return to Title IV calculation was
completed within the prescribed timeframe, due to an oversight the Pell adjustment was not
finalized on the student’s account, therefore it was not reported to COD until it was discovered
and adjusted. The Financial Aid Director regularly monitors student withdrawals and performs
R2T4 calculations. These transactions are listed on a spreadsheet which is updated when the
prescribed action has been performed. All student accounts listed on the spreadsheet will be
double checked to be sure that the correct adjustments and returns have been completed and
reported.
Current Status: The planned corrective action has been implemented.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS--Continued
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
45
FINDING 2008-02
Program CFDA No: Title IV Programs – General
CFDA Program Title: Title IV Programs – General
Deficiency: In our file testing we noted that one student’s cost of attendance was over budgeted
by $900. The budget for one semester for a full time, off-campus student at the main location with
one child care credit adjustment is $5,946 ($5,046 cost of education per semester + $900 child care
credit per semester). The institution had budgeted the student with a whole year of child credit
resulting in a yearly budget of $6,846. (5,046 + 1,800). Thus creating an overstatement of $900.
Requirement: Per the 2007-2008 SFA Handbook (vol.5 pg.10), an overpayment exists whenever a
student receives aid that exceeds his or her eligibility for a Title IV program. Overpayments can
be caused by miscalculating cost of attendance. The institution is liable for any amount of a Pell
Grant or FSEOG overpayment that occurred because the institution failed to follow the
requirements in 34 CFR. If the institution makes a FSEOG overpayment in any amount for which
it is liable, you must immediately restore an amount equal to the overpayment plus any
administrative cost allowance claimed on the overpayment.
Potential Effects: The institution miscalculated the cost of attendance; therefore, the students may
be more likely to become over-awarded.
Cause of the Condition: The miscalculation occurred because the counselor processing the
documentation was a new employee who had just started working for NOC and did not have
adequate experience.
Recommendation: We recommend the institution implement a review process that would require
packaged financial aid files to be subsequently reviewed by a second staff member to verify
accuracy and compliance.
Institution Response: Files completed by new counselors are being reviewed during their training
periods for as long as the Financial Aid Director feels is necessary to achieve accuracy. In
addition, as other counselors have occasion to pull a student file for any reason, they will review
the accuracy of the budget calculations.
Current Status: The planned corrective action has been implemented.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS--Continued
NORTHERN OKLAHOMA COLLEGE
Year Ended June 30, 2009
46
FINDING 2008-03
Program CFDA No: 84.007
CFDA Program Title: Federal Family Education Loan Program
Deficiency: All fall gradate students tested for proper NSLDS status changes were reported to the
Student Status Clearing House within a period of 75 days exceeding the requirements period of
60days. Fall semester graduate status become effective December 14, 2007, the status reports were
sent to the Student Status Clearing House on February 27, 2008.
Requirement: In accordance with 34 CFR 682.610, the institution must certify information and
return the Roster file within 60 days of receiving it. Changes in enrollment to less than half time,
graduated, or withdrawn must be reported within 60 days.
Potential Effects: Incorrect reporting of status changes results in unreliable data in the National
Student Loan Data System. This system is used to determine repayment dates, deferments, grace
periods, and future loans. This could affect the calculation or decisions involving the items listed
above.
Cause of the Condition: The College requires all graduate students to be verified by the Director
of Student Affairs before the Student Status Report can be sent to the Clearinghouse. The
verification process for the Fall 2007 semester was more time consuming and that affected the
timing for the filing of the Student Status Reports.
Recommendation: We recommend that the I