OMB Circular A-133 Reporting Package. Saginaw Valley State University. Year ended June 30, 2010

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1 OMB Circular A-133 Reporting Package Saginaw Valley State University Year ended June 30, 2010

2 Saginaw Valley State University OMB Circular A-133 Reporting Package Year ended June 30, 2010 Audited Financial Statements and Other Financial Information (Including the Schedule of Expenditures of Federal Awards)... i Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Independent Auditors Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings... 33

3 Audited Financial Statements and Other Financial Information Saginaw Valley State University Years ended June 30, 2010 and 2009 with Report of Independent Auditors

4 Saginaw Valley State University Audited Financial Statements and Other Financial Information Years ended June 30, 2010 and 2009 Table of Contents Required Supplementary Information Management s Discussion and Analysis... i Report of Independent Auditors... 1 Financial Statements Statements of Net Assets... 2 Statements of Revenues, Expenses, and Changes in Net Assets... 3 Statements of Cash Flows... 4 Notes to Financial Statements... 6 Other Financial Information Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards... 26

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7 Total Net Assets Unrestricted 17.6% Expendable Restricted 1% Invested In Capital Assets, Net of Related Debt 81.4% iii

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9 Total Revenue Other Revenue 9.9% Nonoperating Revenue 29.6% Operating Revenue 60.5% v

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13 ANDREWS HOOPER & PAVLIK P.L.C. Certified Public Accountants Report of Independent Auditors Board of Control Saginaw Valley State University We have audited the accompanying financial statements of Saginaw Valley State University, a component unit of the State of Michigan as of and for the years ended June 30, 2010 and 2009 and Saginaw Valley State University Foundation, a discretely presented component unit of the University, as of and for the years ended June 30, 2010 and These financial statements are the responsibility of the University s administration. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the administration, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Saginaw Valley State University and its discretely presented component unit, Saginaw Valley State University Foundation as of June 30, 2010 and 2009, and the changes in their financial position and Saginaw Valley State University s cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated August 20, 2010 on our consideration of Saginaw Valley State University s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report when considering the results of our audit Gratiot Saginaw, Michigan ph fx

14 The Management s Discussion and Analysis (MD&A) on pages i to viii is not a required part of the basic financial statements but is supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this supplemental information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements of Saginaw Valley State University and its discretely presented component unit, Saginaw Valley State University Foundation, taken as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. Saginaw, Michigan August 20, 2010 (continued)

15 SAGINAW VALLEY STATE UNIVERSITY STATEMENTS OF NET ASSETS June 30, 2010 June 30, 2009 Component Unit Component Unit SVSU SVSU Foundation SVSU SVSU Foundation ASSETS Current Assets Cash and cash equivalents $ 41,905,892 $ 2,154,582 $ 34,699,345 $ 3,002,304 Short-term investments 54,590 52,385 Accounts receivable, net 18,031, ,995 2,271,811 1,755,331 State appropriations receivable - operations 5,038,200 5,207,236 State appropriations receivable - charter schools 11,452,370 8,516,517 Inventories and prepaid expenses 2,966,830 2,941,462 Notes receivable, net 6,171 6,527 Total current assets 79,400,660 2,918,167 53,642,898 4,810,020 Noncurrent Assets Cash and cash equivalents, restricted 53,656 60,295 Notes receivable, net 12,342 13,252 Accounts receivable, net 3,150,574 2,829,776 Endowment investments 35,399,197 29,945,211 Other long-term investments 192,879 7,372,663 Capital assets, net 283,694, ,157,132 Total noncurrent assets 283,900,187 38,603, ,543,047 32,835,282 Total assets 363,300,847 41,521, ,185,945 37,645,302 LIABILITIES Current Liabilities Accounts payable and accrued liabilities 8,535, ,461 7,284, ,159 Deferred revenues 6,924,112 5,272,200 Deposits 10,109,900 7,317,323 Long-term liabilities - current portion 4,741,995 2,761,757 Total current liabilities 30,311, ,461 22,635, ,159 Noncurrent Liabilities Deferred revenues 1,440,000 Long-term liabilities, net of current portion 129,791, ,304,808 Total noncurrent liabilities 131,231, ,304,808 - Total liabilities 161,542, , ,940, ,159 NET ASSETS Invested in capital assets, net of related debt 164,240, ,346,587 Nonexpendable Restricted Scholarships 13,418,816 11,771,553 Endowed chairs 11,423,099 11,423,099 Other 12,134,722 12,673,750 Expendable Restricted Capital 50,000 87,000 Scholarships and fellowships 844,869 50, , ,633 Research 65,888 65,355 Instructional department use 309, ,303 Loans 2,503 4,089 Other 862, , , ,957 Unrestricted 35,431,970 3,890,338 32,119, ,151 Total net assets $ 201,758,300 $ 41,270,133 $ 180,245,463 $ 37,400,143 See notes to financial statements 2

16 SAGINAW VALLEY STATE UNIVERSITY STATEMENTS OF REVENUES, EXPENSES, AND CHANGE IN NET ASSETS For the year ended June 30, 2010 For the year ended June 30, 2009 Component Unit Component Unit REVENUES SVSU SVSU Foundation SVSU SVSU Foundation Operating revenues Student tuition and fees $ 71,099,791 $ 62,340,054 Less: Scholarship allowances (13,266,292) (9,474,709) 57,833,499 52,865,345 Federal grants and contracts 6,251,247 5,313,983 State and local grants and contracts 1,074,776 1,090,453 Gifts $ 1,861,574 $ 2,827,886 Sales and services of educational departments 4,368,138 3,692,711 Auxiliary enterprises 20,784,784 18,630,057 Less: Scholarship allowances (3,163,698) (2,236,312) 17,621,086 16,393,745 Other operating revenues 2,402,582 2,264,439 Total operating revenues 89,551,328 1,861,574 81,620,676 2,827,886 EXPENSES Operating expenses Educational and general Instruction 38,864,357 37,333,093 Research 796, ,643 Public service 2,626,286 2,407,537 Academic support 14,919,914 14,041,945 Student services 6,188,969 5,701,201 Institutional support 12,452, ,416 11,878, ,182 Operations and maintenance of plant 11,249,996 11,574,500 Depreciation 11,758,730 11,322,924 Student aid 9,011,043 6,346,089 Auxiliary enterprises 13,159,672 12,347,458 Total operating expenses 121,028, , ,641, ,182 Operating income (loss) (31,476,902) 941,158 (32,020,534) 1,996,704 NONOPERATING REVENUES (EXPENSES) State appropriations 27,710,100 28,639,800 Federal grant - State fiscal stabilization fund 807,600 Federal Pell Grant Program 12,935,067 7,788,071 Gifts 1,915,456 (1,915,456) 1,263,805 (1,263,805) Investment income, net 530,035 3,815,138 (427,961) (6,645,916) Interest on capital asset-related debt (5,520,068) (5,458,607) Net nonoperating revenues (expenses) 38,378,190 1,899,682 31,805,108 (7,909,721) Income (loss) before other revenues (expenses) 6,901,288 2,840,840 (215,426) (5,913,017) Capital appropriations 14,532, ,242 Additions to permanent endowments 1,108,235 1,074,162 Capital grants and gifts 79,085 (79,085) 100,828 (100,828) Total other revenues (expenses) 14,611,549 1,029, , ,334 Increase (decrease) in net assets 21,512,837 3,869, ,644 (4,939,683) Net assets - beginning of year 180,245,463 37,400, ,092,819 42,339,826 Net assets - end of year $ 201,758,300 $ 41,270,133 $ 180,245,463 $ 37,400,143 See notes to financial statements 3

17 SAGINAW VALLEY STATE UNIVERSITY STATEMENTS OF CASH FLOWS For the years ended June 30, Cash Flows from Operating Activities Student tuition and fees $ 57,827,386 $ 52,743,269 Grants and contracts 6,680,751 6,257,770 Payments to suppliers (24,911,754) (24,922,651) Payments for utilities (3,561,155) (3,799,741) Payments to employees (53,160,201) (51,191,039) Payments for benefits (16,947,047) (15,598,212) Payments for scholarships and fellowships (9,377,500) (6,482,211) Federal share of Perkins loans (10,804) (16,343) Collection of loans to students 1,266 16,033 Auxiliary enterprises charges 17,216,919 15,937,099 Sales and services 5,934,922 3,893,304 Other receipts 2,402,582 2,264,439 Net cash used by operating activities (17,904,635) (20,898,283) Cash Flows from Noncapital Financing Activities State appropriations 27,879,136 28,588,236 Federal grant - State fiscal stabilization fund 807,600 Federal Pell Grant Program 12,815,291 7,813,855 Federal Direct Lending receipts 53,031,298 42,577,827 Federal Direct Lending disbursements (53,031,298) (42,577,827) Gifts 1,817,436 1,449,560 Net cash provided by noncapital financing activities 43,319,463 37,851,651 Cash Flows from Capital Financing Activities Capital appropriations 48, ,537 Capital grants and gifts received 79, ,828 Principal paid on capital debt (22,440,000) (2,235,000) Proceeds from capital debt 29,590,000 12,555,000 Proceeds from capital debt premium 1,471,071 Interest paid on capital debt and related costs (6,282,515) (5,330,724) Purchase of capital assets (28,384,010) (25,223,682) Net cash used by capital financing activities (25,918,100) (19,796,041) Cash Flows from Investing Activities Interest on investments 4, ,952 Purchase of investments (6,368,926) Proceeds from redemption of investments 7,705,383 3,270,718 Net cash provided (used) by investing activities 7,709,819 (2,831,256) Net increase (decrease) in cash and cash equivalents 7,206,547 (5,673,929) Cash and cash equivalents - beginning of year 34,699,345 40,373,274 Cash and cash equivalents - end of year $ 41,905,892 $ 34,699,345 See notes to financial statements 4

18 SAGINAW VALLEY STATE UNIVERSITY STATEMENTS OF CASH FLOWS - CONTINUED Reconciliation of operating loss to net cash used by operating activities For the years ended June 30, Operating loss $ (31,476,902) $ (32,020,534) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation 11,758,730 11,322,924 Changes in assets and liabilities: Accounts receivable, net (3,993,248) 3,565,878 Inventories and prepaid expenses 184,906 (52,318) Notes receivable, net 1,266 16,033 Accounts payable and accrued liabilities 858,097 (50,657) Deferred revenues 1,711,903 4,419 Deposits 2,792,577 (4,095,092) Compensated absences 268, ,407 Student loans - federal (10,804) (16,343) Net cash used by operating activities $ (17,904,635) $ (20,898,283) See notes to financial statements 5

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37 Saginaw Valley State University Schedule of Expenditures of Federal Awards Year Ended June 30, 2010 Federal Agency Or Federal / Pass Through Grantor CFDA Pass Through Federal Program Title Number Grant Number Expenditures Student Financial Assistance Cluster (Notes 1 and 4) : U.S. Department of Education Federal Supplemental Educational Opportunity Grant Program E-P007A $ 158,551 Federal Work-Study Program E-P033A ,811 Federal Work-Study Program (ARRA) E-P033A ,720 Federal Pell Grant Program (Note 3) E-P063P ,935,067 Federal Academic Competitiveness Grant P375A ,263 Federal SMART Grant P376S ,500 TEACH Grant P379T ,540 Loans and Loan Guarantees-Federal Direct Loan Program (Note 2) ,031,298 US Department of Health and Human Services Passed through Health Resources and Services Administration (HRSA) Scholarships for Disadvantaged Students (ARRA) T0AHP15731RP 12,323 Scholarships for Disadvantaged Students T08HP13290AO 28,104 Total Student Financial Assistance 67,608,177 U.S. Department of Education Direct Programs: SVSU's Strengthening Institutions Project Year A P031A ,504 SVSU's Strengthening Institutions Project Year A P031A ,454 SVSU Special Education Preservice Reform & Induction T H325T ,223 Total Direct Programs 493,181 Passed through Michigan Department of Energy, Labor & Economic Growth Michigan Gear Up/College Day Program 08/ S Michigan Gear Up/College Day Program 09/ S ,932 Gear Up Scholarship S P334S ,415 Total passed through MI Department of Energy, Labor & Economic Growth 53,546 Passed through Michigan Department of Education MSP Teacher Leadership Collaborative B MSPF2006 2,342,114 Includes amounts passed through to the following subrecipients: Grand Valley State University $ 96,303 The Regents of The University of Michigan - Ann Arbor $103,427 The Regents of The University of Michigan - Dearborn $459,729 Preparing Teachers for the Michigan Merit Social Studies Curriculum B ,910 Middle School Mathemathics Partnership for Algebra B ,344 Middle and High School Partnership for Earth Science B ,758 Algebraic Thinking Across Grades B ,004 Improving Teacher Quality, Title II Part A(3) B ,808 Writing Strategies for Middle and High School Teachers 84367B ,316 Urban Literacy Cadre B ,669 Total Passed Through Michigan Department of Education 2,712,923 Passed through Michigan Department of Management and Budget State Fiscal Stabilization Fund (ARRA) A ,600 Total Passed thru Michigan Department of Management and Budget 807,600 Passed Through University of California: Saginaw Bay Writing Project A 94-MI05 46,000 Saginaw Bay Writing Project Year 3 Mini Grant A 94-MI05 5,000 Saginaw Bay Writing Project - FY A 94-MI05 8,665 Saginaw Bay Writing Project - FY10-11 (Mini Grant) A 94-MI Total Passed Through University of California 59,984 U.S. Department of Commerce Passed Through Industrial Technology Institute: CMI/MMTC Admin NANB5H1147N 158,750 Total Passed Through Industrial Technology Institute 158,750 24

38 Saginaw Valley State University Schedule of Expenditures of Federal Awards Year Ended June 30, 2010 Federal Agency Or Federal / Pass Through Grantor CFDA Pass Through Federal Program Title Number Grant Number Expenditures U.S. Department of Defense Passed Through Office of Naval Research: Solidification Based Grain Refinement in Steels N $ 74,495 Total Passed Through Office of Naval Research 74,495 U.S. Department of Labor Passed Through Michigan State University: WIRED - Workforce Innovation Regional Economic Development ,325 Total Passed Through Michigan State University 746,325 National Aeronautics and Space Administration Passed Through University of Michigan: Michigan Space Grant NGT Study of Our Planets 43.UNKNOWN NNG05GH68H 2,500 Total Passed Through University of Michigan 2,592 National Endowment for the Humanities Direct Programs: MF Sculpture Museum Conservation Assessment of Drawings PG ,000 Total Direct Programs 6,000 Passed through Michigan Council for Arts and Cultural Affairs Regional Biennial Juried Sculpture Exhibition OP0138PS 1,179 Total Passed through Michigan Council for Arts and Cultural Affairs 1,179 Passed through Michigan Humanities Council Lost Boys of Sudan Q Alden B. Dow/Marshall M. Fredericks Mix Media Exhibit Planning Project Q034-09P 516 Total Passed Through Michigan Humanities Council 1,016 Institute of Museum and Library Services Passed through MFA: Museums for America MA ,813 Total passed through MFA: 26,813 National Science Foundation Direct Programs: MRI: Acquisition of a Transmission Electron Microscope Total Direct Programs 192 US Department of Health and Human Services Passed through Health Resources and Services Administration (HRSA) Nursing Workforce Diversity (NWD) Program D19HP14622AO 218,092 Advanced Education Nursing Traineeship A10HP12800AO 38,644 Total Passed Through Health Resources and Services Administration (HRSA) 256,736 Corporation For National and Community Service Passed through Michigan Campus Compact: CHS/SVSU Writing Academy BF Total Passed Through Michigan Campus Compact 253 Total Expenditures of Federal Awards $ 73,009,762 See Notes to Schedule of Expenditures of Federal Awards 25

39 Saginaw Valley State University Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2010 Note 1: Note 2: As defined in OMB Circular A-133, Student Financial Assistance programs are considered to be clusters of programs and, accordingly, have been classified as one program for testing purposes. Student Financial Assistance is defined as a major program. Also, the entire Cluster was excluded when determining the dollar threshold for major program determination. Under the William D. Ford Federal Direct Loan Program, students and parents borrow funds directly from the federal government; the University is responsible for verifying student eligibility, electronically transmitting the loan records to the federal processor and distributing the loan funds directly to the student account or parent borrower. For the year ended June 30, 2010, Direct Student Loans totaled $53,031,298 ($22,462,950 subsidized, $26,086,684 unsubsidized, $4,430,774 PLUS, and $50,890 direct graduate). Note 3: The Pell grant expenditures are the actual amounts incurred through June 30, The University will process amendments subsequent to year end to finalize the award year. Amounts reported do not include an administrative cost allowance of $16,530. Note 4: As of July 1, 1996, Saginaw Valley State University terminated participation in the Federal Perkins Loan Program (CFDA Number ). The University will retain and administer the loan portfolio until all outstanding loans are liquidated. There was $26,513 in loans outstanding as of June 30, Additionally, the University must return to the United States Department of Education annually the Federal share of cash-on-hand as of June 30. Federal cash-on-hand as of June 30, 2010 was returned in July The University utilizes the services of Campus Partners to administer the repayment of Perkins loans and perform certain due diligence procedures. The most recent available report on Campus Partners compliance and internal controls was received and reviewed. No significant items of noncompliance or control weaknesses were noted. Note 5: The accompanying Schedule of Expenditures of Federal Awards has been prepared on the accrual basis with the exception of grants, which are generally recorded when received or when billable. 26

40 ANDREWS HOOPER & PAVLIK P.L.C. Certified Public Accountants Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Board of Control Saginaw Valley State University We have audited the financial statements of Saginaw Valley State University (University) and its discretely presented component unit, Saginaw Valley State University Foundation, as of and for the year ended June 30, 2010, and have issued our report thereon dated August 20, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the University's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the University s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the University s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards Gratiot Saginaw, Michigan ph fx

41 We noted certain matters that we reported to management of the University in a separate letter dated August 20, This report is intended solely for the information and use of the Board of Control, management of the University, and federal awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. Saginaw, Michigan August 20,

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

43 Internal Control Over Compliance The management of the University is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal programs. In planning and performing our audit, we considered the University s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the University s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Board of Control and management of Saginaw Valley State University and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Saginaw, Michigan August 20,

44 Saginaw Valley State University Schedule of Findings and Questioned Costs Year ended June 30, 2010 Section I Summary of Auditor s Results Financial Statements Type of auditor s report issued: Unqualified Internal control over financial reporting: Material weakness identified? Yes X No Significant deficiencies identified not considered to be material weakness? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: Material weakness identified? Yes X No Significant deficiencies identified not considered to be material weakness? Yes X None reported Type of auditor s report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section.510(a)? Yes X No Identification of major programs: CFDA Number Name of Cluster and Federal Programs Student Financial Assistance: Federal Supplemental Educational Opportunity Grant Program Federal Work-Study Program Federal Perkins Loan Program Federal Pell Grant Program Federal Academic Competitiveness Grant Federal SMART Grant Federal Direct Loan Program TEACH Grant Scholarships for Disadvantaged Students Scholarships for Disadvantaged Students (ARRA) A Strengthening Institutions Passed through Michigan State University: WIRED Workforce Innovation Regional Economic Development A Passed through Michigan Department of Management and Budget: State Fiscal Stabilization Fund (ARRA) Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? X Yes No 31

45 Saginaw Valley State University Schedule of Findings and Questioned Costs (continued) Section II Financial Statements Findings No matters were reported. Section III Federal Award Findings and Questioned Costs No matters were reported. 32

46 Saginaw Valley State University Summary Schedule of Prior Audit Findings Year ended June 30, 2010 No matters were reported. 33