ECA Final Statements 2023.pdf

MIDLANDS TECHNICAL COLLEGE ENTERPRISE CAMPUS AUTHORITY

AUDITED FINANCIAL STATEMENTS

YEAR ENDED JUNE 30, 2023

WITH

INDEPENDENT AUDITORS’ REPORT

WITH

CONTENTS

Independent Auditors’ Report

Audited Financial Statements

Statement of Net Position Statement of Revenue, Expenses and Changes in Net Position Statement of Cash Flows Notes to Financial Statements

Independent Auditors’ Report on Internal Control

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

THE BRITTINGHAM GROUP, L.L.P.

CERTIFIED PUBLIC ACCOUNTANTS

501 STATE STREET

POST OFFICE BOX 5949

WEST COLUMBIA, SOUTH CAROLINA 29171

PHONE: (803) 739-3090

FAX: (803) 791-0834

Board of Directors Midlands Technical College Enterprise Campus Authority 151 Powell Road Columbia, South Carolina 29202

Report on the Audit of the Financial Statements

Opinions We have audited the accompanying financial statements of the business-type activities of the Midlands Technical College Enterprise Campus Authority (the “Authority”), a component unit of Midlands Technical College, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the Authority, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions 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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Other Matters Management has omitted Management’s Discussion and Analysis, that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 11, 2023, on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely 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 effectiveness of the Authority’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.

West Columbia, South Carolina September 11, 2023

PROPRIETARY FUND TYPE - ENTERPRISE

STATEMENT OF NET POSITION

JUNE 30, 2023

Assets Due from Midlands Technical College 1,673,927$ Other receivables 1,030 Non-depreciable capital assets 2,427,110 Depreciable capital assets, net of accumulated depreciation 2,963,241

Total assets 7,065,308$

Liabilities and Net Position

Liabilities:

Accounts payable 9,254$ Deferred revenue 25,000

Total liabilities 34,254

Net position:

Net invested in capital assets 5,390,351 Unrestricted 1,640,703

Total net position 7,031,054 Total liabilities and net position 7,065,308$

See accompanying notes.

STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION

YEAR ENDED JUNE 30, 2023

Revenue Contract revenue, net of adjustments 159,134$

Total revenues 159,134

Expenses Depreciation 178,375 Other contractual services 52,410 Insurance 18,995 Miscellaneous 14,709 Travel 8,293 Office supplies 3,455

Total expenses 276,237

Change in net position (117,103)

Net position, beginning of year 7,148,157 Net position, end of year 7,031,054$

STATEMENT OF CASH FLOWS

YEAR ENDED JUNE 30, 2023

Cash flows from operating activities:

Cash received from customers and advances from Midlands Technical College $ 97,862 Cash paid to service providers and suppliers (97,862)

Net cash from operating activities -

Net change in cash - Cash, beginning of year - Cash, end of year $ -

Reconciliation of change in net position to cash flows from operating activities:

Change in net position (117,103)$ Adjustments to reconcile change in net position to net cash flows from operating activities:

Depreciation expense 178,375 Changes in operating assets and liabilities:

Due from Midlands Technical College (64,102) Other receivables 306 Accounts payable 6,959 Deferred revenue (4,435)

Net cash from operating activities $ -

PROPRIETARY FUND TYPE – ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2023

1. Summary of Significant Accounting Policies

The Midlands Technical College Enterprise Campus Authority (the “Authority”) was established in 2004 by S. C. Act 200, codified as sub-article 3, Article 20, Chapter 53, Title 59 of the 1976 South Carolina Code of Laws, as amended. The Authority is considered a component unit of Midlands Technical College. The Authority was established to provide for the management, development, and operation of the Enterprise Campus of Midlands Technical College, located on the Northeast Campus.

The Board of the Midlands Technical College Enterprise Campus Authority consists of the members of the Midlands Technical College Commission, all serving ex-officio.

Fund Accounting Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain functions or activities. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, expenses, and transfers.

Resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Basis of Presentation The financial statements were prepared using the fund accounting principles per the Government Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. The Authority used only one fund type, proprietary, within which it maintains an enterprise fund. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services on a continuing basis be financed or recovered primarily through user charges.

Enterprise funds are also used when the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Basis of Accounting The accrual basis of accounting is used for proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.

-CONTINUED-

1. Summary of Significant Accounting Policies (continued)

Basis of Accounting The accrual basis of accounting is used for proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.

Accounts Receivable

Accounts receivable for the Authority consists primarily of contractual services.

Accounts receivable are recorded net of estimated uncollectible amounts.

Capital Assets

Capital assets are recorded at cost at the date of acquisition or fair market value at the date of donation in the case of gifts. The Authority follows capitalization guidelines established by the State of South Carolina. All land is capitalized, regardless of cost.

Qualifying improvements that rest in or on the land itself are recorded as depreciable land improvements. Major additions and renovations and other improvements that add to the usable space, prepare existing buildings for new uses, or extend the useful life of an existing building are capitalized. The Authority capitalizes movable personal property with a unit value in excess of $5,000 and a useful life in excess of two years and depreciable land improvements, buildings and improvements, and intangible assets costing in excess of $100,000.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 15 to 50 years for buildings and improvements and land improvements and 2 to 25 years for machinery, equipment, and vehicles. A full year of depreciation is taken the year the asset is placed in service and no depreciation is taken in the year of disposition.

Use of 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 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.

2. Capital Assets

Beginning Ending Balance Balance

July 1, 2022 Increases Decreases June 30, 2023

Capital assets not being depreciated:

Land and improvements 2,200,075$ -$ -$ 2,200,075$ Intangibles 227,035 - - 227,035

Total capital assets not being depreciated 2,427,110 - - 2,427,110

Other capital assets:

Buildings and improvements 4,509,180 - - 4,509,180 Depreciable land improvements 983,512 - - 983,512

Total other capital assets at historical costs 5,492,692 - - 5,492,692

Less: accumulated depreciation for:

Buildings and improvements (1,578,213) (112,730) - (1,690,943) Depreciable land improvements (772,863) (65,645) - (838,508)

Total accumulated depreciation (2,351,076) (178,375) - (2,529,451) Other capital assets, net 3,141,616 (178,375) - 2,963,241

Capital assets, net 5,568,726$ (178,375)$ -$ 5,390,351$

3. Related Party Transactions

The Authority has certain transactions with Midlands Technical College.

Services received at no cost from Midlands Technical College include processing certain accounting records, check preparation and banking functions.

Midlands Technical College also provides to the Authority at no cost, office space, personnel review, record keeping, disbursement processing, insurance coverage and other centralized functions. The amount of 2023 expenditures applicable to these services is not readily determinable.

At June 30, 2023, the Authority is owed $1,673,927 from the College.

4. Risk Management

The Authority is exposed to various risks of loss and maintains State insurance coverage for known risks. Management believes such coverage is sufficient to preclude any significant uninsured losses to the Authority. The Authority has not had any claims since inception.

4. Risk Management (continued)

The Authority pays insurance premiums to certain State agencies to cover risks that may occur in normal operations. The insurers promise to pay to or on behalf of the insured for covered premium losses sustained during the policy period in accord with the insurance policy and benefit program limits. Several State funds accumulate assets and the State itself assumes substantially all risks for the following:

1. Claims of covered employees for health and dental insurance benefits

(Office of Insurance Services); and

2. Claims of covered public employees for long-term disability and group-life insurance benefits (Office of Insurance Services).

3. Claims of covered public employees for workers' compensation insurance benefits (State Accident Fund).

4. Claims of covered public employees for unemployment compensation insurance benefits (Department of Workforce and Employment).

The Authority and other entities pay premiums to the State's Insurance Reserve Fund (IRF) which issues policies, accumulates assets to cover the risks of loss and pays claims incurred for covered losses related to the following Authority assets, activities, and/or events.

• Torts

• Theft, damage to, or destruction of assets

• Natural disasters

The IRF is a self-insurer and purchases reinsurance to obtain certain services and specialized coverage and to limit losses. The IRF's rates are determined actuarially.

State agencies are the primary participants in the State's Health and Disability Insurance Fund and in the IRF.

The Authority has not recorded any estimated losses or expenditures related to the deductible or policy limits because there is no evidence of asset impairment or other information to indicate a loss should be recorded.

5. Subsequent events

Subsequent events were evaluated through September 11, 2023, which is the date the financial statements were available for issue.

THE BRITTINGHAM GROUP, L.L.P.

CERTIFIED PUBLIC ACCOUNTANTS

501 STATE STREET

POST OFFICE BOX 5949

WEST COLUMBIA, SOUTH CAROLINA 29171

PHONE: (803) 739-3090

FAX: (803) 791-0834

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 Directors Midlands Technical College Enterprise Campus Authority 151 Powell Road Columbia, South Carolina 29202

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities, of the Midlands Technical College Enterprise Campus Authority (the “Authority”), a component unit of Midlands Technical College as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated September 11, 2023.

Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Authority’s internal control.

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

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether Authority’s financial statements are free from 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.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

West Columbia, South Carolina September 11, 2023