consolidated financial statements and omb...

EMORY UNIVERSITY Atlanta, Georgia

Consolidated Financial Statements and OMB Circular A-133 Reports

August 31, 2003

(With Independent Auditors’ Reports Thereon)

EMORY UNIVERSITY

Consolidated Financial Statements and OMB Circular A-133 Reports

Table of Contents

Page

Independent Auditors’ Report 1

Consolidated Financial Statements – Years ended August 31, 2003 and 2002 2

Schedule of Expenditures of Federal Awards – Year ended August 31, 2003 23

Schedule of Expenditures of State of Georgia Awards – Year ended August 31, 2003 34

Notes to Schedule of Expenditures of Federal Awards and Schedule of Expenditures of State of Georgia Awards 36

Independent Auditors’ Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 39

Independent Auditors’ Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 41

Schedule of Findings and Questioned Costs 43

Independent Auditors’ Report

The Board of Trustees Emory University:

We have audited the accompanying consolidated statements of financial position of Emory University (the University) as of August 31, 2003 and 2002, and the related consolidated statements of activities and cash flows for the years then ended. These consolidated financial statements and the schedules referred to below are the responsibility of the University’s management. Our responsibility is to express an opinion on these consolidated 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 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. 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 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Emory University as of August 31, 2003 and 2002, and the changes in its net assets and its 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 November 21, 2003 on our consideration of the University’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 in considering the results of our audit.

The accompanying Schedule of Expenditures of Federal Awards for the year ended August 31, 2003 is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the consolidated financial statements. The accompanying Schedule of Expenditures of State of Georgia Awards for the year ended August 31, 2003 is also presented for purposes of additional analysis and is also not a required part of the consolidated financial statements. Such information in these schedules has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole.

November 21, 2003

KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308

KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative.

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

SCHEDULE OF EXPENDITURES OF STATE OF GEORGIA AWARDS

OMB CIRCULAR A-133 REPORTS

EMORY UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended August 31, 2003

CFDA/ FederalContract Number Expenditures

MAJOR PROGRAMS:

Student Financial Assistance Cluster:

U.S. Department of Education:

Federal Work-Study 84.033 $ 1,624,757 Federal Supplemental Educational Opportunity Grants 84.007 2,133,724 Federal Pell Grant Program 84.063 2,966,917 Federal Family Education Loan Program 84.032 62,957,020 Federal Perkins Loan Program 84.038 3,308,540

Total U.S. Department of Education 72,990,958

U.S. Department of Health and Human Services:

Primary Care Loan Program 93.342 58,868 Undergraduate and Graduate Nursing Student Loan Programs 93.364 280,914

Total U.S. Department of Health and Human Services 339,782

Total Student Financial Assistance Cluster 73,330,740

Research and Development Cluster:

U.S. Department of Health and Human Services:

Fogerty International Center 93.RD 602,136 Centers for Disease Control 93.RD 6,521,419 National Institute of General Medical Sciences 93.RD 11,810,135 National Institute of Child Health and Human Development 93.RD 11,404,068 Health Resources and Services Administration 93.RD 2,641,062 National Library of Medicine 93.RD 312,644 National Eye Institute 93.RD 4,168,431 National Institute on Aging 93.RD 2,445,745 National Institute of Allergy and Infectious Diseases 93.RD 25,664,659 National Center for Research Resources 93.RD 20,489,988 National Institute of Neurological Disorders 93.RD 20,275,986 National Heart, Lung and Blood Institute 93.RD 22,500,833 National Institute of Diabetes and Digestive and Kidney Diseases 93.RD 9,628,061 National Institute of Arthritis and Musculoskeletal and Skin Diseases 93.RD 3,453,925 National Cancer Institute 93.RD 12,819,818 National Institute of Nursing Research 93.RD 2,257,806

National Institutes of Health:National Institute of Mental Health 93.RD 18,905,798 National Institute on Alcohol Abuse and Alcoholism 93.RD 1,737,829 National Institute on Drug Abuse 93.RD 8,978,239 National Institutes of Health 93.RD 4,487,575

Total National Institutes of Health 34,109,441

(Continued)

Federal Grantor/Pass-Through Grantor/Program Title

See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.

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Substance Abuse and Mental Health Services Administration 93.RD $ 1,454,666 National Institute on Deafness and Other Communication Disorders 93.RD 1,176,259 National Institute of Dental Research 93.RD 1,558,604 National Institute of Environmental Health Sciences 93.RD 3,270,863 Food and Drug Administration 93.RD 89,058 Passed through State of Georgia Department of Human Resources 93.RD 1,154,843 Other DHHS 93.RD 312,307 Passed through non-governmental organizations 93.RD 8,084

Total U.S. Department of Health and Human Services 200,130,841

U.S. Department of Education 84.RD 176,735 U.S. Department of Energy 81.RD 1,431,003 Environmental Protection Agency 66.RD 802,455 U.S. Department of Veterans Affairs 64.RD 115,958 National Science Foundation 47.RD 9,840,323 National Endowment for the Humanities 45.RD 1,800 National Aeronautics and Space Administration 43.RD 149,126 U.S. Department of State 19.RD 10,166 U.S. Department of Justice 16.RD 96,496 U.S. Department of Defense 12.RD 3,259,447 U.S. Department of Commerce 11.RD 25,000 U.S. Department of Agriculture 10.RD 417,461 Office of National Drug Control Policy 07.RD 28,365 U.S. Agency for International Development 02.RD (12,032)

Total Research and Development 216,473,144

Total Major Federal Programs 289,803,884

NON-MAJOR PROGRAMS:

Consolidated Health Centers Cluster:

U.S. Department of Health and Human Services - Health Resources and Services Administration:

Coan Middle School Health Clinic 93.151 165,305 Whitefoord Elementary School Health Clinic 93.151 159,618 Coan Middle School Health-Oral Health-New Access 93.151 84,133

Total Consolidated Health Centers Cluster 409,056

Child Care Cluster:

U.S. Department of Health and Human Services - passedthrough State of Georgia Department of Human Resources:

Training and Technical Assistance for Parents and Providers 93.575 43,684

(Continued)


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Other Non-Major Programs:

U.S. Department of Health and Human Services:Office of the Assistant Secretary of Health:

Compasion Capital Fund Demonstration Program 93.XX1 $ 1,402,407 Regional Training Center for Family Planning-General Training 93.260 1,570,435

Total Office of the Assistant Secretary of Health 2,972,842

Fogerty International Center:Emory AIDS International Training and Research Program 93.989 513,077 International Training and Research in EOH 93.989 109,836

Total Fogerty International Center 622,913

National Center for Research Resources:Mechanism and Function of Protein Degradation 93.989 (288) Emory Mentored Clinical Research Scholar Program 93.333 244,715 Q-TOF Spectometer 93.371 493,815 Wide-Field Decomvolution Microscopy System 93.XX2 316,943

Total National Center for Research Resources 1,055,185

National Resources and Services Administration:Public Health Traineeships 93.964 38,400 Faculty Development Program 93.895 145,822 Preparing PAS: Providing Socially Responsible Healthcare 93.886 165,531 Residency Training in GIM and /or GP 93.884 174,769 Geriatric Nursing Knowledge and Experiences in Long Term Care 93.359 22,020 Advanced Education Nursing Traineeship 93.358 88,573 PhD in Nursing Program Training Grant 93.299 176,972 Outpatient Early Intervention Services With Respect to HIV D 93.283 472,132 Women's Health Nurse Practitioner Program-Advanced Education 93.247 332,753 Teen Pregnancy Reduction Innovations Project 93.217 336,288 Psychobiology and Mental Health a Spirit Possession Religion 93.213 32,813 HSRA State Planning Grant 93.256 57,402 National AIDS Education and Training Centers Program 93.145 2,275,389 Renaissance Statewide Initiative to Increase Organ Donation 93.134 56,636 Comprehensive Follow-up and Treatment of Sickle Cell Disease 93.110 85,271 Ryan White HIV/AIDS Reimbursement Program 93.XX3 11,560 MCHB Hemophilia Program 93.XX4 10,910 Whitefoord and Coan School-Based Medical and Dental Clinic 93.XX5 63,012

Total Health Resources and Services Administration 4,546,253

(Continued)


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National Institute of General Medical Sciences:Characterization and Modeling of DCN Neuron Responses 93.960 $ 23,793 Predoctoral Studies in Immunology at Emory University 93.880 21,149 Predoctoral Training Program in Genetics 93.862 181,420 Medical Scientist Training Program 93.859 912,389 Training in Systems and Integrative Biology Neuroscience 93.821 399,006 Emory’s Bioscience Graduate Prep Program for Minorities 93.375 145,936

Total National Institute of General Medical Sciences 1,683,693

Centers for Disease Control:IPA Agreement for Tamera Kuffner 93.944 4,128 Human Immunodeficiency Virus (HIV) Related Applied Research 93.943 82,536 IPA Agreements 93.283 901,231 Graduate Training Program 93.263 146,317 Clinical Trials of Pneumococcal Conjugate Vaccines 93.185 99,141 Certificate Training Program for MCH Epidemiology 93.XX6 188,460 CDC-Kenya Visiting Scholars Program 93.XX7 58,475 Distance Education for Field-Based BD/DD Epidemiologists 93.XX8 5,530 Southern Center of Excellence in Environmental Health 93.XX9 220,510 Emory Public Health Initiative for Professional Preparedness 93.X10 74,572 IPA Agreements 93.X11 539,946 ATPM Fellowship 93.X13 (67) Task Order Proposal (RFTP 2002-T-00357) 93.X14 210,741 Faculty Research Participation Program - ORISE 93.X15 85,841 IPA Agreements 93.X16 1,025,047 Swimming Pool Water Quality, Operation and Maintenance 93.X17 8,474 Clinical Care for CDC Workers with Potential Work Exposure 93.X18 72,839 Is There a Genetic Predisposition to Developing Rheumatoid Arthritis 93.X19 57,939 Validation of Drop-In Based Syndromic Surveillance System 93.X20 10,835 Improving Public Health Systems Performance 93.X21 15,530 Prevention of the Complications of Hemophilia 93.X22 18,521 Epidemiologic and Statistical Consultation 93.X23 27,996 Prospective Evaluation of Bleeding Disorders in Children 93.X24 30,270 IPA Agreements 93.X25 662,685 Human Blood, Blood Products and Other Bodily Fluids 93.X26 266,856 Acquisition of Blood and Blood Products 93.X27 357,327 Southeastern Center for Emerging Biologic Threats Conference 93.X28 13,022 Consultant Agreement 93.X29 14,977 Prevention of the Complications of Hemophilia 93.X30 26,179 Regional Training to Build Capacity 93.X31 98,896 Institute for Public Health and Faith Collaborations 93.X32 415,027 Anthrax Vaccine Research Program 93.X33 571,173 Tuberculosis Trials Consortium 93.X34 138,510 HealthComm Key Updating Project 93.X35 87 IPA Agreements 93.X36 95,370 The Costs of Operating and Maintaining an Urban Immunization 93.268 179

Total Centers for Disease Control 6,545,100

(Continued)


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National Institute of Child Health and Human Development:Training Rehab Scientists: A Multi-Disciplinary Approach 93.929 $ 1,186

National Eye Institute:Multidisciplinary Training in Vision and Research 93.876 83,948 Complications of Age-Related Macular Degeneration Prevention 93.867 602,843 Studies of Ocular Complications of AIDS (SOCA) 93.X37 288,286 The Cornea Donor Study 93.X38 (2,356)

Total National Eye Institute 972,721

National Institute of Allergy and Infectious Diseases:Molecular Mechanisms of Microbial Pathogenesis 93.856 447,188 Training in Immunology and Molecular Pathogenesis 93.855 196,750 Minority Predoctoral Fellowship Program 93.855 35,513 Steroid Withdrawal in Sirolimus and CY Closporine-Treated PRI 93.855 68,155 The Tetramer Core Facility 93.X39 2,636 Niaid Tetramer Facility 93.X40 769,101 Clinical Studies of Therapies for Virus Infections 93.X41 1,134 A Phase 1 Randomized AVA-Controlled Trial 93.X42 35,492 Identification and Mechanistic Investigations of Tolerant 93.X43 28,141 Mixed Chimerism and Renal Allografting 93.X44 32,529

Total National Institute of Allergy and Infectious Diseases 1,616,639

National Institute on Aging:Safety & Efficacy of Vitamin E & Donepezil HCL (Aricept) 93.866 51,527 A Multicenter Trial of Refecoxib and Naproxen in Alzheimer's 93.X45 960 High Dose Supplements to Reduce Homocysteine 93.X46 31 Treating Agitation/Psychosis in Dementia 93.X47 6,134

Total National Institute on Aging 58,652

National Institute of Neurological Disorders:Training in Translational Research in Neurology 93.854 (28,792) Earlier vs Later Levodopa in Parkinson's Disease 93.854 87 Intervention Management of Stroke 93.854 3,378 Effects of Coenzyme Q10 in Early Parkinson's Disease 93.853 (23) Temporal Frequency in Tactile Roughness Perception 93.853 22,081 Localization and Activation of Protease Receptor PAR 1 in 93.853 21,838 Neonatal Optical Non-Invasive Brain Oxygenation Monitor 93.853 15,574 Training in Translational Research in Neurology 93.853 205,322 Neuromodulation of a Rhythmic Network: Electrophysiological 93.853 21,135 Functional Analysis of M4MACHR and EFF1A2 Interaction 93.853 35,272 Carotid Occlusion Surgery Study 93.853 31,508 Analysis of Niemann-Pick C Protein (NPC1) Function 93.853 23,601 Roles of Meta Botropic Glutamate Receptors 93.853 16,155 Siblings with Ischemic Stroke Study 93.853 360

(Continued)


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Ischemic Stroke Genetics Study 93.X48 $ 56,047 Crest: Carotid Revascularization Endarterectomy 93.X49 3,000 Sterotactic Intrastriatal Implantation of Spheramine 93.X50 185,468

Total National Institute of Neurological Disorders 612,011

National Institute of Diabetes, Digestive, and Kidney Diseases:Mortality and Morbidity in Hemodialysis Patients: Full Scale 93.849 (98) Nephrology Institutional Training Grant 93.849 176,353 Symposium for Molecular and Therapeutic Insights 93.849 20,000 Polycystic Kidney Disease Clinical Trial Network-RFA DK 01-0 93.849 115,421 Pathobiology of Mucosal Epithelial 93.848 140,508 Nutritional Sciences and Health 93.848 163,071 Ursodiol-Methotrexate for Primary Biliary Cirrhosis 93.848 22,644 Endocrinology, Metabolism, and Diabetes 93.847 187,347 Diabetes Prevention Trial - Type 1 (DPT-1) 93.847 7,300

Total National Institute of Diabetes, Digestive, and Kidney Diseases 832,546

National Institute of Arthritis and Musculoskeletal and Skin Diseases:NRSA Institutional Training Grant (T32) in Dermatology 93.846 156,269 The Autoimmune Biomarkers Collaborative Network 93.X51 1,600

Total National Institute of Arthritis and Musculoskeletal and Skin Diseases 157,869

National Heart, Lung and Blood Institute:Optimizing Primary Stroke Prevention in Sickle Cell Anemia 93.839 112,406 Prospective Investigation of Pulmonary Embolism Diagnosis I 93.838 (32,132) Research Training in Academic Cardiology 93.837 481,583 Multicenter Study of Hydroxyurea (MSH) Patients' Follow-Up 93.X53 152

Total National Heart, Lung, and Blood Institute 562,009

National Institutes of Health:Project Prevent 93.551 417,472 Influence of Soy Consumption on Menopause in Japan 93.213 22,018 Effectiveness of Outpatient Treatment for PID 93.180 32,547 Purchase of FECNT 93.X54 20,075 Professional Services for Family Planning and Reproductive 93.X55 399 Developing Data to Monitor and Reduce Emergency 93.X56 6,751 Substance Abuse Treatment Needs Assessment and Resource Invent 93.X57 93,497

592,759 National Institute of Mental Health:

HIV/AIDS Clinical Research Training Program 93.282 148,242 Neural Mechanisms of Pair Bonding in Prairie Voles 93.282 19,864 Dopaminergic Mesthalamic System: Anatomy and Physiology 93.282 22,646 Pathways of Glucocorticord Induction in Viral Infection 93.282 22,525 Basal Ganglia Function: Processing by GP Neurons 93.282 10,129 Oxytocin and Social Memory 93.282 170 Economic Anxiety, Childhood Reactivity and Well-being 93.282 23,488

(Continued)


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Effect of Phytoestrogens on Estrogen Dependent Processes 93.282 $ 1,769 V1AR Gene Structure Expression and Social Behavior 93.282 18,864 Mental Health Effects of a Major Stressor in Adolescence 93.282 20,384 Comparative Effectiveness of Anti-Psychotic Medications 93.X58 168,521

Total National Institute of Mental Health 456,602

National Institute on Drug Abuse:Cart and the Dopamine System in the Nucleus Accumbens 93.278 20,472 Psychostimulant-like Effects of Cart Neuropeptides 93.278 33,967 Effects of Clozapine on Glutamate Transmission 93.278 20,562 Ambivalence and Addiction Among Adolescents 93.278 26,828 Combination Pharmacotherapies for Cocaine Addiction 93.278 1,876 A Cysteine Reactive Ligand for the Dopamine Transporter 93.278 1,248 Monoamine Function in Monkeys During Cocaine Use 93.278 171 Cart Peptide Localization in Accumbalan Nigral Pathways 93.278 (85)

Total National Institute on Drug Abuse 105,039

National Institute on Alcohol Abuse and Alcoholism:The Protective Effects of ADH*2 Alleles against Alcholism 93.272 19,859

Total National Institutes of Health 1,174,259

Women's Health Initiative:Vanguard Clinic for Clinical Trial & Observational Study 93.837 1,186,440

National Cancer Institute:Prostate Cancer Prevention Trial 93.399 5,256 ECOG OPS Office Continuation Budget and Other Support 93.395 90,000 Pediatric Oncology Group, Subcontract #8858 U10 93.395 32,150 Radiation Therapy Oncology Group 93.395 10,641 EGOG FSTRF Winship 93.395 84,143 Gynecology and Oncology Group Studies-Various Protocols 93.395 45,779 NSABP Purchased Services Agreement #TFED31-284 93.395 537 Chemoprevention Committee Chair 93.X60 11,790 ACR/RTOG 93.X61 20,755 Contemporary Screening for the Detection of Lung Cancer 93.X62 416,358 Trial of Chop Chemotherapy With or Without Rituximab 93.X63 3,805 Children's Oncology Group 93.X68 172,263 Eastern Cooperative Oncology Group Operations Office 93.395 35,670 ECOG FSTRF Grady 93.395 5,569 ECOG FSTRF VA 93.395 1,576 Role of ELF4F in Breast Cancer 93.398 21,388 Purchased Service Agreement Amend #3-Breast Cancer Prevention 93.399 12,177 Digital vs. Screening - Film Mammography 93.X64 189,910 Radiation Oncology Committee for the Children's Oncology 93.X59 33,559

(Continued)


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EMORY UNIVERSITY





Per Case and Specimen Reimbursement Contract 93.X66 $ 41,531 Fat Reduction, Heart Use, and Benign Breast Disease Risk 93.X65 13,725 A Phase III Multi-Institutional Randomized Study of Immuniza 93.X67 5,712

Total National Cancer Institute 1,254,294

National Institute on Nursing Research:Sleep Patterns of Women at Risk for Preterm Labor 93.361 22,986 Role Change and Adaptation After AMI in Midlife Women 93.361 21,678 Antigen-Specific Memory CD8+T Cells in Pregnancy 93.361 16,649 Practice Variation Among School Health Personnel 93.361 10,520

Total National Institute on Nursing Research 71,833

Substance Abuse and Mental Health Services Administration:Mental Health Care Provider Education in HIV/AIDS Program II 93.230 20,663

National Institute on Deafness and Other Communications Disorders:Neuronal Progenitor Cell Migration in the Forebrain 93.193 20,690

Other U.S. Department of Health and Human Services:HIV/AIDS Mental Health Provider Education and Evaluation 93.X69 33,500 Analytic Methods for Determining Smallpox Control 93.X70 98,959 Local Evaluation and Support for the Heart of Georgia Healthy Start 93.X71 34,424 Credentialing Services for the 17th National Conference 93.X72 19,329 Ryan White Care Act-HIV Emergency Relief Program 93.X73 68,256 Epidemiological and Statistical Consultation:Health Care Quality 93.X74 38,317 IPA Agreements 93.X75 244,737 Divalproex Sodium Therapy for Agitation in Nursing Home 93.X76 3,590 Prospective Huntington At Risk Observation Study 93.X77 5,732 Study of Estuary Syndrome:NC Search Project 93.X78 24,650 Assessment Measures for Alzheimer Disease Primary Prevention 93.X79 18,467 Trial of Simvastatin to Slow the Progression of Alzheimer's 93.X80 4,868 Collaborative Services Agreement-In Affililation 93.918 12,689

Total Other U.S. Department of Health and Human Services 607,518

Passed through State of Georgia:Occupational and Environmental Medicine Residency Agreement 93.X81 35,340 Workshop on the Ten Essential Public Health Services 93.X82 2,213 HIV Consumer Survey On Met Need, Quality Management Standards 93.X83 32,633 Nursing Workforce and Training Analysis 93.X84 105,635

Total passed through State of Georgia 175,821

Passed through Georgia Department of Human Resources:Genetic Services and Screening Program 93.994 834,370 Georgia Perinatal HIV Prevention Project 93.977 53,110 En-Acte: Achieving Change 93.940 53,835

(Continued)


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Region 2 MHMRSA Workshops 93.667 $ 18,412 Emory Child Advocacy Program 93.643 51,280 Children's Trust Fund of GA 93.590 81,288 Georgia Emerging Infections Program 93.283 460,212 A Study to Collect Supplemental Surveillance Data 93.118 117,390 Comprehensive Plan to Use Outreach to Increase Folic Acid 93.X85 270,665 Clinical Breast Examination Training 93.X86 3,988

Total passed through Georgia Department of Human Resources 1,944,550

Passed through Fulton County, Georgia and DeKalb County, Georgia:Occupational Health Services Contract 93.X87 91,574 HIV/AIDS Mental Health Training and Evaluation Project 93.X88 102,863

Total passed through Fulton and DeKalb County, Georgia 194,437

Total U.S. Department of Health and Human Services 28,890,124

U.S. Department of Education:Mortality and Life Expectancy After Traumatic Brain Injury 84.133 990 Oxford Institute for Environmental Education 84.281 21,106 Graduate Assistance in Areas of National Need (GAAN) 84.200 273,565 Associate Director and Chair of the Arabic Board 84.229 13,722 Center for Arabic Study Abroad (Casa) 84.021 249,246 Web-Based Arabic Listening Materials 84.017 (2,111) Emory U. Title VI Undergraduate NRC for Middle East Studies 84.015 255,682 Community Technology Centers 84.XX1 123,805

Total U.S. Department of Education 936,005

U.S. Information Agency:Hubert H. Humphrey Services Agreement 82.002 15,779

U.S. Department of Energy:Station Car Acquisition and Management System 81.XXI 21,691 Emory Electric Eagle Charging Stations 81.XX2 90,010

Total U.S. Department of Energy 111,701

U.S. Environmental Protection Agency:Nhexas Maryland Analysis and Database 66.606 18,651 Continuing Medical Education for Anniston, Alabama Program 66.XX1 9

Total U.S. Environmental Protection Agency 18,660

U.S. Department of Transportation:University Rideshare 20.XX1 72,823

(Continued)


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U.S. Department of Veterans Affairs:IPA Agreements 64.XX1 $ 652,908 Scarce Medical Specialist Services 64.XX2 1,255,138 C.O.U.R.A.G.E. 64.XX3 192,502 Warfarin And Antiplatelet Therapy in Chronic Heart Failure 64.XX4 101

Total U.S. Department of Veterans Affairs 2,100,649

National Science Foundation:Graduate Research Fellowship Program 47.076 144,336 CK-12 Prism 47.076 151,932 Research Experience for Undergraduates: Experimental 47.076 10,649 Chemmentors: From Today’s Freshmen to Tomorrow’s Leaders 47.075 2,576 Research Experience for Undergraduates: Behavioral Neuroscience 47.074 106,985 Symbolic Computational Algebra 2002 Conference 47.070 9,628 The Acquisition of Cultural Knowledge of Hierarchy by Samoan 47.041 1,269

Total National Science Foundation 427,375

U.S. Department of State:Proposal to Enhance Graduate Training and Enrich Teaching 19.XX1 8,340

U.S. Department of Defense:A Synergy Consortium Targeting the Lethal Phenotypes of Pros 12.420 84,223 Improving Education for Medical Professionals 12.300 10,846 Advanced Arabic Language Training and Development 12.XX1 8,497 Teledermatology Versus Face to Face Evaluation 12.XX2 1,181 8th International Symposium on Activation of Dioxygen 12.XX3 (199)

Total U.S. Department of Defense 104,548

U.S. Department of Justice:Representing the Whole Child: A Juvenile Defender Training Manual 16.540 1,202

National Endowment for the Humanities:Creating a Database of 19th and 20th Century Women Writers 06.XX1 104,524 Entering the Council of the Community: The Rhetorical World 06.160 40,000 Communism and American Life 06.161 107,024

Total National Endowment for the Humanities 251,548

National Endowment for the Arts:Organizational Grants: General Operating Support 05.XX1 71,576 Public Educational Programs for Egyptian Reinstallation 05.XX2 10,946

Total National Endowment for the Arts 82,522

(Continued)


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Agency for International Development:PHR II 02.XX1 $ 197,690 Flagship 02.XX2 3,857 Ukrainian-American Birth Defects Program 02.XX3 23,556

Total Agency for International Development 225,103

Total Other Non-Major Programs 33,246,379

Total Non-Major Programs 33,699,119

Total Expenditures of Federal Awards $ 323,503,003


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Schedule of Expenditures of State of Georgia Awards


State of Georgia 2003Contract Number Expenditures

020102 $ 270,665 020302 23,532 030302 57,756 3000000374 15,386 427-93-12006 (3,940) 427-93-12031 (295) 427-93-12034 (19) 427-93-12086 75 427-93-12217 26,642 427-93-25115 (1,231) 427-93-25116 74,670 427-93-25155 (6,580) 427-93-25225 (1,317) 427-93-25332 (20) 427-93-25522 (66) 427-93-25714 9,164 427-93-25786 4,580 427-93-25902 21,802 427-93-25920 22,115 427-93-25954 32,034 427-93-25978 69,303 427-93-26033 (925) 427-93-26071 22,008 427-93-26099 76,185 427-93-26100 25,369 427-93-26134 19,362 427-93-26140 9,277 427-93-26141 9,135 427-93-26142 80 427-93-26165 8,279 427-93-26165 18,825 427-93-26192 109,859 427-93-35026 100,770 427-93-35030 63,140 427-93-35075 59,690 427-93-35076 579,353 427-93-35107 78,548 427-93-35237 3,987 427-93-35246 59,623 427-93-35515 242,130 427-93-35577 75,540 427-93-35806 373,972 427-93-35827 30,355 427-93-35838 34,520 427-93-36021 46,745 427-93-36073 32,779 427-93-36103 50,800 427-93-36104 300,627 427-93-36114 48,012 427-93-36129 52,813 427-93-36151 85,489 427-93-36164 214,404 427-93-25358

(Continued)See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.

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Schedule of Expenditures of State of Georgia Awards


State of Georgia 2003Contract Number Expenditures

427-93-36244 $ 51,200 427-93-45221 47,196 427-93-45236 168,771 427-93-45269 7,340 427-93-45283 12,628 427-93-45284 100,890 427-93-45285 7,759 A6673S1/013000320179803 6,765 GCC64/4279326165 5,403 GRA03.03/116112635/53635 124,625 GRA03.03/116112635/536355 268,578 GRA03.04/116112636/53636 117,721 GRA03.05/116112637/53637 699,378 GRA03.06/116112638/53638 50,000 GRA03.07/116112639/53639 247,266 GRA03.08/116112640/53640 631,000 GRA03.09/116112641/53641 329,871 GRA03.10/116112642/53642 685,551 GSU SUBCONTRACT 65,000 GSU SUBCONTRACT 193,054 GSU SUBCONTRACT 195,846 GSU SUBCONTRACT 124,265 GSU SUBCONTRACT 207,899 GSU SUBCONTRACT 99,989 GSU SUBCONTRACT 208,201 GSU SUBCONTRACT 334,624 GSU SUBCONTRACT 100,591 GSU SUBCONTRACT 120,000 GSU SUBCONTRACT 65,000

$ 8,721,417


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Notes to Schedule of Expenditures of Federal Awards and Schedule of Expenditures of State of

Georgia Awards

August 31, 2003

36 (Continued)

(1) Summary of Significant Accounting Policies

The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the Federal grant activity of the University 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 financial statements.

The accompanying Schedule of Expenditures of State of Georgia Awards includes expenditures incurred by the University under various state contracts and is also presented on the accrual basis of accounting.

EMORY UNIVERSITY


Georgia Awards

August 31, 2003

37 (Continued)

(2) Pass-Through Funding

The University passes through certain Federal awards to subrecipient organizations. Such subrecipients are responsible for compliance with the applicable provisions of the grants and contracts governing the underlying Federal awards. Federal awards passed through to subrecipients by the University during 2003 are as follows:

CFDA/Federal Program Contract Number Amount

Research and Development RD $ 15,806,157 Creating a Database of 19th and 20th Century

Women Writers 06.XX1 700 University Rideshare 20.XX1 72,823 Scarce Medical Specialist Services 64.XX2 42,683 Center for Arabic Study Abroad (Casa) 84.021 205,000 National AIDS Education and Training Centers Program 93.145 779,843 Clinical Trials of Pneumococcal Conjugate Vaccines 93.185 8,100 Teen Pregnancy Reduction Innovations Project 93.217 293,402 Outpatient Early Intervention Services With Respect

to HIV D 93.283 114,132 Children’s Trust Fund of GA 93.590 34,777 Optimizing Primary Stroke Prevention in Sickle

Cell Amemia 93.839 127,781 Neonatal Optical Non-Invasive Brain

Ocygenation Monitor 93.853 6,000 Complications of Age-Related Macular

Degeneration Prevention 93.867 17,494 Preparing PAS: Providing Socially

Responsible Healthcare 93.886 30,710 International Training and Research in EOH 93.989 65,254 Compassion Capital Fund Demonstration Program 93.XX1 900,000 Institute for Public Health and Faith Collaborations 93.X32 14,500 Niaid Tetramer Facility 93.X40 176,097 Nursing Workforce and Training Analysis 93.X84 33,724 Comprehensive Plan to Use Outreach to Increase

Folic Acid 93.X85 49,625 $ 18,778,802

EMORY UNIVERSITY


Georgia Awards

August 31, 2003

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(3) Noncash Federal Assistance

Most Federal financial assistance is in the form of cash awards. However, there are a number of Federal programs that do not involve cash transactions with the University. These noncash transactions in which the University obtains other assistance are the Federal Family Education Loan Program (FFELP), which includes the Federal Stafford Student Loan program (subsidized and unsubsidized) and the Federal Parent Loans for Undergraduate Students (FPLUS) and revolving loan programs such as the Federal Perkins Loan program.

The loans advanced and related expenditures are as follows for the various student loan programs:

CFDA # Amount

Federal Perkins Loan program: Student loans advanced 84.038 $ 3,016,851 Administrative cost allowance 291,689

$ 3,308,540

Federal Family Education Loan Program – Student loans advanced: 84.032

Stafford Loan Program $ 54,953,678

Federal PLUS Loan – Student loans advanced $ 8,003,342

Primary Care Loan – Student loans advanced 93.342 $ 58,868

Nursing Student Loan – Student loans advanced: 93.364

Graduate $ 151,099 Undergraduate 129,815

$ 280,914

The Federal Perkins Loan Program is administered directly by the University and balances and transactions relating to this program are included in the University’s financial statements. Federal Perkins loans outstanding at August 31, 2003 totaled approximately $19,480,000.

The University is responsible for the performance of certain administrative duties with respect to the guaranteed loan programs. It is not practicable to determine the balance of loans outstanding to students and former students of the University under these programs for the year ended August 31, 2003. These loans are not included in the University’s financial statements.

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Independent Auditors’ Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements

Performed in Accordance With Government Auditing Standards


We have audited the consolidated financial statements of Emory University (the University) as of and for the year ended August 31, 2003, and have issued our report thereon dated November 21, 2003. 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.

Compliance

As part of obtaining reasonable assurance about whether the University’s consolidated financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of consolidated 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 that are required to be reported under Government Auditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the University’s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the consolidated financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting, which we have reported to management of the University in a separate letter dated November 21, 2003.


KPMG LLP, a U.S. limited liability partnership, is the U.S.member firm of KPMG International, a Swiss cooperative.

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This report is intended solely for the information and use of the Board of Trustees, management, 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.

November 21, 2003

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Independent Auditors’ Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over

Compliance in Accordance with OMB Circular A-133


Compliance

We have audited the compliance of Emory University (the University) 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 August 31, 2003. The University’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 University’s management. Our responsibility is to express an opinion on the University’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 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 are applicable to each of its major federal programs for the year ended August 31, 2003. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements that are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as findings 03-1 through 03-3.

We did not audit the University’s compliance with requirements governing student loan repayments. Those requirements govern functions that are performed by Educational Computer Systems, Inc. (ECSI). Since we did not apply auditing procedures to satisfy ourselves as to compliance with those requirements, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on compliance with those requirements.

KPMG LLP, a U.S. limited liability partnership, is the U.S.member firm of KPMG International, a Swiss cooperative.


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ECSI’s compliance with the requirements governing the functions that it performs for the University was examined by other accountants whose report has been furnished to us. The report of the other accountants indicates that compliance with those requirements was examined in accordance with the U.S. Department of Education’s Audit Guide, Compliance Audits (Attestation Engagements) of Federal Student Financial Assistance Programs at Participating Institutions and Institution Servicers. Based on our review of the service organization accountants’ report, we have determined that all of the compliance requirements included in the Compliance Supplement that are applicable to the major programs in which the University participates are addressed in either our report or the report of the service organization accountants. Further, based on our review of the service organization accountants’ report, we have determined that it does not contain any findings of noncompliance that would have a direct and material effect on the University’s major programs.

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 grants 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.

Requirements governing student loan repayments are performed by ECSI. Internal control over compliance relating to such functions was reported on by other accountants in accordance with the U.S. Department of Education’s Audit Guide, Compliance Audits (Attestation Engagements) of Federal Student Financial Assistance Programs at Participating Institutions and Institution Servicers. A copy of the service organization accountants’ report has been furnished to us. However, the scope of our work did not extend to internal control maintained at ECSI.

Our consideration of internal control over compliance would not necessarily disclose all matters in internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving internal control over compliance and its operation that we consider to be material weaknesses.

This report is intended solely for the information and use of the Board of Trustees, management, 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.

November 21, 2003

EMORY UNIVERSITY

Schedule of Findings and Questioned Costs


43 (Continued)

(1) Summary of Auditors’ Results

(a) The type of report issued on the financial statements: unqualified opinion

(b) Reportable conditions in internal control were disclosed by the audit of the Financial Statements: none reported Material weaknesses: no

(c) Noncompliance which is material to the financial statements: no

(d) Reportable conditions in internal control over major programs: none reported Material weaknesses: no

(e) The type of report issued on compliance for major programs: unqualified opinion

(f) Any audit findings which are required to be reported under Section .510(a) of OMB Circular A-133: yes

(g) Major programs: Student Financial Assistance Cluster; Research and Development Cluster

(h) Dollar threshold used to distinguish between Type A and Type B programs: $3,000,000

(i) Auditee qualified as a low-risk auditee under Section .530 of OMB Circular A-133: yes

(2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards

There were no findings related to the financial statements reported in accordance with Government Auditing Standards for the year ended August 31, 2003.

(3) Findings and Questioned Costs Relating to Federal Awards

Finding No. 03-1

Student Financial Assistance Cluster

Special Tests and Provisions – Refunds

Criterion

Federal regulations require institutions to return student financial assistance (SFA) funds to SFA program accounts within 30 days from the later of the student’s last date of attendance or student notification of when the student withdrew from the institution.

Condition

Of 30 students sampled, SFA funds for seven students were not refunded to the appropriate program account within 30 days.

EMORY UNIVERSITY



44 (Continued)

Cause

Noncompliance for six of the seven students noted above was due to erroneous information initially delivered to individuals responsible for calculating Federal refunds. Such information incorrectly indicated that Federal funds were not required for those six students.

Questioned Cost

Not determined.

Recommendation

The University should implement procedures to ensure that accurate information regarding student withdrawal dates is timely forwarded to appropriate personnel charged with calculating Federal refunds. Such procedures may include periodic reporting at intervals sufficient to allow for timely refund calculations. In addition, such information should be subject to appropriate management review to ensure accuracy.

Finding No. 03-2

Student Financial Assistance Cluster

Special Tests and Provisions – Verification

Criterion

Federal regulations require institutions to require each student financial aid applicant whose application is selected by the central processor, based on edits specified by the U.S. Department of Education, to verify certain specific information.

Condition

Of 30 student financial assistance applicants selected for verification, discrepancies between information supplied by two applicants to the central processor and information obtained by the University in the verification process were not reconciled and resolved by the University. For one of the two applicants, the number of family members in college as reported to the central processor did not agree to that as verified by the University. For the remaining applicant noted above, parent’s adjusted gross income as reported to the central processor ($-0-) did not agree to the amount verified by the University ($49,964).

Cause

Noncompliance due to lack of procedures in place to ensure that information discrepancies identified through the verification process are timely resolved and, if necessary, reported to the central processor.

Questioned Cost

Not determined.

EMORY UNIVERSITY



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Recommendation

The University should implement procedures to ensure that discrepancies identified through the verification process are aggregated and timely resolved.

Finding No. 03-3

Research and Development Cluster

Allowable Costs/Cost Principles

Criterion

Federal regulations require that costs charged to Federal grants and contracts be supported by appropriate documentation, such as approved purchase orders, receiving reports, vendor invoices, canceled checks, and time and attendance records, and correctly charged as to account, amount, and period.

Condition

Of 30 salary and wage payments selected for test work, time and effort certifications for two employees were not on file. The University determined that time and effort certifications for 30 student employees, including the two noted above, were not initially obtained for the six-month period ending February 28, 2003. Salaries and wages charged to Federal research and development grants and contracts during that period for these 30 student employees totaled $175,081.

Cause

The 30 student employees were miscoded within the University’s effort reporting system as biweekly employees rather than monthly employees due to conversion issues encountered during the University’s implementation of PeopleSoft. As a result, the 30 student effort reports were not transmitted during the normal transmission process; however, upon discovery of the PeopleSoft error, the reports were subsequently transmitted and the proper certification obtained. The University determined that salary and wage expenses for these employees during the six-month period ended February 28, 2003 were properly charged with respect to Federal grants and contracts.

Questioned Cost

Salaries and wages charged to Federal grants and contracts for the 30 student employees noted above totaled $175,081 during the six-month period ended February 28, 2003, as compared to salaries and wages charged to Federal grants and contracts for all employees totaling $92,752,867 during the year ended August 31, 2003.

Recommendation

We recommend that the modifications made to employee classifications within the PeopleSoft system be appropriately monitored.

consolidated financial statements and omb...

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