A TH LETIC D EPA RTM ENT M C N EESE STA TE U N IV ERSITY STA TE O F LO U ISIA NA Lake C harles,louisiana

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3 A TH LETIC D EPA RTM ENT M C N EESE STA TE U N IV ERSITY STA TE O F LO U ISIA NA Lake C harles,louisiana FinancialStatem entand IndependentAuditor's Reports Forthe YearEnded June 30,1996 Underthe provisions ofstate law,this reportis a public docum ent. A copy ofthis report has been subm ited to the G overnor,to the Attorney G eneral,and to other public ofi cials as required by state law. A copy ofthis report has been m ade available forpublic inspection atthe Baton Rouge ofi ce ofthe Legislative Auditor and atthe ofice ofthe parish clerk ofcourt. M arch

4 ATHLETIC DEPA RTM ENT M C NEESE STATE UNIVERSITY STATE O F LO UISIANA FinancialStatem entand IndependentAuditors Reports Forthe YearEnded June 30,1996 CO NTENTS Statem ent Page No IndependentA uditor's Report on the FinancialStatem ent 2 FinancialStatem ent: Statem entofrevenues and Expenditures N otes to the FinancialStatem ent A 3 4 Exhibit O therreports Required by N CAA FinancialAuditG uidelines: Report on InternalControlStructure Based Solely on an A uditofthe Athletic r)epartm ent's Statem entof Revenues and Expenditures Reporton M inim um Agreed-U pon Procedures A B

5 @ ~ DANIEL G.KYLE,PH.D.,CPA,CFE LEGISLATIVE AUDITOR OFFICE O F LEG ISLA TIV E A U D ITO R STA TE OF LOU ISIAN A BATON ROUGE,LOU ISIANA Janua~ 8, NORTH THIRD STREET POST OFFICE BOX TELEPHONE:(504) FACSIMILE: (504) DR.RO BERT D.HEBERT,PRESIDENT M CNEESE STATE UNIVERSITY STATI"O F LO UISIANA Lake Charles.Louisiana W e have audited the accom panying statem entofrevenues and expenditures ofthe M cneese State U niversity Interco legiate Athletics Program,a program w ithin M cneese State U niversity, forthe yearended June 30,1996. This financialstatem entis the responsibility ofm anagem ent of M cneese State University. O ur responsibility is to express an opinion on this financial staten'tentbased on ouraudit. VVe conducted our audit in accordance w ith genera ly accepted auditing standards. Those standards require thatw e plan and perform the auditto obtain reasonable assurance about w hetherthe financialstatem entis free ofm aterialm isstatem ent. A n auditincludes exam ining, on a testbasis,evidence supporting the am ounts and disclosures in the financialstatem ent.an auditalso includes assessing the accounting principles used and significantestim ates m ade by m anagem ent,as w e las evaluating the overa lfinancialstatem entpresentation. W e believe thatourauditprovides a reasonable basis forouropinion. In our opinion,the financialstatem ent referred to above presents fairly the revenues and expenditures of the M cneese State U niversity Interco legiate Athletics Program for the year ended June 30,1996,in conform ity w ith genera ly accepted accounting principles. As described in note 1,the statem entofrevenues and expenditures referred to above presents only the financial transactions of the M cneese State University Interco legiate Athletics Program,a program w ithin M cneese State U niversity. A s such,the financialstatem entis not intended to and does not presentfairly the financialposition and changes in fund balance s of M cneese State University in conform ity w ith genera ly accepted accounting principles. pecfu ly subm itted, DHM :BJJ:d [MSU-NC/~] DanielG.Kyle,CPA,C FE Legislative A uditor

6 Statem enta ATHLE TIC DEPA RTM ENT' M CNI-ESE STATE UNIVERSITY STATE O F LO UISIA NA Statem entof Revenues and Expenditures Forthe YearEnded June 30,1996 (PORTION OF) CURRENT FUNDS - AGENCY UNRESTRICTED - FUNDS - TOTAL AUXILIARY AGENCY BOOSTER (MEMORANDUM ENTERPRISE FUND FUNDS ORGANIZATIONS ONLY) REVENUES Gate rece ipts Season ticketsales Guarantees Sates and services Broadcasting rights Studentfees Gifts In-kind contributions (note 2) Postseason toum arnent M isce tlaneous Totalrevenues $891, ,356 82, ,053 11,640 1,907, , ,712,251 $12,905 73,750 92, ,881 $26, ,203 $891, ,356 " B2,ooo 133,958 11,640 1, , , ,918 4,022,335 EXPENDITURES Personalserv ices: C oaches'salaries Othersalaries Related benefits Travel O perating service s Supplies Professionalservice s Scholarships Othercharges Awards G uarantees Capitaloutlsy -equipment Totalexpenditures 734, , , , , , , , , ,336 54,964 3,711,806 39, ,762 40,225 40,893 6,675 5,040 1, , ,294 89,852 12,158 23,000 3, , , , , , , , , ,157 50,850 20, , ,000,955 EXCESS OF REVENUES OVER EXPENDITURES $445 $20,935 NONE $21,380 The accom panying notes are an integralpartofthis statem ent. 3

7 ATHLETIC DEPA RTM ENT M CNEESE STATE UNIVERSITY STATE O F LO UISIA NA Notesto the FinanciaIStatem ent Forthe YearEnded June 30,1996 NTRO DUCTIO N M cneese State University is a publicly supported institution ofhighereducation. The university is a com ponentunitofthe State oflouisiana within the executive branch ofgovernm ent. The M cneese State University Athletic Departm ent is a part of M cneese State University. The accom panying financialstatem ent presents inform ation only as to the transactions of the M cn eese State University Athletic Departm ent. SUM M A RY O F SIG NIFICA NT ACCO UNTING PO LICIES A. FUND A CCO UNTING To observe lim itations and restrictions placed on the use of available resources,the accounts of M cneese State University are m aintained in accordance with the principtes offund accounting. Such principles prescribe the m annerin w hich resources forvarious purposes are classified,foraccounting and reporting purposes,into funds thatare in accordance with the activities orspecified objectives. Ac ounts are maintained forthe transactions ofthe athletic departm entas fo low s: C urrentfunds -Unrestricted Currentfunds are operating funds thatw ilbe expended in the nearfuture. Such funds have tw o basic subgroups, unrestricted and restricted. Unrestricted current funds include a lfunds for operating purposes on w hich there are no restrictions, exce pt the budgetary control provisions included in the annual legislative appropriation act, and include the G eneral Fund and Auxiliary Enterprise Fund. The Auxiliary Enterprise Fund includes the accounts ofthe athletic departm ent. A gency Funds This fund group represents funds in w hich the university acts as custodian or fiscalagenton behalfofothers,such as contributions and interestearnings of the athletic departm ent. B. BA SIS O F A CCO UNTING The accounts of the athletic departm ent are m aintained on the accrual basis of accounting as fo low s:

8 ATHLE'TIC DEPA RTM ENT M CNEESE STATE UNIVERSITY STATE O F LO U ISIA N A Notes to the FinancialStatement(Continued) R evenues Substantia ly a lrevenues are recognized w hen earned Expenditures Expenditures are recognized under the accrual basis of accounting w hen incured,exceptthat(1)depreciation is notrecognized;(2)annualand sick leave are re cognized when paid;and (3)inventories ofthe GeneralFund are recorded as expenditure s atthe tim e ofpurchase..,- C. EM PLOYEE CO M PENSATED A BSENCES Em ployees ofthe university w orking in the athletic departm ent earn annualand sick leave in accordance w ith state law and adm inistrative re gulations. Leave benefits are reflected in the accom panying statem entw hen paid. TO TA L,C O LUM N O N STATEM ENT The totalcolum n on StatementA is captioned Memorandum Only (overview)to indicate that it is presented only to facilitate financialanalysis. Data in this colum n does not present results of operations in conform ity w ith genera ly accepted accounting principles. Neitheris such data com parable to a consolidation. CONTRIBUTIONS (GIFTS IN-KIND) FRO M O UTSIDE O RGA NIZATIO NS Expenditure s on Statem enta re flectgifts in the form ofgoods,serv ices,and benefits paid foror in behalfofthe athletic departm entas fo low s: O perating serv ices Professionalserv ices Total $81, $104, PENSIO N PLA NS Plan D escription. Substantia ly a lem ployees ofthe university are m em bers oftw o statew ide, public em ployee retirem ent system s. Academ ic em ployees are genera ly m em bers of the Louisiana Teachers RetirementSystem (TRS),and classified/unclassified state employees are members ofthe Louisiana State Employees RetirementSystem (LASERS). Both plans are cost-sharing,m ultiple-em ployerdefined benefitpension plans adm inistered by separate boards

9 ATH LETIC DEPA RTM ENT M C NEESE STATE UNIVERSITY STA TE O F LO U ISIA NA Notes to the FinancialStatement(Continued) oftru.,~tees. TRS and LASERS provide retirem ent,disability,and survivors'benefits to plan m em bers and beneficiaries. Benefits granted by the retirem entsystem s are guaranteed by the State oflouisiana by provisions ofthe Louisiana Constitution of G enera ly,a lfu l-tim e em ployees are eligible to participate in the system s,w ith em ployee benefits vesting after 10 years of service. Article 10,Section 29 ofthe constitution of 1974 assigns the authority to establish and am end benefit provisions to the state legislature. The system s issue annual publicmy available financialreports thatinclude financialstatem ents and re quired supplem entary inform ation for the system s. The reports m ay be obtained by w riting to the Teachers Retirem entsystem oflouisiana,posto fi ce Box 94123,Baton Rouge,Louisiana , orby caling (504) and/orthe Louisiana State Employees Retire mentsystem,p ost Ofice Box 44213,Baton Rouge,Louisiana 70804,orby caling (504 ) Funding Policy. The contribution re quirem ents of plan m em bers and the university are established and m ay be am ended by the state legislature. The legislature annua ly sets the required em ployercontribution rate equalto the actuaria ly require d em ployer contribution as setforth in Louisiana Revised Statute (LSA-R.S.) 11:102. Employees contribute 8 perce nt (TRS)and 7.5 percent(la SERS)ofcovered salaries. The state is re quire d to contribute 16.5 percent of covered salaries to TRS and 12 perce nt of covered salaries to LASERS. The university's em ployer contribution is funded by the State of Louisiana through the annual appropriation to the university. The university's em ployercontributions forthe athletic fund to TRS forthe years ended June 30,1996,1995,and 1994,w ere $48,997,$4 2,097,and $4 3,293, respectively, and to LA SE:RS for the years ended June 30, 1996, 1995, and 1994,w ere $11,518,$10,220,and $9,573,respectively,equalto the required contributions foreach year. 4. O PTIO NA L RETIREM ENT SYSTEM LSA-R.S. 11:921 created an optional retirem ent plan for academ ic and adm inistrative em ployees of public institutions of higher education. This program w as designed to aid universities in re cruiting em ployees w ho m ay notbe expected to rem ain in TRS for10 orm ore years. The purpose ofthe optionalretirem entplan is to provide retire m entand death benefits to the participants w hile afording the m axim um portability ofthese benefits to the participants. The optionalretirem entplan is a defined contribution plan thatprovides forfu land im m ediate vesting ofa lcontributions rem ited to the participating com panies on behalfofthe participants. Eligible em ployees m ake an irrevocable election to participate in the optionalretirem ent plan ratherthan the TRS and purchase re tirem entand death benefits through contracts provided by designated com panies. Totalcontributions by the university are 16.2 perce ntofthe covered payro l. The participant's contribution (8 percent),less any monthly fee required to coverthe costofadministration and m aintenance of the optional retirem ent plan, is rem itted to the designated com pany or com panies. Upon re ceiptofthe em ployer's contribution,the TRS pays overto the appropriate

10 ATHLI-TIC DEPA RTM ENT M C NEESE STATE UNIVERSITY STA TF"O F LO UISIA NA Notes to the FinancialStatement(Concluded) com pany orcom panies,on behalfofthe participant,an am ountequalto the em ployer's portion ofthe norm alcostcontribution as determ ined annua ly by the actuarialcom m ittee. The TRS retains the balance ofthe em ployercontribution forapplication to the unfunded accrued liability ofthe system. Em ployercontributions to the optionalretirem entplan forthe years ended June 30,1996,1995 and 1994,were $77,007,$65,137,and $52,495,respectively. 5 O UTSIDE O RG A NIZATIO NS C R EATED FO R O R IN BEHA LF O F TH E M C NEESE STATE U NIVERSITY INTERCO LLEG IATE ATHLETICS PRO G RA M The outside organizations created for or in behalf of the M cneese State University Interco legiate Athletics Program include the M cneese Cowboy Club, Q uarterback Club, Petrochem C lub,and the Tip O ffc lub. The M cneese Cow boy C lub accounts are m aintained in the athletic business ofi ce by em ployees ofthe athletic departm entunderthe direction ofthe athletic; director. The athletic director, at his discretion, determ ines whether the am ounts received are rem itted to the university as revenue to the M cneese Cow boy Club Agency Fund or deposited in the M cneese Cow boy C lub C hecking Account. The accounts of the Q uarterback Club,the Petrochem C lub,and the Tip O f C lub are m aintained by officers ofthe clubs and review ed by ofi cials ofm cneese State University.

11 O THER REPO RTS REQ UIRED BY N CAA FINANCIA L A UDIT G UIDELINES The fo low ing pages contain reports on internalcontrolstructure and agreed-upon procedures required by N CAA Financial A udit G uidelines, issued by the National Co legiate Athletic A ssociation. The reporton internalcontrolstructure is based solely on the auditofthe financial statem ent and includes, w here appropriate, any reportable conditions and/or m aterial weaknesses. The report on agreed-upon procedures relates only to the item s discussed and is substantia ly less in scope than an audit.

12 or DAN IEL G.KYLE,PH.D.,CPA,CFE LEGISLATIVE AUDITOR O FFICE O F LEG ISLA TIV E A U D ITO R STATE O F LOU ISIAN A BATON ROU GE,LOUISIAN A January 8, NORTH THIRD STREET POST OFFICE BOX TELEPHONE:(504) FACSIMILE: (504) DR.RO BERT D.HEBERT,PRESIDENT M C NEESE STATE UNIVERSITY STATE O F LO UISIA NA Lake Charles.Louisiana W e h;=ve audited the statem entofrevenues and expenditures ofthe M cneese State University Interco legiate Athletics Program forthe yearended June 30,1996,and have issued ourreport thereon dated January 8,1997. W e conducted our audit in accordance w ith genera ly acce pted auditing standards. Those standards require that w e plan and perform the audit to obtain reasonable assurance about w hetherthe financialstatem entis free ofm aterialm isstatem ent. M anagem entofm cneese State University Athletic Departm entis responsible forestablishing and m aintaining an internal control structure. In fulfi ling this responsibility, estim ates and judgments by managementare required to assess the expected benefits and related costs of intern alcontrolstructure policies and procedures.the objectives ofan internalcontrolstructure are to provide m anagem ent w ith reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance w ith m anagem ent's authorization and recorded pro perly to perm itthe preparation of the financial statem ent in accordance w ith genera ly acce pted accounting principles. Because of inherent lim itations in any internal contro l structure, errors or irro gu~arities may nevertheless occurand notbe detected.also,projection ofany evaluation of the structure to future periods is subjectto the risk thatprocedures may become inadequate because of changes in conditions or that the efectiveness of the design and operation of policies and procedures m ay deteriorate. In planning and perform ing our audit ofthe financialstatem entof M cneese State University Athletic Departm entforthe yearended June 30, 1996,w e obtained an understanding ofthe internal control structure. W ith respect to the internal contro l structure, w e obtained an understanding ofthe design ofrelevantpolicies and procedures and w hetherthey have been placed in operation,and w e assessed controlrisk to determ ine ourauditing procedures forthe purpose ofexpressing ouropinion on the financialstatem entand notto provide an opinion on the internalcontrolstructure. A ccordingly,w e do notexpress such an opinion. EXH IB IT A

13 LEGISLATIVE A UDITOR M C NE!ESE STATE UNIVERSITY STATE O F LO UISIA NA InternalC ontrolreport January 8,1997 Page 2 O urconsideration ofthe internalcontrolstructure w ould notnecessarily disclose a lm atters in the internalcontrolstructure thatm ightbe m aterialw eaknesses understandards established by the Am erican Institute ofcertified Public Accountants. A m aterialw eakness is a condition in w hich the design oroperation ofone orm ore ofthe internalcontrolstructure elem ents does not reduce to a relatively low levelthe risk thaterrors and irregularities in am ounts thatw ould be m aterialin relation to the financialstatem ent being audited m ay occur and not be detected w ithin a tim ely period by em ployees in the norm alcourse ofperform ing theirassigned functions. W e noted no m atters involving the internalcontrolstructure and its operations thatw e consider to be m aterialw eaknesses as described previously. O ur com m ents on internal control structure are intended for the inform ation and use of m anagem entofthe university. By provisions ofstate law,this reportis a public docum ent,and ithas been distributed to appropriate public ofi cials. DHM :BJJ:dl [MSU-NCAA) Legislative A uditor EXHIBIT A

14 ~~ DAN IEL G.KYLE,Ptt.D.,CPA,CFE LEGISLATIVE AUDITOR OFFICE O F LEG ISLA TIV E A U D ITO R STA TE O F LO U ISIAN A BATON ROUGE,LOUISIAN A January 8, NORTH TIIIRD STREET POST OFFICE BOX TELEPHONE:(504) FACSIMILE: (504) DR.RO BERT D.HEBERT,PRESIDENT M CN EESE STATE UNIVERSITY STATI-O F LO UISIA NA Lake C harles.louisiana W e have audited the statem entofrevenues and expenditures ofthe M cneese State University Interco legiate Athletics Program forthe yearended June 30,1996,and have issued ourreport thereon dated January 8,1997. As requested by the university,w e have also applied certain m inim um agreed-upon procedures contained in the N CAA FinancialAudit G uidelines to the accounting records of M cneese State University Athletic Departm ent and applied ce rtain m inim um agreed-upon procedures related to outside organizations created fororin behalfof the university's Interco legiate Athletics Program forthe yearended June 30,.1996,solely to assistthe university in complying with the NationalColegiate Athletic Association (NCAA) Bylaw These m inim um agreed-upon proce dures relate only to the accounts and item s as fo low s and do notaffectouropinion on the statem entofrevenues and expenditures. O ur m inim um agreed-upon proce dures fo low : STATEM ENT O F R EVENUES A ND EXPENDITURES Test of Statem ent W e obtained from m anagem ent the statem ent of revenues and expenditures for the year ended June 30, 1996, as shown on Statem ent A, and requested w riten repre sentation from m anagem entas to its fairpre sentation. In addition,w e verified the m athem aticalaccuracy of the am ounts on the statem entand trace d the am ounts to the university's revenue and expenditure ledgers. W e com piled the in-kind contributions and proposed corresponding adjustments to both revenues and expenditures. University fiscalmanagers concurred with the adjustments made. C om parison of Statem ents W e com pared the statem ents of revenues and expenditures for June 30, 1995,and June 30,1996,to determ ine the percentage ofincrease ordecrease betw een the tw o years. The universjty provjded satisfactory responses for any m aterial variances betw een the tw o years. EXH IBIT B

15 LEGISLATIVE A UDITOR M C NEESE STATE U NIVERSITY STATE O F LO U ISIA NA M inim um Agreed-Upon Procedures Report January 8,1997 Page 2 C om parison of Budgetto A ctual Revenues and Expenditures W e com pared the am ountofbudgeted revenues and expenditures to actualrevenues and expenditures forthe year ended June 30,1996,to determ ine ifthere were any m aterial budget variances. The university provided satisfactory responses for any m aterialvariances. Contributions Exceeding Ten Percent of TotalContributions W e com piled from the university accounting records and inform ation provided by university staf a list of contributions m ade to the athletic departm ent and identified individualcontributions thatexceeded ten percentofthe totalcontributions of$46,474. M cneese State University Cowboy Club,Incorporated,contributed $100,757 and the Lake Are a Car Dealers contributed $81,600 in-kind contributions forthe year ended June 30,1996. EXPENDITURES O F O UTSIDE O RG A NIZATIO NS M Ar)E FO R O R IN BEHA LF O F M CNEESE STATE UNIVERSITY INTERCO LLEG IATE ATHLETICS PRO G RA M Review of FinancialA ctivities of O utside O rganizations W e obtained w ritten representation from m anagem entofthe university thatthe fo low ing booster gro ups w ere the only outside organizations created for or in behalf of the athletic departm ent. In addition, w e obtained from representatives of the outside organizations statem ents ofcash re ce ipts and disbursem ents w ith w ritten representations as to the fair presentation of the statem ents. W e also reconciled the cash disbursem ents m ade by outside organizations fororin behalfofthe athletic departm ent to the statem entofrevenues and expenditures,and w e reconciled the directpaym ents ofoutside organizations to the accounting records ofthe university and to the revenues reported on the statementofre venues and expenditures (StatementA).The Petro chem Athletic A ssociation began fund raising activities in Novem ber 1994, but w as not reported by the university untilthe yearended June 30,1996. Although fund raising activities began before the fiscalyearended June 30,1996,no expenditures relating to the university have been m ade by the association,resulting in a balance of$21,735 at July 1,1995. EXHIBIT B

16 LEGISLATIVE A UDITOR M CNEESE STATE UNIVERSITY STA TE"O F LO UISIA NA M inim um A greed-u pon Procedures Report January 8,1997 Page 3 Payments Beginning Contributions Contributions Ending Batance to Athletic forathletic Balance July Reoeipts Departm ent Department Other,June 30,1996 M cneese State University organizations: Cowboy Club Quarterback Club Tip Of Club Petrochem Club $ ,356 5, $132,819 45,744 68,154 71,537 $100,757 19, $3,423 14, $57,244 14,761 1, $29,302 8~745 18, T(~al $98,127 $318,254 $165,021 $26,603 $ Because the above procedures do notconstitute an auditm ade in accordance with genera ly accepted auditing standards,w e do notexpress an opinion on any ofthe accounts oritem s referred to above. In connection with the procedures referred to above,no m atters cam e to our atention thatcaused us to believe thatthe specified accounts oritems should be adjusted. H ad w e perform ed additionalprocedures orhad w e m ade an auditofthe financialstatem ents of the related outside organizations in accordance w ith genera ly accepted auditing standards, m atters m ighthave com e to ourattention thatw ould be reported to you. This report relates only to the accounts and item s specified above and does notextend to any financialstatem ents ofm cneese State University orthe related outside organizations taken as a w hole. This reportis solely forthe inform ation and use ofm anagem entofthe university. By provisions ofstate law,this reportis a public docum ent,and ithas been distributed to appropriate public ofi cials. D HM :BJJ:d [MSU-NCA=.] DanielG.Kyle,C PA,CFE Legislative A uditor EXHIBIT B

(70,518) (3,449) DR.DO NA LD J.A YO,PRESIDENT N IC HO LLS STA TE U N IV ERSITY STATE O F LO UISIA NA A uditreport,june 30,1996

(70,518) (3,449) DR.DO NA LD J.A YO,PRESIDENT N IC HO LLS STA TE U N IV ERSITY STATE O F LO UISIA NA A uditreport,june 30,1996 LEGISLATIVE A UDITOR DR.DO NA LD J.A YO,PRESIDENT N IC HO LLS STA TE U N IV ERSITY STATE O F LO UISIA NA A uditreport,june 30,1996 EXPENDITURES O F O UTSIDE O RGA NIZATIO N M A DE FO R O R IN BEHA LF O