Volusia Flagler Advanced Technology Center, Inc. Basic Financial … rpts/2010... · 2019. 11....

Volusia Flagler Advanced Technology Center, Inc.

Basic

Financial Statements and Required Supplemental

Information

Years ended June 30, 2010 and 2009

TABLE OF CONTENTS

Page INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements Statements of Net Assets 9 Statements of Revenues, Expenses, and Changes in Net Assets 10 Statements of Cash Flows 11

Notes to Financial Statements 12 REQUIRED SUPPLEMENTARY INFORMATION Estimated Schedule of Funding Progress for the Retiree Health Plan 26 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 27 MANAGEMENT LETTER 29

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INDEPENDENT AUDITORS’ REPORT To the Board of Directors, Volusia Flagler Advanced Technology Center, Inc. Daytona Beach, Florida We have audited the accompanying financial statements of the business-type activities for Volusia Flagler Advanced Technology Center, Inc. (the “ATC”) as of and for the years ended June 30, 2010 and 2009, which collectively comprise the ATC’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the ATC’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the ATC, as of June 30, 2010 and 2009, and the respective changes in financial position and cash flows thereof 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 December 15, 2010, on our consideration of the ATC’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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

8035 Spyglass Hill Road Melbourne, FL 32940 Phone: 321-757-2020 Fax: 321-242-4844

255 S. Orange Ave. Suite 745 Orlando, FL 32801

Phone: 407-841-8841 Fax: 407-841-8849

www.bermanhopkins.com

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Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and schedule of funding progress for the retiree health plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. December 15, 2010 Melbourne, Florida

Berman Hopkins Wright & LaHam CPAs and Associates, LLP


MANAGEMENT DISCUSSION AND ANALYSIS

Years Ended June 30, 2010 and 2009

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The discussion and analysis of Volusia Flagler Advanced Technology Center’s (the “ATC”) financial statements provides an overview of their financial activities for the years ended June 30, 2010 and 2009. Management has prepared the financial statements and the related footnote disclosures along with the discussion and analysis. Responsibility for the completeness and fairness of this information rests with management. The management discussion and analysis contains financial activities of the ATC for fiscal years 2010 and 2009. The ATC opened as a joint venture between Volusia County School Board (VCSB), Flagler County School Board (FCSB), and Daytona State College (the “College”). The ATC is a 163,000 square foot facility that is located on a stand-alone campus in Daytona Beach. The equipment are assets of Daytona State College with the exception of those items purchased with partner share revenue. It should be noted that fiscal year 2010 is the ATC’s ninth year of operations and relative comparisons will be discussed. Pertinent financial information pertaining to the ATC over the past two fiscal years is presented. ATC FINANCIAL HIGHLIGHTS The following chart provides a graphical breakdown of revenues by category for three fiscal years:

(500,000)

500,000

1,500,000

2,500,000

3,500,000

4,500,000

5,500,000

Fu

nd

ing

FY 2010 FY 2009 FY 2008

Total Revenue By Source

Sponsor Contributions

Operating Grants,Contributions and otherrevenues

The ATC’s total revenues for fiscal year 2010, 2009 and 2008 were $4,952,893, $5,812,671, and $4,907,794, respectively. This is a 15% decrease from fiscal year 2009 and a 1% increase from fiscal year 2008. Revenue from the Sponsors was $4,948,678, $5,262,495, and $4,562,439, representing 99.9%, 90.5%, and 93.0% of the total revenue for fiscal year 2010, 2009, and 2008, respectively. Revenue from Sponsors for fiscal year 2010 consisted of that of Daytona State College as follows: $4,948,678 (100%) which includes $668,180 of Operating Cost of New Facilities (OCNF). Due to their fiscal constraints, both Volusia and Flagler County School Systems were unable to make Sponsor contributions in 2010. Other fiscal year 2010 revenue for the ATC includes charges for services of $4,215.




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ATC FINANCIAL HIGHLIGHTS (continued) For fiscal year 2009, the revenue distributions from the Sponsors were $3,701,366 (Daytona State College), $1,235,816 (VCSB), and $325,313 (FCSB). For fiscal year 2008 the revenue distributions from the Sponsors were $2,870,310, $1,200,000, and $492,129, respectively. There was operating grants and contributions for fiscal year 2010, 2009 and 2008 of $0, $528,391 and $338,620, respectively. The ATC received no capital contributions in fiscal year 2010, 2009 and 2008. Current assets for ATC totaled $346,057 at the fiscal year end 2010, a 25.2% decrease from fiscal year 2009 current assets of $462,334. This decrease is largely due to a decrease in cash and cash equivalents, which was a direct result of the decrease in salaries and compensated absences payable. Fiscal year 2009 represented a 25.4% increase from 2008 current assets of $368,596. Current liabilities are $346,057. This is a decrease of $116,277 over the previous year. Accrued salaries and compensated absences are the major components of this decrease. Noncurrent liabilities increased by $307,127 to $744,559. This increase is directly related to the increase of management’s estimate of the balance of compensated absences due beyond one year and the implementation of Governmental Accounting Standards Board Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions (“OPEB”) (GASB No. 45). Compensated absences consist of vacation and sick leave earned by employees, but not yet taken or paid and a limited amount of sick leave earned by ATC employees. Based upon experience, management has determined that approximately 30% of the total amount will be paid to employees in the coming fiscal year and is considered a current liability. The balance of the liability will be paid in future years and therefore is considered a non-current liability. USING THIS ANNUAL REPORT This report consists of three basic financial statements:

1. Statements of Net Assets 2. Statements of Revenues, Expenses and Changes in Net Assets 3. Statements of Cash Flows

These statements provide information on the ATC as a whole and present a long-term view of the finances. Programs associated with the ATC encompass the following categories: instruction, academic support, student support, institutional support, and plant operation and maintenance.




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REPORTING THE ATC AS A WHOLE

The Statements of Net Assets and the Statements of Revenues, Expenses, and Changes in Net Assets

One of the most important questions asked about the institution’s finances is “Is Advanced Technology College as a whole better off or worse off as a result of the year’s activities?” The Statements of Net Assets and the Statements of Revenues, Expenses, and Changes in Net Assets report information on the ATC as a whole and on its activities. When revenues and other sources of support exceed expenses, the result is an increase in net assets. When the reverse occurs, the result is a decrease in net assets. The relationship between revenues and expenses may be thought of as ATC operating results. The Advanced Technology Center’s net assets, the difference between assets and liabilities, are one way to measure the financial health, or financial position. Over time, increases or decreases in the net assets are one indicator of whether its financial health is improving or deteriorating. One will need to consider many other non-financial factors, such as certain trends, student retention, and condition of the buildings and the safety of the campus, to assess the overall health of the ATC. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private sector institutions. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. THE ATC AS A WHOLE

Table 1 Net Assets

FY 2010 FY 2009 FY 2008

Current assets 346,057$ 462,334$ 368,596$

Non-current assets 744,559 437,432 470,489

Total assets 1,090,616$ 899,766$ 839,085$

Current liabilities 346,057$ 462,334$ 367,737$

Non-current liabilities 744,559 437,432 470,489

Total liabilities 1,090,616 899,766 838,226

Net assetsRestricted - - 859

Total net asset - - 859

Total liabilities and net assets 1,090,616$ 899,766$ 839,085$




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THE ATC AS A WHOLE (continued)

Table 2 Statements of Revenues, Expenses, and Changes in Net Assets

FY 2010 FY 2009 FY 2008

Revenues:Operating revenues:

Charges for services 4,215$ 21,785$ 6,735$ Operating grants and contributions - 528,391 338,620 Sponsor contributions 4,948,678 5,262,495 4,562,439

Total revenues 4,952,893 5,812,671 4,907,794

Expenses:Salaries 2,964,788 3,688,584 3,229,094 Benefits 960,920 924,093 846,549 Utilities 356,656 382,199 366,150 Contractual services 127,978 239,207 257,649 Other services and expenses 49,013 75,511 121,795 Materials, maintenance, and supplies 272,393 243,476 161,898 Administrative fee 221,145 260,460 242,997

Total expenses 4,952,893 5,813,530 5,226,132

Increase/(decrease) in net assets -$ (859)$ (318,338)$

Results for the Year REVENUES The ATC’s total revenues for fiscal year 2010, 2009 and 2008 were $4,952,893, $5,812,671, and $4,907,794, respectively. This is a 15% decrease from fiscal year 2009 and a 1% increase from fiscal year 2008. Due to their fiscal constraints, both Volusia and Flagler County School Boards did not make Sponsor contributions in 2010. Sponsorship contributions were attributable only to Daytona State College. Daytona State College’s contribution included $688,180 of Operating Cost of New Facilities funding from the State of Florida. For fiscal year 2009, the revenue distributions from the Sponsors were $3,701,366 from Daytona State College, $1,235,816 from VCSB, and $325,313 from FCSB. For fiscal year 2008, the revenue distributions from the Sponsors were $2,870,310, $1,200,000, and $492,129, respectively. There were operating grants and contributions for fiscal year 2010, 2009 and 2008 of $0, $528,391 and $338,620, respectively. The ATC received no capital contributions in fiscal year 2010, 2009 and 2008.




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EXPENSES

Total expenses for the 2010 fiscal year were $4,952,893, as compared to $5,813,530 and $5,226,132 for fiscal year 2009 and 2008, resulting in a 15% decrease and 5.2% decrease, respectively over the prior years.

A view of expenses by category follows:

Amount % of Total Amount % of Total Amount % of TotalSalaries 2,964,788$ 59.9% 3,688,584$ 63.4% 3,229,094$ 61.9%Benefits 960,920 19.4% 924,093 15.9% 846,549 16.2%Utilities 356,656 7.2% 382,199 6.6% 366,150 7.0%Contractual services 127,978 2.5% 239,207 4.1% 257,649 4.9%Other services and expenses 49,013 1.0% 75,511 1.3% 121,795 2.3%Materials, maintenance and supplies 272,393 5.5% 243,476 4.2% 161,898 3.1%Administrative fee 221,145 4.5% 260,460 4.5% 242,997 4.6%

Total 4,952,893$ 5,813,530$ 5,226,132$

FY 2010 FY 2009 FY 2008

Contractual Services showed a decrease over the previous year mainly due to the reduction of Tri-State employees in 2010. In addition, reductions in Sponsor contributions from Volusia and Flagler County School Boards and the discontinuation of high school level courses this year led to some employees returning to the school boards or College for employment. In turn, salaries, benefits, and other services and expenses decreased in the current year. It is doubtful that further significant reductions can be obtained without a detrimental effect upon operations.

Program expenses by functional area are as follows:

Amount % of Total Amount % of Total Amount % of TotalInstructional 3,444,874$ 69.6% 3,932,523$ 67.6% 3,447,481$ 66.0%Academic support 396,431 8.0% 359,657 6.2% 425,919 8.1%Student support 146,517 3.0% 466,210 8.0% 318,684 6.1%Institutional support 232,766 4.7% 322,490 5.6% 314,850 6.0%Plant operations and maintenance 732,305 14.8% 732,650 12.6% 719,198 13.8%

4,952,893$ 5,813,530$ 5,226,132$

FY 2010 FY 2009 FY 2008




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EXPENSES (continued)

The largest increase in functional expenses was in the Academic Support area, reflecting an additional emphasis on academics. The largest decrease in functional expense was in the Instructional area, reflecting a decrease primarily in salaries and benefits. Several employees returned to their respective county school districts or to other departments of the College. Student Support also decreased significantly as a result of high school level courses dropped from the ATC curriculum in 2010.

CAPITAL ASSETS AND DEBT ADMINISTRATION As of June 30, 2010, the ATC has no debt and no capital assets. Facility and equipment items are contributed equipment to the ATC for the use of training students. The equipment is not the property of the ATC and is replaced occasionally by Sponsors. The building and equipment were funded by the Sponsors and state appropriations, which was in accordance with the Consortium Agreement. The College has no debt, however, the Generally Accepted Accounting Principles (GAAP) in the United States requires employers to accrue a liability for employees’ rights to receive compensation for future absences when certain conditions are met. The amount of compensated absence leave is based upon “vested” leave as prescribed by The Office of the Comptroller, Department of Banking and Finance, Bureau of Accounting. Therefore, as reported in Note F to the financial statements, for the fiscal year 2010 and 2009, the ATC had compensated absences amounting to $714,480, and $676,523, respectively. In addition, during fiscal year 2010, the ATC implemented GASB No. 45, which requires the ATC to report the net OPEB obligation. As of June 30, 2010, the ATC has a net OPEB obligation of $244,717. These figures are reflected in the Statements of Net Assets. ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE The economic position of the Advanced Technology Center continues to be closely tied to that of the sponsors in 2010. Due to their fiscal constraints both the Volusia County School Board and the Flagler County School Board will not be providing support for the Advanced Technology Center in Fiscal Year 2011, as was the case in 2010. Accordingly, all high school level courses have been dropped by the ATC, although dual enrollment in college level courses continues. In order to maintain necessary funds for operation, one sponsor, Daytona State College, is funding the ATC at this time. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the finances of Volusia Flagler Advanced Technology Center. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Dr. Rand Spiwak, Executive Vice President and CFO, Daytona State College, 1200 W. International Speedway Blvd. P.O. Box 2811 Daytona Beach, Florida 32120-2811.


STATEMENTS OF NET ASSETS

June 30,

2010 2009

Current assetsCash and cash equivalents 129,652$ 219,894$

214,638 239,091 Due from other agencies - 3,049 Prepaid items 1,767 300

Total current assets 346,057 462,334

Noncurrent assets744,559 437,432

Total assets 1,090,616$ 899,766$

Current liabilitiesAccounts payable 18,060$ 15,359$ Salaries payable 113,359 207,884 Compensated absences payable 214,638 239,091

Total current liabilities 346,057 462,334

Noncurrent liabilitiesCompensated absences payable 499,842 437,432 Other postemployment benefits ("OPEB") payable 244,717 -

Total liabilities 1,090,616 899,766

Net assetsRestricted - -

Total liabilities and net assets 1,090,616$ 899,766$

LIABILITIES AND NET ASSETS

ASSETS

Due from sponsors - (Note C)

Due from sponsors - (Note C)

The accompanying notes are an integral part of these financial statements.

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STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS

Years ended June 30,

2010 2009Revenues

Operating revenues:Charges for services 4,215$ 21,785$ Operating grants and contributions - 528,391 Sponsor contributions 4,948,678 5,262,495

Total operating revenues 4,952,893 5,812,671

ExpensesOperating expenses:

Salaries 2,964,788 3,688,584 Benefits 960,920 924,093 Utilities 356,656 382,199 Contractual services 127,978 239,207 Other services and expenses 49,013 75,511 Materials, maintenance, and supplies 272,393 243,476 Administrative fee 221,145 260,460

Total operating expenses 4,952,893 5,813,530

Operating Income (Deficit) - (859)

Net assets, beginning of year - 859

Net assets, end of year -$ -$


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STATEMENTS OF CASH FLOWS

Years ended June 30,

2010 2009Cash flows from operating activities

Sources of fundsReceipts from sponsor contributions 4,666,004$ 4,627,799$ Receipts from state contributions - 1,191,962 Receipts from federal contributions 3,049 115,995 Receipts from charges for services 4,215 21,785

Uses of fundsPayments to suppliers (321,587) (321,848) Payments to utilities and communications (354,210) (380,425) Payments to employees (3,059,314) (3,627,364) Payments for employee benefits (678,246) (924,093) Payments for contractual services (129,008) (241,636) Payments for administrative fee (221,145) (260,460)

Net cash provided by (used in) operating activities (90,242) 201,715

(90,242) 201,715

219,894 18,179

129,652$ 219,894$

Operating income (deficit) -$ (859)$

Decrease (increase) in certain assetsDue from sponsors - current 24,453 60,502 Due from sponsors - noncurrent (307,127) 33,057 Due from other agencies 3,049 46,916 Prepaid items (1,467) 559

Increase (decrease) in certain liabilitiesAccounts payable 2,701 (4,076) Salaries payable (94,525) 61,220 Compensated absences - current (24,453) 37,453 Compensated absences - noncurrent 62,410 (33,057) OPEB 244,717 -

Net cash provided by (used in) operating activities (90,242)$ 201,715$

Net increase (decrease) in cash and cash equivalents

Reconciliation of deficit from Operations to Net Cash Provided by (used in) Operating Activities:

Adjustments to reconcile deficit from operations to net cash provided by (used in) operating activities:

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year


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NOTES TO FINANCIAL STATEMENTS

June 30, 2010 and 2009

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of Volusia Flagler Advanced Technology Center, Inc. (the “ATC”) conform to generally accepted accounting principles as applicable to governments. The following is a summary of the significant policies.

1. Reporting entity The ATC is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not For Profit Corporation Act, and Section 228.505, Florida Statutes. The governing body of the ATC is the not-for-profit corporation’s Board of Directors. The general operating authority of the ATC is contained in Section 1002.34, Florida Statues. The ATC operates under a charter of the sponsors, Daytona State College (the “College”), Flagler County School Board (the “FCSB”) and Volusia County School Board (the “VCSB”), hereafter referred to as the “Sponsors”. The current charter is effective until June 30, 2011 and may be renewed every five school years by mutual written agreement between the ATC and the Sponsors. At the end of the term of the charter, the Sponsors may choose not to renew the charter. The profits will revert to the Sponsors based on their proportionate equity in the ATC as defined by the Consortium Agreement. Criteria for determining if other entities are potential component units of the ATC which should be reported with the ATC’s basic financial statements are identified and defined in the Governmental Accounting Standards Board’s (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Section 2100 and 2600. The application of these criteria provide for identification of any entities for which ATC is financially accountable and other organizations for which the nature and significance of their relationship with the ATC are such that exclusion would cause the ATC’s basic financial statements to be misleading or incomplete. Based on these criteria, no component units are included within the reporting entity of the ATC. Additionally, the ATC does not meet the criteria of a component unit of any of the Sponsors and is reported as an investment in a joint venture. 2. Basis of accounting The government-wide financial statements report information about the reporting government as a whole excluding fiduciary activities. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange revenues. Business-type activities rely, to a significant extent, on fees and charges for support. Funds are organized into three major categories: governmental, proprietary and fiduciary. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues and expenditure/expenses.



June 30, 2010 and 2009

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2. Basis of accounting (continued) For financial reporting purposes, the ATC reports all of its operations as business activity in a single enterprise fund. Therefore, the government-wide and the fund financial statements are the same. Enterprise funds are proprietary funds. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating activity generally arises from providing services in connection with a proprietary fund’s principal activity. The operating revenues of the ATC consist primarily of sponsor contributions, operating grants and contributions, and charges for services. Operating expenses for the ATC include the cost of salaries, benefits, utilities, contractual services, other services and expenses, materials, maintenance and supplies, and administrative fees. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 3. Measurement focus, basis of accounting and basis of presentation Measurement focus is a term used to describe which transactions are recorded within the various financial statements. The proprietary fund utilizes an economic resources measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. The basis of accounting used is similar to businesses in the private sector, thus, this fund is maintained on the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset is used. For financial reporting purposes, the ATC considers its Sponsor contributions associated with operations as operating revenue because these funds more closely represent revenues generated from operating activities rather than nonoperating activities. As permitted by Governmental Accounting Standards Board (GASB) Statement of Governmental Accounting Standard (SGAS) No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting, the ATC has elected not to apply Financial Accounting Standards Board statements and interpretations issued after November 30, 1989.



June 30, 2010 and 2009

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. Cash and cash equivalents The amount reported as cash and cash equivalents consists of the ATC’s equity in Daytona State College’s pooled cash account. The Daytona State College (the ATC’s fiscal agent) considers all deposits with original maturities of three months or less to be cash equivalents. Under this definition, the Daytona State College considers amounts invested in the State Treasury Special Purpose Investment Account (SPIA) investment pool to be cash equivalents.

5. Facility and equipment usage

Facility and equipment items are contributed equipment to the ATC for the purpose of students’ training. The equipment is not the property of the ATC and is replaced periodically by Sponsors. In accordance with the Consortium Agreement, the building and equipment were funded by the Sponsors and state appropriations. The title to the land and building remains with VCSB and the equipment remains with the College. The Sponsors have entered into a lease agreement for the ATC’s use of the land and building. The terms of the lease call for the College to pay VCSB $1 per year for 40 years. Equipment purchased with state appropriations are recorded on the financial statements of the College. The College has obtained grants and other state funding to purchase additional assets for use at the ATC; such equipment remains on the College’s financial statements. The cafeteria equipment was transferred from VCSB and remains on the financial statements of VCSB. In accordance with Government Auditing Standards, the recording of contributed facilities is not required and since the amount cannot be reasonably estimated, the accompanying financial statements do not reflect any contributed revenues for the land, facilities and equipment usage.

6. Revenue sources

Revenues for current operations are primarily from the Sponsors pursuant to the funding provisions as described in the Bridge Document dated April 9, 2004, which is an addendum to the original charter. If the full time equivalent (FTE) allocation rate exceeds base funding, the Sponsors will fund at that year’s full FTE allocation rate after their approval. The College is responsible for funding the operating cost of new facilities (OCNF), the site and facility. The College receives an administrative fee equal to 5% of total ATC budgeted expenses from the ATC for serving as the fiscal agent, which is reflected as a school administration expenditure/expense. The FY 2010 and 2009 base funding for operations is $4,948,678 and $3,701,366 from the Daytona State College, $0 and $1,235,816 from VCSB, and $0 and $325,313 from FCSB.



June 30, 2010 and 2009

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6. Revenue sources (continued) Severe funding reductions have been experienced by the school board Sponsors due to budget cuts and, therefore, these Sponsors no longer have the fiscal capacity to provide sufficient support to the educational programs as set out in the charter agreement. Each party desires to continue to jointly provide services to students. For FY 2010 and future years, the College has agreed to fulfill the funding requirements of the charter. Daytona State College, as fiscal agent of the ATC, receives state awards for the enhancement of various educational programs. This assistance is generally received based on proposals submitted to and approved by various granting agencies. The College collects this assistance and remits it to the ATC through its annual funding discussed above. 7. Income taxes

The ATC is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not For Profit Corporation Act, and Section 228.505, Florida Statutes. Accordingly, the ATC is exempt from Federal income taxes. 8. Compensated absences

Daytona State College’s personnel policies allow limited vesting of unused employee vacation and unused sick leave time. Compensated absences consist of vacation earned by employees but not yet taken or paid, and limited amount of sick leave earned by the ATC employees. Personnel working at the ATC are employees of the College, and as such, some leave was earned prior to the inception of the ATC’s charter. The ATC has recorded a liability that represents total leave accrued from the hire date.

9. Prepaid items

Certain payments to vendors reflect costs applicable to future periods and are recorded as prepaid items in the financial statements.



June 30, 2010 and 2009

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 10. Net assets

Net assets represent the difference between assets and liabilities and are generally reported in three categories as hereafter described. Net assets invested in capital assets, represent capital assets, net of accumulated depreciation. Net assets are reported as restricted when their use is restricted by (1) external groups such as grantors, creditors or laws and regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Unrestricted net assets are net assets that do not meet the definitions of the classifications previously described. The ATC’s policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. All net assets of the ATC are restricted by enabling legislation. In accordance with the charter, any deficits will be funded by the Sponsors, and therefore, no net assets existed as of the fiscal year ended June 30, 2010 and 2009. 11. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make various estimates. Actual results could differ from those estimates.

NOTE B - CASH

Custodial Credit Risk - The ATC maintains its cash balances in a pooled account with Daytona State College in a financial institution (the “Bank”). The Bank participates in the Federal Deposit Insurance Corporation (FDIC) Transaction Account Guarantee Program. Under this program, through December 31, 2010, all non-interest bearing transaction accounts (demand deposit accounts) are fully guaranteed by the FDIC for the entire amount in the account. Coverage under this program is in addition to and separate from the coverage available under the FDIC’s basic deposit insurance rules. Balances in other account types, including interest bearing accounts, are insured up to $250,000. As of June 30, 2010 and 2009, none of the ATC’s bank balances of $129,652 and $219,894, respectively, was exposed to custodial credit risk, as all were either insured or collateralized.



June 30, 2010 and 2009

17

NOTE C - AMOUNTS DUE FROM SPONSORS

The amount reported as due from Sponsors represents expenditures in excess of monies provided by the Sponsors (see Note D).

Due from sponsors is as follows at June 30:

2010 2009Due from sponsors - current

Compensated absences 214,638$ 239,091$ Due from sponsors - noncurrent

Compensated absences 499,842 437,432 OPEB 244,717 -

959,197$ 676,523$

NOTE D - RELATED PARTIES

The ATC primarily receives its funding from the Sponsors. During the year ended June 30, 2010, Daytona State College contributed $4,948,678. The VCSB and FCSB did not make contributions to the ATC due to the budget cut experienced, as discussed in Note A-6. Daytona State College contributed $668,180 in OCNF. Sponsor contributions accounted for over 99% of total revenues during 2010. During the year ended June 30, 2009, Daytona State College contributed approximately $3,701,000, VCSB and FCSB contributed approximately $1,236,000 and $325,000 to the ATC, respectively. Daytona State College contributed approximately $733,000 in OCNF. Sponsor contributions accounted for over 91% of total revenues during 2009. Further, in addition to being one of the three sponsors, Daytona State College is also the fiscal agent for the ATC. During the year ended June 30, 2010, the College received $221,145 in administrative fees from the ATC for acting as the ATC’s fiscal agent. During the year ended June 30, 2009, the College received $260,460 in administrative fees from the ATC for acting as the ATC’s fiscal agent. As of June 30, 2010 and 2009, a receivable of $959,197 and $676,523 is recorded as Due from Sponsors, respectively. Due to changes in Sponsor contributions effective FY 2010, and discussed at Note A-6, the total balance at June 30, 2010 is due from Daytona State College. A lease has been entered into by the Sponsors as outlined in Note A-5.

NOTE E - CONCENTRATIONS

For the year ended June 30, 2010, approximately 99% of revenues and 100% of receivables reflected in the basic financial statements are from Daytona State College. For the year ended June 30, 2009, approximately 91% of revenues and 99% of receivables reflected in the basic financial statements are from Sponsors.



June 30, 2010 and 2009

18

NOTE F - LONG-TERM LIABILITIES

A summary of changes in long-term liabilities are as follows:

BalanceJuly 1, 2009 Additions Deletions

BalanceJune 30, 2010

Due withinone year

Compensated absences 676,523$ 260,665$ 222,708$ 714,480$ 214,638$ OPEB - 259,762 15,045 244,717 -

Total 676,523$ 520,427$ 237,753$ 959,197$ 214,638$

BalanceJuly 1, 2008 Additions Deletions

BalanceJune 30, 2009

Due within one year

Compensated absences 672,127$ 297,671$ 293,275$ 676,523$ 239,091$

NOTE G - STATE RETIREMENT PROGRAM

Most employees working in regularly established positions of Daytona State College are covered by the Florida Retirement System, a State-administered, cost-sharing, multiple-employer, defined benefit retirement plan (the “Plan”). Plan provisions are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 60S, Florida Administrative Code, wherein Plan eligibility, contributions, and benefits are defined and described in detail. Participating employers include all State departments, counties, district school boards, community colleges, and universities. Many municipalities and special districts have elected to be participating employers. Essentially, all regular employees of participating employers are eligible to enroll as members of the Plan. The Florida Legislature reduced the vesting period for the Plan from 10 to 6 years of service effective July 1, 2001. Any member employed in a regularly established position as of July 1, 2001, with a total of 6 or more years of creditable service is considered vested. Former members who were not employed with a participating Plan employer on July 1, 2006, must return to covered employment for one year to become eligible for this six-year vesting provision. An exception to this one-year requirement applies to former members who are within one year of vesting under the pre-2001 vesting requirements.

These members will only be required to work the lesser of one year or the amount of time it would have taken to vest in their class of membership prior to July 1, 2001. All members are eligible for normal retirement benefits at age 62 or at any age after 30 years of service, which may include up to 4 years of credit for military service. The Plan also includes an early retirement provision, but imposes a penalty for each year a member retires before the specified retirement age.



June 30, 2010 and 2009

19

NOTE G - STATE RETIREMENT PROGRAM (continued)

The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments, as well as supplements for certain employees to cover social security benefits lost by virtue of retirement system membership. The Florida Retirement System annual report may be obtained by writing to the:

State of Florida Department of Administration Division of Retirement

1317 Windwood Blvd, Bldg 8 P O Box 9000

Tallahassee, FL 32315-9000 For the years ended June 30, 2010, 2009, and 2008, total ATC contributions were $257,506, $326,978, and $289,864, respectively, which equaled the required contributions for each year.

The contribution rates for plan members during the 2009-2010 and 2008-2009 fiscal years are shown below:

Class or Plan

EmployeeEmployer

(A)Florida Retirement System, Regular Pension 0.00% 9.85%Florida Retirement System, Regular Investment 0.00% 9.85%Florida Retirement System, Senior Management Service 0.00% 13.12%Teachers' Retirement System, Plan E 6.25% 11.35%Deferred Retirement Option Program - Applicable to Members from all of the Above Classes or Plan 0.00% 10.91%Florida Retirement System, Reemployed Retiree (B) (B)

Notes: (A) Employer rates include 1.11 percent of the post-employment health insurance supplement. Also, employer rates, other than for DROP participants, include .05 percent for administrative costs of the Public Employee Optional Retirement Program for 2010.

(B) Contribution rates are dependent upon retirement class or plan in which reemployed.

FY 2009/2010Percent of Gross Salary



June 30, 2010 and 2009

20

NOTE G - STATE RETIREMENT PROGRAM (continued)

State College System Optional Retirement Program - Pursuant to Section 240.3195, Florida Statutes, the Florida Legislature created the State College System Optional Retirement Program (the “Program”) for eligible college instructors and administrators. The Program is designed to aid the college in recruiting employees by offering more portability to those employees who are not expected to remain in the Florida Retirement System for six or more years. The Program is a defined contribution plan, which provides full and immediate vesting of all contributions submitted to the participating companies on behalf of the participant. Employees in eligible positions are allowed to make an irrevocable election to participate in the Program, rather than the Florida Retirement System, and purchase retirement and death benefits through contracts provided by certain insurance carriers. The employing college contributes, on behalf of the participant, 10.43% of the participant's salary, less a small amount used to cover administrative costs. The remaining contribution is invested in the company or companies selected by the participant to create a fund for the purchase of annuities at retirement. The participant may contribute, by payroll deduction, an amount not to exceed the percentage contributed by the College to the participant's annuity account. Public Employee Optional Retirement Program - Pursuant to Section 121.4501, Florida Statutes, the Florida Legislature created a Public Employee Optional Retirement Program (PEORP), also known as the Florida Retirement System Investment Program. The PEORP is a defined contribution plan, sponsored by the State of Florida, available as an option to the Florida Retirement System, and is self-directed by the employee. Daytona State College employees already participating in the State College System Optional Retirement Program or the DROP are not eligible to participate in this program. A retirement account is established for each employee who selects this option and an employer contribution is directed to the individual account. The employees have the responsibility of selecting how their funds are invested within the approved set of investment choices and may take their funds when they leave the program. A Deferred Retirement Option Program (DROP) subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in the DROP for a period not to exceed 60 months after electing to participate. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest.

NOTE H - OTHER POSTEMPLOYMENT BENEFITS OTHER THAN PENSION

The College follows Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, for certain other postemployment benefits administered by the College.



June 30, 2010 and 2009

21

NOTE H - OTHER POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (continued)

Plan description: The Other Postemployment Benefits Plan (the “Plan”) is a single-employer defined benefit plan administered by the College. Pursuant to the provisions of Section 112.0801, Florida Statutes, former employees who retire from the College are eligible to participate in the College’s self insured health and hospitalization plan for medical, prescription drug, dental, vision and life insurance benefits. The College subsidizes the premium rates paid by retirees for all but life insurance benefits by allowing them to participate in the Plan at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the Plan on average than those of active employees. The College does not offer any explicit subsidies for retiree coverage. Retirees are encouraged, but not required, to enroll in the Federal Medicare program for their primary coverage as soon as they are eligible. The College does not issue a stand-alone report and is not included in the annual report of a public employee retirement system or another entity. Funding policy: Benefit provisions are pursuant to provisions of Section 112.0801, Florida Statutes. Both benefits and contributions may be amended by the Board of Trustees. The College has not advance-funded or established a funding methodology for the annual other postemployment benefit (OPEB) cost or the net OPEB obligation, and the Plan is financed on a pay-as-you-go basis. For the 2009-10 fiscal year, an average of 55 retirees received postemployment healthcare benefits and 148 received postemployment life insurance benefits. The College provided required contributions of $303,179 toward the annual OPEB cost, comprised of benefit payments made on behalf of retirees for claims expenses (net of reinsurance), administrative expenses, and reinsurance premiums. Retiree contributions totaled $295,703. Annual OPEB cost and net OPEB obligation: The College’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The ARC represents a level of funding that if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the College’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the College’s net OPEB obligation.



June 30, 2010 and 2009

22


The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation as of June 30, 2010, and for the transition and preceding years were as follows:

Description College ATCNormal cost (service cost for one year) 1,314,333$ 65,224$ Amortization of unfunded actuarial accrued liability 572,721 28,421

Annual required contribution 1,887,054 93,645 Interest on net OPEB obligation 100,859 5,005 Adjustment to annual required contribution (115,428) (5,728)

Annual OPEB cost (expense) 1,872,485 92,922 Contribution toward the OPEB cost (303,179) (15,045)

Increase in net OPEB obligation 1,569,306 77,877 Net OPEB obligation, beginning of year 3,361,982 166,840

Net OPEB obligation, end of year 4,931,288$ 244,717$

Amount

Funded status and funding progress: As of July 1, 2009, the most recent valuation date, the College’s unfunded actuarial accrued liability for benefits was $16,681,182 with a $0 actuarial value of assets, and a funded ratio of 0% on a $50,154,958 covered annual payroll of active participating employees. Using a ratio of the ATC’s 53 active participating employees compared to the College’s 1,068, the ATC’s unfunded actuarial accrued liability is $827,811 with a $0 actuarial value of assets, and a funded ratio of 0% on a $2,488,963 covered annual payroll of active participating employees.



June 30, 2010 and 2009

23


Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment and termination, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. In the future, the Estimated Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial methods and assumptions: Projections of benefits for financial reporting purposes are based on the substantive Plan provisions, as understood by the employer and participating members, and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The College’s OPEB actuarial valuation as of July 1, 2009, used the entry age cost actuarial method to estimate the unfunded actuarial liability as of June 30, 2010, and the College’s 2009-10 fiscal year ARC. This method was selected because it is the same method used in the private sector for determination of retiree medical liabilities. Because the OPEB liability is currently unfunded, the actuarial assumptions included a 3% rate of return on invested assets, which is the College’s expectation of investment returns under its investment policy. The actuarial assumptions also included a payroll growth of 3% per year, and an annual healthcare cost trend rate of 9% initially for the 2007-08 fiscal year, reduced by 1% per year, to an ultimate rate of 5% after six years. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2007, was 27 years.

NOTE I - COMMITMENTS AND CONTINGENT LIABILITIES

General - In the normal course of conducting its operations, the ATC may become party to various legal actions and proceedings. As of June 30, 2010, there are no pending lawsuits. Grants - Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the state government. Any disallowed claims, including amounts already collected, may constitute a liability for the applicable funds. As of June 30, 2010, management is not aware of any such disallowed claims.



June 30, 2010 and 2009

24

NOTE J - RISK MANAGEMENT

The ATC is exposed to various risk of loss related to torts; thefts of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

The ATC is part of the Daytona State College’s self-insured insurance program and the Florida Community Colleges Risk Management Consortium program.

The Florida College Risk Management Consortium (Consortium) was created under the authority of Section 1001.64(27), Florida Statutes, by the boards of trustees of the Florida public colleges for the purpose of joining a cooperative effort to develop, implement, and participate in a coordinated Statewide College risk management program. The Consortium is self sustaining through member assessments (premiums) and is reinsured through commercial companies for claims in excess of specified amounts. Insurance coverage obtained through the Consortium includes fire and extended property, general and automobile liability, workers’ compensation, and other liability coverage. There were no significant reductions of insurance coverage from prior years and actual settlements did not exceed insurance coverage for each of the past three years.

NOTE K - SUBSEQUENT EVENT Management has evaluated subsequent events through December 15, 2010, the date which the financial statements were available to be issued.

25

REQUIRED SUPPLEMENTARY INFORMATION


ESTIMATED SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN

June 30, 2010

Actuarial Valuation Date

Actuarial Value of Assets

(a)

Actuarial Accrued

Liability (AAL)(b)

Unfunded AAL (UAAL)

(b-a)Funded Ratio

(a/b)

Estimated Covered Payroll

( c)

UAAL as % of Covered Payroll([b-a]/c)

7/1/2009 -$ 827,811$ 827,811$ 0% 2,488,963$ 33%

26

27

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 Volusia Flagler Advanced Technology Center, Inc. Daytona Beach, Florida We have audited the financial statements of the business type activities of Volusia Flagler Advanced Technology Center, Inc. (the “ATC”), as of and for the year ended June 30, 2010, which collectively comprise the ATC’s basic financial statements and have issued our report thereon dated December 15, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the ATC’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the ATC’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the ATC’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.



Phone: 407-841-8841 Fax: 407-841-8849


28

Compliance and Other Matters As part of obtaining reasonable assurance about whether the ATC’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the ATC’s Board of Directors, management, Sponsors and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. December 15, 2010 Melbourne, Florida


29

MANAGEMENT LETTER To the Board of Directors Volusia Flagler Advanced Technology Center, Inc. Daytona Beach, Florida We have audited the financial statements of Volusia Flagler Advanced Technology Center, Inc. (the “ATC”), as of and for the fiscal year ended June 30, 2010, and have issued our report thereon dated December 15, 2010. We conducted our audit 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. We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters. Disclosures in that report, which is dated December 15, 2010, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.850, Rules of the Auditor General, which governs the conduct of the charter school and similar entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors’ reports:

Section 10.854(1)(e)1, Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no recommendations in the preceding audit report.

Section 10.854(1)(e)3, Rules of the Auditor General, requires that we address in the

management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Section 10.854(1)(e)4, Rules of the Auditor General, requires that we address violations of

laws, regulations, contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings.



Phone: 407-841-8841 Fax: 407-841-8849


30

Section 10.854(1)(e)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential affect on the financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse and (2)control deficiencies that are not significant deficiencies. In connection with our audit, we did not have any such findings.

Section 10.854(1)(e)6, Rules of the Auditor General, requires the name or official title of

the school. The official title of the school is Volusia Flagler Advanced Technology Center, Inc., which is a not-for-profit corporation organized pursuant to Chapter 617, Florida Statues, the Florida Not-For-Profit Corporation Act, and Section 1002.34, Florida Statues.

Section 10.854(1)(e)2., Rules of the Auditor General, requires a statement be included

as to whether or not the school has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that The Volusia Flagler Advanced Technology Center, Inc. did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.854(1)(e)7.a. and 10.855(10)., Rules of the Auditor General, we

applied financial condition assessment procedures. It is management’s responsibility to monitor the ATC’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by management.

Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of Volusia Flagler Advanced Technology Center, Inc.’s management, Board of Directors, others within the entity, and the State of Florida Auditor General and other regulatory agencies and is not intended to be and should not be used by anyone other than these specified parties. December 15, 2010 Melbourne, Florida


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