EMORY UNIVERSITY Atlanta Georgia Consolidated Financial by jolinmilioncherie

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




                                                                    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, 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


                                Federal Grantor/Pass-                                      CFDA/                 Federal
                            Through Grantor/Program Title                              Contract 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




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

                                                                 23                                                (Continued)
                                                      EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                     Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
     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 - passed
        through State of Georgia Department of Human Resources:
           Training and Technical Assistance for Parents and Providers                 93.575                          43,684




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                               24
                                                        EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                    Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
     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




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                               25
                                                       EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                    Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
        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

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

                                                                                                                   (Continued)
                                                              26
                                                        EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                       Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
        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




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                                27
                                                       EMORY UNIVERSITY
                                             Schedule of Expenditures of Federal Awards
                                                     Year ended August 31, 2003


                                Federal Grantor/Pass-                                          CFDA/               Federal
                            Through Grantor/Program Title                                  Contract Number       Expenditures
           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


See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                    (Continued)
                                                                  28
                                                         EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                     Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
              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




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

                                                                                                                   (Continued)
                                                               29
                                                      EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                     Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
           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




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                              30
                                                      EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                     Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
           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




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                              31
                                                       EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                    Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
     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




See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                   (Continued)
                                                              32
                                                     EMORY UNIVERSITY
                                            Schedule of Expenditures of Federal Awards
                                                    Year ended August 31, 2003


                               Federal Grantor/Pass-                                       CFDA/                 Federal
                           Through Grantor/Program Title                               Contract Number         Expenditures
     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




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

                                                              33
                                                      EMORY UNIVERSITY
                                         Schedule of Expenditures of State of Georgia Awards
                                                     Year ended August 31, 2003


                   State of Georgia                                                                          2003
                   Contract 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



See accompanying notes to schedule of expenditures of Federal awards and schedule of expenditures of State of Georgia awards.
                                                                                                                         (Continued)
                                                                   34
                                                      EMORY UNIVERSITY
                                         Schedule of Expenditures of State of Georgia Awards
                                                     Year ended August 31, 2003


                   State of Georgia                                                                          2003
                   Contract 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




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

                                                                   35
                                          EMORY UNIVERSITY
                             Notes to Schedule of Expenditures of Federal Awards
                                   and Schedule of Expenditures of State of
                                               Georgia Awards
                                               August 31, 2003



(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.




                                                      36                                            (Continued)
                                           EMORY UNIVERSITY
                             Notes to Schedule of Expenditures of Federal Awards
                                   and Schedule of Expenditures of State of
                                               Georgia Awards
                                               August 31, 2003



(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




                                                       37                                           (Continued)
                                           EMORY UNIVERSITY
                             Notes to Schedule of Expenditures of Federal Awards
                                   and Schedule of Expenditures of State of
                                               Georgia Awards
                                               August 31, 2003



(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.




                                                       38
            KPMG LLP
            Suite 2000
            303 Peachtree Street, NE
            Atlanta, GA 30308




                  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


The Board of Trustees
Emory University:

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.
                                                                            39
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




                                                 40
          KPMG LLP
          Suite 2000
          303 Peachtree Street, NE
          Atlanta, GA 30308




                          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


The Board of Trustees
Emory University:

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.
                                                                         41
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




                                                     42
                                           EMORY UNIVERSITY
                                  Schedule of Findings and Questioned Costs
                                         Year ended August 31, 2003



(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.




                                                       43                                           (Continued)
                                      EMORY UNIVERSITY
                             Schedule of Findings and Questioned Costs
                                    Year ended August 31, 2003



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.



                                                  44                                            (Continued)
                                     EMORY UNIVERSITY
                            Schedule of Findings and Questioned Costs
                                   Year ended August 31, 2003



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.




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