Audit report, Appling County Board of Education, Baxley, Georgia, year ended June 30, 1998, June 30, 1998

AUDIT REPORT APPLING COUNTY BOARD OF EDUCATION
BAXLEY, GEORGIA YEAR ENDED JUNE 30, 1998
',,-~---------------------
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

APPLING COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING ,STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

G

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

22

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

23

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

26

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

27

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

-

29

6

BY PROGRAM

30

APPLING COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-I33
SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 4, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Appling County Board ofEducation
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose fmancial statements of the Appling County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Appling County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe 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 overallfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

98ARL-13B

* The general purpose fmancial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose fmancial statements~
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department of Education for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects of such adjustments, if any, on the Special Revenue Fund, as might have
been determined to be necessary had we been able to satisfy ourselves as to the accuracyof the food service inventories as discussed in the third paragraph and except for the effects on the general purpose fmancial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Appling County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordancewith Government Auditing Standards, we have also issued our report dated May 4, 1999, on
our consideration ofthe Appling County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit
the information and do not express an opinion on it. In addition, we do not provide assurance that Appling
County Board ofEducation is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Appling County Board ofEducation does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe Appling County Board of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget
98ARL-13B

Circular A-133, Audits of States, Local Governments, and Non';'Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effect of adjustments, ifany, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph and except for the effects of the matters referred to in the fourth paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~ut.~ Russell W. Hinton State Auditor
RWH:gp 98ARL-13B

APPLING COUNTY BOARD OF EDUCATION

ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

APPLING COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30.1998

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 2,798,671.46 $

463,099.96 $

674,229.78

235,206.55

311,000.00

272,000.27

177,848.30

143,449.34

33,360.82 14,825.38

$ 3,211,726.31 $

965.735.50 $ ....._ ..9..4..6.0!:,2;;,;;3=0.0..5...

Total Liabilities and Fund Equity

$

The notes to the general purpose financial statements are an integral part of this statement.

-2-

965,735.50 $

94..6,.,2.3,.0.0..5..

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS

TOTALS

(Memorandum Only)

JUNE 30,1998

JUNE 30,1997

$

4,832.78 $

0.00 $ 3,940,833.98 $ 3,409,923.29

28,704.54

846,911.36

416,888.58

13.46

321,311.10

390,229.91

33,360.82 14,825.38

20,712.51 13,836.64

$

33,550.78 $

0.00 $ 5,157,242.64 $ 4,251,590.93

$

49,150.11 $

45,856.35

231,186.87

205,760.60

54,581.04

21,108.07

25,000.00

17,158.33

$

359,918.02 $

289,883.35

$

33,550.78

$

33,550.78

$

33,550.78 $

$

30,964.72

112,699.80 $

72.50

13,096.84

33,360.82 14,825.38

20,712.51 13,836.64

70,985.27 4,534,416.13

71,779.02 3,842,282.57

$ 4,797,324.62 $ 3,961.707.58

0.00 $ 5,157,242.64 $ 4,251,590.93

-3-

APPLING COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1998

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Services Operations
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In .... Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 10,275,092.97 $ 26,144,20
7,994,730.00 279,617,61
$ 18,575,584,78 $

736,332.43 2,117,780.08
371,997,34
3,226,109,85

$ 11,882,303.75 $

780,509.42 599,876.57 544,753,44 291,929.89 1,113,154,48 108,068.52 1,624,238,70 961,857.71
21,680.50

9,670.29 30,918,00

$ 17,968,961.27 $

$

606,623.51 $

1,446,353,10
107,537.49 194,298,69
4,979.84 54,252,67
6,064.55 39,334,04
5,392,26 1,250,118,27
1,457.31
3,109,788,22
116,321,63

$

$

-241,723.58

$

-241,723.58 $

$

364,899:93 $

2,846,826.38

8,597.58
8,597,58
124,919.21 467,261.22
12,648,31 988.74

FUND BALANCE JUNE 30

$ 3,211,726.31 $===6=05=:,8=1=7=.4=8

The notes to the general purpose financial statements are an integral part of this statement. -4-

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$

75,000.00

$ 31,734.94

$

106l34.94 $

$
144.56 1,727.79

11,086,425.40 $ 2,143,924.28 7,994,874.56
685,077.68

10,130,851.15 1,819,297.22 8,194,563.47 605,054.48

1,872.35 $ 21,910,301.92 $ 20,749,766.32

$

$

9,572.44

$

9,572.44 $

$

97,162.50 $

0.00 $ 13,328,656.85 $ 12,856,076.95

888,046.91 794,175.26 549,733.28 346,182.56 1,113,154.48 108,068.52 1,630,303.25 1,001,191.75
27,072.76 1,250,118.27
11,127.60 40,490.44

885,744.28 579,292.47 502,723.21 356,831.57 1,068,196.98 168,908.16 1,468,607.41 986,060.90
29,708.70 1,170,872.07
44,281.94 59,517.66

0.00 $ 21 ,088,321.93 $ 20,176,822.30

1,872.35 $

821,979.99 $

572,944.02

$

233,126.00

$

233,126.00

$

330,288.50 $

615,941.55

$

241,723.58 $

-241 ,723.58

$

0.00 $

29.64 -29.64
0.00

1,872.35 $ 31,678.43

821,979.99 $ 3,961,707.58

572,944.02 3,395,004.76

12,648.31 988.74

-5,997.81 -243.39

$

946,230.05 $

33,550.78 $ 4,797,324.62 $ 3,961,707.58

-5-

APPLING COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30,1998

EXHIBIT"C"

FUND BALANCE JUNE 30,1998

$ 2,271,301.72 $ 3,211,726.31

$

382,544.07 $

6,;,;05;;,:,:,8:;.,;1.;,;7.;,;;.48;;,

The notes to the general purpose financial statements are an integral part of this statement. -7-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Appling County Board ofEducation (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources .obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives.

-8-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for fmancial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUNDS - the funds used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted"for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (Le., expenditures and other fmancing uses) in net current assets. Their reported fund balance is considered a measureof available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Agency funds are purely custodial in nature and do not involve measurement of results of operations.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation
-9-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Appling County Board of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.

- 10-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT liD"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation ofthe United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 11 -

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Appling County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on September 17, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Appling County Tax Commissioner bills and collects the property taxes for the Board of Education.

The tax millage rate levied for the 1997 tax year (calendar year) for the Appling County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

13.22 mills

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

COMPENSATED ABSENCES

Compensated absences represent obligations of the Board relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current poqion ofthis obligation as this amount is deemed immaterial to the general purpose financial statements.

Additionally, the dollar value ofaccumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements.

INTERFUND TRANSACTIONS

The Board has the following types of interfund transactions:

- 12-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
- 13-

APPLING COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS AND INVESTMENTS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $1,400,278.03. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category

Bank Balance

1

$ 407,784.38

2

869,144.97

3

123,348.68

Total

$ 1.400.278.03

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $440,591.27 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state . government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which
follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to

- 14-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS
be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-tenn instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration of approximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years.
Note 3: NON-MONETARY TRANSACTIONS
The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk of loss associated with torts, assets and errors or omissions. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three years.
The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.
The Board is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the Board. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

- 15 -

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

The Appling County Board ofEducation has not incurred any liabilities for unemployment compensation during the past two years.

The Board participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991 to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Board pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $2,000,000.00.

The Board has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent Each Employee

$ 100,000.00 $ 10,000.00

Note 5: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of $367,895.49 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnelAdministration For Health Insurance ofNon-Certified Personnel
In the amount of$293,818.20

Paid to the Teachers Retirement System of Georgia . For Teachers Retirement System (TRS) Employer's Cost
In the amount of$31,912.29

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost
In the amount of$42,165.00

Note 6: CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall fmancial position.

- 16-

APPLING COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 6: CONTINGENT LIABILITIES

The Board is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general purpose financial statements.

Note 7: ACCUMULATED EMPLOYEES' LEAVB

Noncertified employees earn annual leave ranging from five to fifteen days each year depending upon the employee's length of continuous service with a maximum accumulation of fifteen days. Employees are paid, at the current rate ofpay, for unused accumulated leave upon retirement or termination of employment. See Note 1- Compensated Absences

Note 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Oeorgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE
Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross
earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 1,496,025.41 $ 1,428,764.85 $ 1,347,361.19

- 17 -

APPLING COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET .SPECIAL REVENUE FUND JUNE 30.1998

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

177,161.46 $

68,206.95

311,000.00

22,160.39

8,208.00

33,360.82 14,825.38

Total Assets

$

558,508.05 $ ======7..6.'.6.Oc41,;,,;4,;,;;;.9oi:5

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity
See notes to the general purpose financial statements. - 18-

$

11,493.61 $

13,555.40

58,013.65

62,735.54

124.01

$

69,507.26 $

76,414.95

$

33,360.82

14,825.38

440,814.59 $

0.00

$ 489,000.79 $

0.00

$

558,508.05 $

76;;,:".4..1;,,,;4..9.-.5

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS
JUNE 30, 1998 JUNE 30, 1997

$

213,614.66 $

4,116.89 $ 463,099.96 $ 526,131.68

311,000.00

113,080.95

143,449.34

196,109.27

33,360.82 14,825.38

20,712.51 13,836.64

$

326,695.61 $

4,116.89 $

965,735.50 $

756,790.10

$

24,101.10

110,437.68

54,457.03

25,000.00

$

213,995.81

$

19,926.36

$

49,150.11

42,733.85

231,186.87

205,760.60

54,581.04

21,108.07

25,000.00

$

359,918.02 $

289,528.88

$

112,699.80

$

112,699.80 $

13,096.84

0.00 $

$

112,699.80 $

4~,..:..;11;.;:;.6.;.;;:.8..;:..9
4,116.89 $

33,360.82 14,825.38
444,931.48
605,817.48 $

20,712.51 13,836.64
419,615.23
467,261.22

$

326,695.61 $

4,116.89 $

965,735.50 $

756,790.10

- 19-

APPLING COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1998

FUND BALANCE JUNE 30 See notes to the general purpose financial statements.
- 20-

$

489,000,79 $ ======,,=0=,0.=0

EXHIBIT"F"

FEDERAL
PROGRAMS

OTHER
PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30, 1997

$ 1,294,368.68 -----$
$ 1,294,368.68 $

$ 13,467.50

736,332.43 $ 2,117,780.08
371,997.34

714,240.19 1,796,180.31
364,828.84

13,467.50 $ 3,226,109.85 $ 2,875,249.34

$ 887,783.85 $
35,613.67 193,083.44
4,979.84 54,252.67
1,080.00 19,334.04 4,299.77 2,936.02

$ 1,203,363.30 $

$

91,005.38 $

11,172.93 $ 1,446,353.10 $ 1,334,833.71

1,457.31

107,537.49 194,298.69
4,979.84 54,252.67
6,064.55 39,334.04
5,392.26 1,250,118.27
1,457.31

132,733.52 88,463.94 3,382.53 60,225.86
30.00 4,431.53 39,007.43 8,031.70 1,170,872.07 1,821.95

12,630.24 $ 3,109,788.22 $ 2,843,834.24

837.26 $ 116,321.63 $

31,415.10

8,597.58

$

99,602.96 $

13,096.84

8,597.58

29.64

837.26 $ 3,279.63

1'24,919.21 $ 467,261.22

31,444.74 442,057.68

12,648.31 988.74

-5,997.81 -243.39

$ 112,699.80 $

4,116.89 $ 605,817.48 $ 467,261.22

- 21 -

APPLING COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30,1998

EXHIBIT"G"

SCHOOL FOOD SERVICE SPECIAL ACCOUNT
ASSETS Cash and Cash Equivalents

BALANCE JULY 1,1997

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30,1998

$

17,158.33 $

0.00 $

17,158,33 $=====0:;;;.0=0

LIABILITIES Funds Held for Others

$

17,158.33 $

0.00 $

17,158.33 $=====0:;;;.0=0

See notes to the general purpose financial statements.

- 22-

APPLING COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30, 1998

At June 30, 1998, the Appling County Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result ofshortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting, student information and heating and air conditioning control systems and instructional computer equipment. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validation/Testing Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage; the student information and heating and air conditioning control systems were determined to be in the Assessment Stage; the instructional computer equipment was determined to be in the Remediation Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of
either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the
Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as of December 9, 1998. The Georgia Department of Education has remediated the GENESIS software and cond~cted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards ofeducation currently utilizing the GENESIS accounting software.

See notes to the general purpose fmancial statements. - 23-

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U, S. Department of Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
Total U. S. Department of Agriculture
Education, U. S, Department of Pass-Through From First District Regional Educational Service Agency d/b/a Live Oak Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education 1997 Summer 1998 Regular Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1997 Grant 1998 Grant Title VI Innovative Educational Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Gran~ 1997 Regular 1998 Regular Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 10,553
* 10.555 10,550

N/A $ 160,428.70

(2)

N/A

577,526.69 $ 1,161,726,24 (3)

N/A

85,456.01

85,456.01

$ 823,411.40 $ 1,247,182.25

84.011 84,011

N/A $ 69,966.87 $

N/A

58,481.72

69,966.87 58,481.72

84,010

N/A

84,281

N/A

84.281

N/A

84.298

N/A

657,383.93 18,875,49 19,156,00

665,981.51 (3)
13,096.84 14,701,89
19,156.00

84.276

N/A

84.276

NlA

45,357.68 146,516.00

45,357.68 37,989.80

84.027

N/A

84,173

N/A

220,089.13 20,116.96

220,089,13 20,116.96

84.048 84,243

N/A

33,609.58

33,609.58

N/A

4,815.32

4,815.32

$ 1,294,368.68 $ 1,203,363.30

-24 -

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
OTHER FEDERAL ASSISTANCE
Defense, U. S. Department Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

$ 26,144.20 $

61,228.17 (3)

Total Federal Financial Assistance
= N/A Not Available

$ 2,143,924.28 $ 2,511,773.72

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
,(3) Expenditures for this program include State and/or Other Funds. Expenditures are not maintained by fund source.

Major programs are identified by an asterisk (*) in front of the CFDA number.

The Board did not provide ~ederal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Appling County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general'purpose financial statements.

See notes to the general purpose financial statements.

-25 -

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of Local Assistance Grant
Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Middle School Incentive Program In-School Suspension Migrant Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment At-Risk Summer School Program Experimental Science Program Health Insurance Innovative Programs Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Teachers' Retirement Lottery Programs Instructional Technology Assistive Techn~logy Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
OTHER Education, Georgia Department of Office Rental Reimbursement for Substitute Teachers
See notes to the general purpose financial statements.

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE PROJECTS

FUND

FUND

FUND

TOTAL

$ 75,000.00 $ 75,000,00

$ 7,093,425,00 1,751,339.00 284,694.00 296,308.00 92,227,00 1,987,740,00

554,757.00 166,845,00 256,427,00 86,953,00
7,206,00 28,626.00 43,263.00 -2,981,198.00
$ 76,069.00

89,720.00

85,840.00 14,973.64
500.00 293,818.20
5,000.00 752.00
44,002.00 6,383.80 31,912.29

8,208.00 91,415,00

546,989,43

42,165.00

7,093,425,00 1,751,339,00
284,694,00 296,308,00
92,227.00 1,987,740.00
554,757.00 166,845.00 256,427.00 86,953.00
7,206.00 28,626.00 43,263.00 -2,981,198,00 89,720.00 76,069.00
85,840.00 14,973.64
500.00 293,818.20
5,000.00 752.00
44,002.00 6,383.80 31,912.29
8,208.00 91,415,00
546,989.43
42,165.00

5,000.04 65.00

5,000.04 65.00

$ 10,275,092.97 $ 736,332.43 $ 75,000.00 $ 11,086,425.40

-26-

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "4"

EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Maintenance and Operation of Plant Student Transportation Services Other Support Services

INSTRUCTIONAL TECHNOLOGY

CLASSROOM

ASSISTIVE

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

91,415,00 $

8,208.00 $

447,773.32 $ 547,396.32

71,923.82 1,215,25 4,984,55
.20,000.00 1,092.49

71,923.82 1,215.25 4,984.55
20,000.00 1,092.49

Total Expenditures

$

91,415.00 $

8,208.00 $

546,989.43 $ 646,612.43'

RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program "'"

$ 466,703.18
8,208.00 91,415.00 80,286.25
$ 646,612.43

See notes to the general purpose financial statements.

- 27-

APPLING COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

9,425,766.00 $ _ _..;;2;.;.4.;.19,"""-00;.;.1..;;.0_0_

$

10,849,641.44

654,524.40 $ _ _-=5:.::.36;:;.z,,44...:..=2:..;..4.;;..3

$

11,504,165.84

-222,454.37 $ _---'1;..:,1~,2~81.:.L,7;..,;1;..:,1.;..;.4~7

$

0,00 $=====0='0=0

See notes to the general purpose financial statements. - 29 -

APPLING COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (*) Grades 1 3 (*) Sub-Total K3 Grades 4 5 (*) Grades 6 8 (*) Grades 9 12 (*) High School Laboratories (*) Vocational Education Laboratories (*) Total General and Career Education Programs
SPECIAL EDUCATION PROGRAMS Regular Programs Category I (*) Category " (*) Category III (0) Category IV (0) Category V (*) Sub-Total Regular Category VI (Gifted) (0) Total Special Education Programs
REMEDIAL EDUCATION PROGRAM (*) Total Fourteen Weighted Programs
MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

$

738,292.00

$

664,462.80 $

0.00

1,755,482.00

1,579,933.80

$ 2,493,774.00 90 $ 2,244,396.60 $

0.00

852,452.00 90

767,206.80

1,623,489.00 90

1,461,140.10

1,290,716.00 90

1,161,644.40

506,834.00 90

456,150.60

326,160.00 90

293,544.00

$ 7,093,425.00

$ 6,384,082.50 $

0.00

$ 1,729,145.00

$ 1,556,230.50 $

0.00

$ 1,729,145.00 90 $ 1,556,230.50 $

22,194.00 90

19,974.60

$ 1,751,339.00

$ 1,576,205.10 $

$

284,694.00 90 $

256,224.60 $

$ 9,129,458.00

$ 8,216,512.20 $

$

242,161.00 90 $

217,944.90 $

54,147.00 90

48,732.30

$

296,308.00

$

266,677.20 $

$ 9,425,766.00

$ 8,483,189.40 $

0.00
0.00 0.00 0.00
0.00 0.00
0.00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs (0) Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements.

$

26,735.00

$

26,735.00 $

0.00

65,492.00

65,492.00

0.00

$

92,227.00 100 $

92,227.00 $

0.00

30

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS.

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

664,462.80 $

768,440.51 $

25,743.46 $

794,183.97

1,579,933.80

1,938,348.58

121,176.48

2,059,525.06

$ 2,244,396.60 $ 2,706,789.09 $

146,919.94 $ 2,853,709.03 $

0.00

767,206.80

1,291,741.90

75,810.79

1,367,552.69

0.00

1,461,140.10

1,983,614.29

103,289.51

2,086,903.80

0.00

1,161,644.40

1,408,884.80

64,022.30

1,472,907.10

0.00

456,150.60

514,240.07

14,514.02

528,754.09

0.00

293,544.00

598,571.46

82,666.48

681,237.94

0.00

$ 6,384,082.50 $ 8,503,841.61 $

487,223.04 $ 8,991,064.65

$ 1,556,230.50 $

17,084.89 $ 506,250.53 867,668.20 193,203.54
25,482.19

1,517.48 $ 8,883.52 23,539.94 4,104.94
593.06

18,602.37 515,134.05 891,208.14 197,308.48
26,075.25

$ 1,556,230.50 $ 1,609,689.35 $

38,638.94 $ 1,648,328.29

0.00

19,974.60

79,555.05

7,515.62

87,070.67

0.00

$ 1,576,205.10 $ 1,689,244.40 $

46,154.56 $ 1,735,398.96

$

256,224.60 $

255,875.03 $

3,064.83 $

258,939.86

0.00

$ 8,216,512.20 $ 10,448,961.04 $

536,442.43 $ 10,985.403.47

$

217,944.90 $

400,680.40

$

400,680.40

0.00

48,732.30

$

118,081.97

118,081.97

0.00

$

266,677.20 $

400,680.40 $

118,081.97 $

518,762.37

$ 8,483,189.40 $ 10,849,641.44 $

654,524.40 $ 11,504,165.84 $

0.00

$

26,735.00

65,492.00

$ _ _,;;,92.,22_70.;;;.0

$

92,154.50 $

92,154.50

0.00

0.00

$

92,154.50 $

92,154.50 $ ......

72.5.0.

- 31 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, Sow., Suite 214 Atlanta, Georgia 30334-8400
May 4, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Appling County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofAppling County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated May 4, 1999. This report was qualified for a scope limitation and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States.
We did not observe the taking of either the Federal donated commodities inventory or the purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance
As part of obtaining reasonable assurance about whether Appling County Board of Education's financial statements are free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial 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.

98YB-40

Internal Control Over Financial Reporting
In planning and performing our audit, we considered Appling County Board of Education's internal control over fmancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over fmancial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in ourjudgement, could adversely affect Appling County Board ofEducation's ability to record, process, summarize and report fmancial data consistent with assertions of management in the fmancial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6011-98-01, FS-6011-98-03 and FS-9011-98-04.
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 fmancial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, we consider item FS-9011-98-04 to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record.
Respectfully submitted,
~W.~ Russell W. Hinton State Auditor
RWH:gp 98YB-40

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 4, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Appling County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Appling County Board of Education with the types of cQmpliance
u.s. requirements described in the Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Appling County Board of Education's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the require~ents of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Appling County Board of Education's management. Our responsibility is to express an opinion on Appling County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; 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 ofStates, 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 Appling County Board of Education'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 Appling County Board of Education's compliance with those requirements.

98SA-45

In our opinion, the Appling County Board of Education 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 June 30, 1998.
Internal Control Over Compliance
The management of Appling County Board of Education 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 Appling County Board
ofEducation'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.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect the Appling County Board of Education's ability to administer a major Federal program in accordance with applicable requirements of laws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6011-98-01.
A material weakness is a condition in which the design or operation of one or more ofthe internal control
a components does not reduce to relatively low level ofrisk 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. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition noted above is also considered to be a material weakness.
This report is intended for the information ofmanagement, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
<P. . Q1w.4~ Russell W. Hinton State Auditor
RWH:gp 98SA-45

SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

APPLING COUNTYBOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6011-93-02 FS-60 11-97-01

Further Action Not Warranted Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Audit Control Number: FS-6011-97-01

Appling County Board ofEducation does not maintain an account of General Fixed Assets. At the present time, there are no plans to start an account of General Fixed Assets.

SECTIONN FINDINGS AND QUESTIONED COSTS

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements
The auditor's opinion on the Appling County Board ofEducation's financial statements was qualified
for a scope limitation and for various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Appling County Board ofEducation disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts General Fixed Assets

Expenditures/Liabilities/Disbursements General Ledger

Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit of the Appling County Board of Education disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Appling County Board of Education disclosed a reportable condition in internal control over major programs for the following compliance requirements.

Eligibility

The reportable condition described above is considered to be a material weakness.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Appling County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings ReqUired to be Reported by Section .510(a) ofOMB Circular A-133 The Appling County Board ofEducation's audit disclosed an audit finding required to be reported by section .5lO(a) ofOMB Circular A-133. This audit finding is included in section N ofthis report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program

- 1-

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
I SUMMARY OF AUDITOR'S RESULTS
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Appling County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
C4SH AND CASH EQUIVALENTS REVENUESIRECEIVABLESIRECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-6011-98-01
The Appling County Board ofEducation maintained a banquet account and a continuing education account did not record the fmancial activity associated with these accounts in the formal accounting records of the Board. At June 30, 1998, checking accounts, savings accounts, and certificate of deposits for these activities totaled $39,614.87. This condition is a result of management's failure to properly account for all financial activity ofthe Board ofEducation. Appropriate action should be taken by the Board to record these accounts in the formal accounting records.
EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to MeetExpenditure Requirements Nonmaterial Noncompliance Amount: $72.50 Finding Control Number: FS-6011-98-02
The Appling County Board ofEducation reported to the Georgia Department ofEducation on DE form 0420 . "General Fund QBE Program Expenditure Summary" expenditure totaling $92,227.00 for the Staff Development Programs. A review of underlying documentation for the Quality Basic Education (QBE) program disclosed that the Board had an underexpenditure of $72.50.
The underexpenditure ofthe above listed QBE program occurred.because the Board expended less than the minimum expenditure requirement for the QBE program. These funds should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
-2-

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Documentation of Journal Entries Reportable Condition Finding Control Number: FS-6011-98-03
An examination ofthirty ofthe Board's journal entries was performed to test for the validity and accuracy of the journal entries. The journal entries examined revealed that twenty-eight of the journal entries did not provide adequate supporting documentation. Procedures should be implemented to ensure that all journal entries are supported by adequate documentation
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6011-98-04
The Appling County Board of Education did not maintain a General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Qroup.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Record Retention Reportable Condition - Material Weakness Nonmaterial Noncompliance U. S. Department of Agriculture Through Georgia Department ofEducation Finding Control Number: FA-6011-98-0l
The Appling County Board of Education failed to maintain a Master List of Free and Reduced Price Meal Applications for the High School for the National School Lunch Program (CFDA 10.555) in accordance with the Guidance for School Officials on Free and Reduced Priced Meals and Verification Regulations. This condition is a result of management not being aware of the requirements set forth by federal regulations.
-3-

APPLING COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998 ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ELIGffiILITY Record Retention Reportable Condition - Material Weakness Nonmaterial Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Finding Control Number: FA-6011-98-01 A review of subsequent year records revealed that the Board has implemented procedures to maintain a Master List ofFree and Reduced Price Meal Applications as required.
-4-