Audit report, Bacon County Board of Education, Alma, Georgia, year ended June 30, 1998

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AUDIT REPORT

BACON COUNTY BOARD OF EDUCATION

ALMA, GEORGIA

YEAR ENDED JUNE 30, 1998

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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

BACON 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 AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

3

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMEN]S

6

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

20

2 SCHEDULE OF STATE REVENUE

22

3 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

23

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS '

4

OVERALL

25

5

BY PROGRAM

26

BACON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II 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
March 18, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bacon County Board of Education
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 financial statements of the Bacon 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 of the Bacon 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 overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues, requires disclosure ofcertain matters regarding the year 2000 issue. Bacon County Board of Education has inCluded such disclosures in the significant commitments section ofthe Notes to the Financial Statements. Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the Success of related remediation efforts will not be fully determinable until year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support Bacon County Board of Education's disclosures with respect to the year 2000 issue made i,n the Notes to the Financial Statements. Further, we do not provide assurance that Bacon County Board of Education is or will be year 2000 ready, that Bacon County Board of Education's year 2000 remediation
98ARL-13A

"
efforts will be successful in whole or in part, or that parties with which Bacon County Board of Education does business will be year 2000 ready.
As described in the notes to the general purpose financial statements, the Board's fmancial statements have been prepared using certain accounting practices and policies which, in om opinion, vary in some respects from generally accepted accounting principles. These.variances are described as follows:
* The general purpose financial 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 financial 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 measmable and expenditures should be recorded when incurred, rather than when funds are received or disbmsed.
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 om opinion, except for the effects of such adjustments, if any~ as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosmes 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 Bacon County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in cqnformity with generally accepted . accounting principles.
In accordance with Government Auditing Standards, we have also issued om report dated March 18, 1999, on om consideration ofthe Bacon County Board of Education's internal control over fmancial reporting and om tests of its compliance with certain provisions of laws, regulations, contracts and grants.
Om audit was performed for the purpose of forming an opinion on the general purpose financial statements of the Bacon County Board of Education taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133,
Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional
analysis and are not a required part of the general purpose financial statements. Such information has been
98ARL-13A

subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects ofsuch adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures 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 ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~ ~...B-,,:
Russell W. Hinton State Auditor
RWH:gp 98ARL-13A

BACON COUNTY BOARD OF EDUCATION

BACON COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1998

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities PUrchased Food
Amount to be Provided in Future Years For Payment of Capital Lease Agreements

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum Only) JUNE 30, 1998 JUNE 30,1997

$

96,445.99 $ 290,773.81

$ 387,219.80 $ 261,232.07

660,723.63

660,723,63

970,528,46

99,840,28

124,800.83

224,641.11

277,229.01

13,658.26 5,064.50
$

41,700.41

13,658.26 5,064,50
41,700.41

15,952.87 6,031.34
101,352.90

Total Assets

$ 857,009.90 $ 434,297.40 $

41,700.41 $ 1,333,007.71 $ 1,632,326.65

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Capital Lease Agreements
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Designated for self-Insurance Undesignated
Total Fund Equity

$

30,566,57 $ 29,639.24

116,234.72

22,346.28

$

$

30,566.57 $ 168,220.24 $

$ 13,658.26 5,064.50

$

49,621.43

776,821.90

247,354.40

$ 826,443.33 $ 266,077.16

$
41,700.41 41,700.41 $

60,205.81 $ 116,234.72 22,346.28 41,700.41
240,487.22 $

64,147.53 117,369.45
335.31 101,352.90
283,205.19

$

13,658,26 $

15,952.87

5,064.50

6,031.34

49,621.43 1,024,176,30

49,621.43 1,277,515.82

$ 1,092,520.49 $ 1,349,121,46

Total Liabilities and Fund Equity

$ 857,009.90 $ 434,297.40 $

41,700.41 $ 1,333,007.71 $ 1,632,326,65

The notes to the general purpose financial statements are an integral part of this statement. -2-

BACON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 3D. 1998

EXHIBIT"B"

FUND BALANCE JUNE 30

$

826,443.33 $

266,on,16 $ 1,092,520,49 $ 1,349,121,46

The notes to the general purpose financial statements arean integral part of this statement. -3-

BACON 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

$

432,666.24 $ _--:;8~26:;,:.,44.;.;;;3,;,;;;.3~3

$ 210,322.42 $ 266,077.16

The notes to the general purpose financial statements are an integral part of this statement. -5-

BACON COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Bacon 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 and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
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 ofthese 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 and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a 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 ofspecific-revenue sources that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to aecomplish specific .educational objectives.
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BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for material capital lease obligations.
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 (Le., revenues and other fmancing sources) and decreases (Le., expenditures and other fmancing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be fmanced from available spen~ble resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., when they be~ome 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 defmitions 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 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 of the 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

-7-

BACON COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

~.30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
BUDGET
The Bacon 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 ofthe budget at any level. The budget for all governmental funds is . prepared by fund, function and object. The legal level of budget 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 of general 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 fmal budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department of Education. The Bqard may increaSe or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASHEQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized :fiilancial 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.
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 of return shall be the objective, given equivalent conditions of safety and liquidity. Funds tp.ay be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
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BACON COUNTY BOARD OF EDUCATION

EXlllBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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 of the 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 of the State of Georgia.

RECEIVABLES

Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but notreimbursed 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.

PROPERTY TAXES

The Bacon County Board ofCommissioners fixed the property tax levy for the 1997tax year (calendar year) on September 25, 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 daysafter year-end are reported as revenue in fiscal year 1998. The Bacon County Tax Commissioner bills and collects the property taxes for the Board ofEducation, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the Board.

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

School Operations

11.5 mills

- 9-

BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported oQ. 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 offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

INTERFUND TRANSACTIONS

The Board has the following types of interfund transactions:

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 confonnity 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 ofmoney 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 :fi;mds placed in demand deposit checking accounts.

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BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS AND INVESTMENTS
Acceptable security for deposits consists of anyone of or any combination ofthe 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 ofthe United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe 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
(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 $1,006,078.89. 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:

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BACON COUNTYBOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Note 2: DEPOSITS AND INVESTMENTS

Risk Category

Bank Balance

1

$ 106,231.84

2

899,847.05

3

0.00

Total

$ 1,006,078.89

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $660,723.63 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 of Treasury 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 be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's pnmary
objectives are safety of capital, investment income, liquidity and diversification while maintainirig 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 ofthe 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-term 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 of Georgia 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.

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BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

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 ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The Board has neither significantly reduced coverag~ for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe 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. A premium is charged when needed by the General Fund to each user fund on the basis of the percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The Board accounts for claims with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. The Board has not incurred any liabilities for unemployment compensation during the past two fiscal years.

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

Position Covered

Amount

Superintendent Board Chairman Board Vice-Chairman All Other Employees

$ 50,000.00 $ 20,000.00 $ 20,000.00 $ 5,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Bacon County Board of Education has entered into various lease agreements as lessee for equipment. , These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as ofthe date oftheir inception.

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BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: GENERAL LONG-TERM DEBT

The changes in General Long-Term Debt during the fiscal year ended June 30, 1998, were as follows:

Balance July 1, 1997
Deductions Payments
Balance June 30, 1998

Capital Leases $ 101,352.90
59,652.49 $ 41.700.41

At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
1999
Deduct: Imputed Interest
Net Present Value ofFuture Minimum Lease Payments
Note 6: ON-BEHALF PAYMENTS

Capital Leases $ 44,286.47
2.586.06
$ 41.79.41

The Board has recognized revenues and expenditures in the amount of$193,177.66 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 of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$159,219.92

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $1,485'.74

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 $32,472.00

- 14-

BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 7: SIGNIFICANT COMMITMENTS
At June 30, 1998, the Board 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 of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Board's fmancial accounting system, student information system 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 chang~s 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 of June 30, 1998, the financial accounting system was determined to be in the Awareness Stage and the student information system and instructional computer equipment were determined to be at the Assessment Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department of Education). As of June 30, 1998, the State had not contracted for the remediation ofeither the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department ofEducation has remediated the Wang VS operating system and the updated system was installed at all GENESIS sites as of December 9, 1998. The Georgia Department of Education is implementing a plan for remediating the GENESIS software and four ofthe five GENESIS software modules were remediated as of January 14, 1999 with the fmal module scheduled to be remediated by the end of January. The validation and testing phases for all five modules are scheduled to be completed by March 1, 1999.
Nore8: CONTINGENTLIAB~ITIES
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.

- 15 -

BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Nore9: SUBSEQUENTEVENTS

On March 17, 1998, the voters of Bacon County voted in favor ofa Special Purpose Local Option Sales Tax

referendum for education purposes. The imposition ofthe tax approved by the voters, as stared on the Official

Ballot of Atkinson, is as follows:

.

"Shall a special one percent sales and use tax for educational purposes be imposed in Bacon County for a period not to exceed five (5) years or twenty calendar quarters, beginning July 1, 1998, and for the acquisition, construction, furnishing and equipping of a new elementary school, parking areas and grounds, including the purchase of any necessary real and personal property; and (to the extent that funds are available) construction, furnishing and equipping ofadditional classrooms, instructional and support space, as well as remodeling and renovating existing classrooms, instructional and support space, and to provide furnishings, equipment and fixtures, including technology equipment and retrofitting to accommodate such equipment, at existing facilities; and the payment ofexpenses incident thereto, at an estimated cost of$8,186,000, $5;500,000 ofwhich will be financed from funds raised by this tax?

If the imposition of the tax is approved by the voters, such vote shall also constitute approval of the issuance ofgeneral obligation debt ofthe Bacon County School DiStrict in the principal amount of up to $3,000,000 for the purposes set forth in the above question."

Note 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all reachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (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 stature. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy c~ be obtained from the Georgia Department of Audits and Accounts.

rRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by Stare statute to contribute 5% of their gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted. by the TRS Board ofTrustees 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 currentfiscal year and the preceding two fiscal years are as follows:

- 16-

BACON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

,
Note 10: RETIREMENT PLANS
Fiscal Year
1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 768,299.00 $ 716,006.57 $ 656,108.33

- 17 -

BACON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30,1998

EXHIBIT"E"

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

SCHOOL FOOD
SERVICES FUND

LOITERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30,1998 JUNE 30,1997

$ 284,051,00 $ 42,864,96

$ 326,915,96 $ 228,858.60

.6,868.55

$ 117,932.28

124,800,83

215,873.60

13,658.26 5,064.50

13,658.26 5,064.50

15,952.87 .6,031.34

Total Assets

$ 309,642.31 $ 42,864.96 $ 117,932,28 $ 470,439,55 $ 466,716.41

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances ReserVed For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$ 8,523.03 $ 35,042,12

$ 4,778,12 17,636.66 20,450,18

36,142.15 $ 16,338,09 63,555.94 1,896.10

$ 43,565.15 $ 42,864.96 $ 117,932.28 $

36,142.15 $ 29,639.24 116,234,72 22,346,28
204,362.39 $

97,838.61 43,663.55 117,369.45
335.31
259,206.92

$ 13,658.26 5,064;50
247,354.40 $
$ 266,On.16 $

0.00 $ 0.00 $

$
0.00 0,00 $

13,658.26 $ 5,064.50
247,354,40
266,On.16 $

15,952.87 6,031.34
185,525.28
207,509.49

Total Liabilities and Fund Equity

$ 309,642.31 $ 42,864.96 $ 117,932.28 $ 470,439.55 $ 466,716.41

See notes to the general purpose financial statements,

-18 -

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

EXHIBIT"P

FUND BALANCE JUNE 30

$ 266,0n,16 $

0,00 $

0,00 $ 266,0n,16 $ 207,509,49

See notes to the general purpose financial statements.

-19-

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

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U, S. Department of Direct Summer Food Service Program for Children 1998 Grant 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) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program 1998 Contract

* 10,559
* 10,553 * 10.555
10.550
10,558

$

6,780,13

(2)

N/A

95,708,18

(2)

N/A

320,370.76 $

640,847.82 (3)

N/A

50,778.62

50,778,62

NlA

3,148.76

(2)

Total U, S. Department of Agriculture

$

416,786,45 $

691,626,44

Education, U. S. Department of PaSS-Through From Berrien County Board of Education d/b/a Southem Pine Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education 1998 Grant 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 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grants 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant

84.011
84.010 84.281 84.298 84.276 84.027 84,173

NlA $

16,679.50 $

16,679,50

NlA

471,047.35

471,047.35

NlA

19,557.99

19,557.99

N/A

12,416.00

12,416.00

N/A

161,941.08

161,941.08

N/A

99,950.80

99,950.80

NlA

25,038,19

25,038.19

-20 -

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

SCHEDULE "1"

.FUNDING AGENCY PROGRAM/GRANT
Education, U, S, Department of Pass-Through From Georgia Department of Education Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant Pass-Through From Okefenokee Regional Educational Service Agency Safe and Drug-Free Schools 1998 Grant
Total U, S, Department of Education
Health and Human Services, U, S, Department of Pass-Through From Concerted Services, Incorporated Head Start Program 1998 Grant

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84,048 84,243

N/A $ NlA

25,071.46 $ 29,600,29

25,071.46 29,600,29

84,186

N/A $

9,111,38 870,414,04 $

9,111,38 870,414.04

93,600

N/A $

117,430,23 $

117,430,23

Total Federal Financial Assistance
= NlA Not Available

$

1,464,630,72 $==1;.r.;,6=7~9,~47~0,;,;,,7.;,,1

Notes to the Schedule of Expenditures of Federal Awards
I'
(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 Summer Food Service Program, Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are included in the 1998 National Schoo.1 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 Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant actiVity of the Bacon County Board of Education and is p~sented 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.

- 21 -

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

SCHEDULE ''2"

AGENCY/FUNDING
GRANTS 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 Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment At-Risk Summer School Program Health Insurance Mentoring Program Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Severely Emotionally Disturbed .Teachers' Retirement Lottery Programs Instructional Technology Assistive Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of Reimbursement for Substitute Teacher Reimbursement for MCI Peachnet Installation
See notes to the general purpose financial statements.

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 3,935,684,00 763,439,00 204,604.00 163,643.00 53,950.00
1,163,321,00
259,725.00 75,302,00
147,501.00 264,728.00
79,668.00 7,746,00 15,114.00
28,842.00 -599,158.00 538,132.00
$ 59,873.14
46,897.00 8,415.94
159,219.92 2,414.44 2,256.00
20,274.00 4,592.96 . 180.88 1,485.74
32,472.00

$ 58,660.00

3,935,684,00 763,439,00 204,604.00 163,643.00 53,950.00
1,163,321.00
259,725.00 75,302.00
147,501.00 264,728.00
79,668,00 7,746.00
15,114.00 28,842.00 -599,158.00 538,132.00 58,660.00 59,873,14
46,897.00 8,415.94
159,219.92 2,414.44 2,256.00
20,274,00 4,592.96 180.88 1,485.74

5,769.00 54,338.00

5,769.00 54,338.00

167,619.24

167,619.24

32,472.00

42.00 88.08

42.00 88.08

$ 7,440,453.10 $' 286,386,24 $ 7,726,839.34 - 22-

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

SCHEDULE "3"

EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Maintenance and Operation of Plant Student Transportation Services Debt Service Principal Payments Interest Payments

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

5,769.00 $

4,021,83 $

45,083.98 5,232.19

156.762.48 $ 166,553,31

5,448,97 1,443.38
724,41 3,240.00

5,448.97 1,443.38
724.41 3.240,00

45,083.98 5.232.19

Total Expenditures

$

5,769.00 $

54.338.00 $

....:1,;;;,67~.6;;;,1;,;;9~.2_4 $ 227,726.24

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

$ 153.591.30
5,769,00 54,338.00 14,027.94
$ 227.726.24

See notes to the general purpose financial statements.

- 23-

I I I I -I
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I

BACON COUNTY BOARD OF -EDUCATION

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

..

YEAR ENDED JUNE 30. 1998

SCHEDULE "4"

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

$ 5,067,370.00 $

1.:..::5:.:.J9,~16::.::5:.:.::.0:.:..0

$ 5,400,756.00 214,037.79 $
$ 5,614,793.79

1.:..::84:::J,~46::.::3:.:.::.6:.:..3

-71,920.12 $ 5,542,873.67

$

0.00 $=====0='0=0

See notes to the general purpose financial statements. - 25 -

BACON COUNTY BOARD OF EDUCATION ANAlYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND - QUAlITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 3D. 1998

SCHEDULE "5"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

307,350.90 $

379,131,49 $

5,057.89 $

384,189.38

923,475.60

930,526.26

33,567.97

964,094.23

$ 1,230,826.50 $ 1,309,657.75 $

38,625.86 $ 1,348,283.61 $

0.00

405,934.20

482,215.74

13,157.21

495,372.95

0.00

791,480.70

1,006,327.63

25,706.33

1,032,033.96

0.00

462,999.60

684,100.53

33,123.79

717,224.32

0.00

331,453.80

328,097.99

11,824.68

339,922.67

0.00

319,420.80

385,268.27

45,245.62

430,513.89

0.00

$ 3,542,115.60 $ 4,195,667.91 $

167,683.49 $ 4,363,351.40

$

671,815.80

$

24,362.59 $ 292,173.09 386,294.64
25,107.71 6,354.52

1,138.13 $ 5,327.20 5,876.57 1,244.83

25,500.72 297,500.29 392,171.21
26,352.54 6,354.52

$

671,815.80 $

734,292.55 $

13,586.73 $

747,879.28

0.00

15,279.30

27,780.39

320.45

28,100.84

0.00

$

687,095.10 $

762,072.94 $

13,907.18 $

775,980.12

$

184,143.60 $

237,026.19 $

2,872.96 $

239,899.15

0.00

...

$ 4,413,354.30 $ 5,194,767.04 $

184,463.63 $ 5,379,230.67

$

118,311.30 $

205,988.96

$

205,988.96

0.00

28,967.40

$ . 29,574.16

29,574.16

0.00

$

147,278.70 $

205,988.96 $

29,574.16 $

235,563.12

$ 4,560,633.00 $ 5,400,756.00 $

214,037.79 $ 5,614,793.79 $

0.00

$

15,645.00

38,305.00

$ a===53.,9~5=0==.0~0

$

21,993.65 $

21,993.65

31,983.12

31,983.12

$

53,976.77 $

53,976.77 $==_=........""'O....O=.O

- 27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 18, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Bacon 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 of Bacon County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated March 18, 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 discl:1Ssed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards .applic~ble to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
We were unable to examine sufficient audit evidence regarding year 2000 disclosures as required by
Governmental Accounting Standards Board Technical Bulletin 98-1, Disc.losures About Year 2000 Issues.
This bulletin requires disclosure of certain matters regarding the year 2000 issue in order for financial statements to be prepared in conformity with generally accepted accounting principles.
Compliance
As part of obtaining reasonable assurance about whether Bacon County Board of Education's financial statements are free ofmaterial 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 detennination of fmancial 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 Bacon County Board ofEducation's internal control over financial 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 financial reporting and its operation thatwe 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 our judgement, could adversely affect Bacon County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6031-98-0I and FS-6031-98-02.
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 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. 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, all ofthe reportable conditions described above are also considered to be material weaknesses.
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 of public record.
Respectfully submitted,
~~.~ Russell W. Hinton State Auditor
RWH:gp 98YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S.W. Suite 214 Atlanta. Georgia 30334-8400
March 18, 1999

Honorable RoyE. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Bacon 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 Bacon County Board of Education with the types of compliance
requirements described in the u.s. Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each ofits major Federal programs forthe year ended June 30, 1998. Bacon County Board ofEducation's major Federal programs are identified in the accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and giants applicable to each of its major Federal programs is the responsibility of Bacon County Board of Education's management. Our responsibility is to express an opinion on Bacon 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 ofthe United States; and OMB Circular A-l33, 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 Bacon 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 Bacon County Board of Education's compliance with those requirements.

98SA-1O

In our opinion, the BaCon County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management of Bacon 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 Bacon 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.
Our consideration ofthe internal control over compliance wouldnot necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a 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. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
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 of public record.
Respectfully submitted,
7-...QQ~.~ Russell W. Hinton State Auditor
RWH:gp 98SA-I0

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

BACON COUNTY BOARD 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

6031-93-01 6031-94-01 FS-6031-97-01 FS-6031-97-02

Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

CASH AND CASH EQUNALENTS Inadequate Separation ofDuties Reportable Condition - Material Weakness Finding Control Number: FS-6031-97-01

Due to limited funds and staff, this problem cannot be totally resolved. The Board has tried to separate the duties as much as possible with the staffthat is employed:

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Finding Control Number: FS-6031-97-02

When funds become available to hire additional staff, the Board will pursue the recording of fixed assets. The funds are not available at this time.

'.
SECTION IV FINDINGS AND QUESTIONED COSTS

BACON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 3D. 1998

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Bacon County Board of Education'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 Bacon County Board of Education disclosed fmancial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents

General Fixed Assets

All of the reportable conditions described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit ofthe Bacon County Board ofEducation 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 Bacon County Board of Education did not disclose any reportable conditions in internal control over major programs.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Bacon 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 Bacon County Board of Education's audit did not disclose audit fmdings required to he reported by section .510(a) ofOMB Circular A-133.

7. Major Programs Federalawards 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 10.559 Summer Food Service Program for Children

8. Type "A" Program Dollar Threshold The dollar threshold for tYPe "A" programs was $300,000.00.

9. Low Risk Auditee The Bacon County Board of Education was audited as a low risk auditee based on a waiver granted
by the U. S. Department of Education.

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BACON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Separation of Duties Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6031-98-01
The accounting procedures ofthe Board were insufficient to provide for adequate control over cash and cash equivalents. The following deficiency was noted:
The check preparation, check writing and check signing functions were not separated.
This deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
Management's Response:
We concur with this finding. This finding has been resolved. The duties of check writing and check signing have been separated and reassigned to two different individuals.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6031-98-02
The Bacon County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose fmancial statements ofthe 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 Group.
Management's Response:
We concur with this finding. Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff the Board has decided not to pursue the recording of general fixed assets on the financial statements at this time.
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BACON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 1998 ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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