BANKS COUNTY BOARD OF EDUCATION
HOMER, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013
(Including Independent Auditor's Reports)

BANKS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

Page
i
1 2 4 5 6 7 8 9 11
27

BANKS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
28 30 31 33

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

SECTION III 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

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 23, 2014

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Banks County Board of Education
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Banks County Board of Education, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express
2013ARL-11

no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Banks County Board of Education, as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2013, the Banks County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 27 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Banks County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare
2013ARL-11

the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 23, 2014, on our consideration of the Banks County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Banks County Board of Education's internal control over financial reporting and compliance.
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,

GSG:bf 2013ARL-11

Greg S. Griffin State Auditor

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
INTRODUCTION
Our discussion and analysis of the Banks County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2013. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2013 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $49.4 million compared to $47.5 million for the previous year. Of this amount, $0.3 million is unrestricted and is available for spending at the School District's discretion.
The School District had $26.7 million in expenses relating to governmental activities compared to $27.5 million for the previous year which is a decrease of $0.8 million. Only $469,271.47 of these expenses are offset by program specific charges for services, and $16.9 million were offset by grants and contributions. General revenues (primarily property and sales taxes) of $11.2 million were adequate to provide for these programs.
As stated above, general revenues accounted for $11.2 million or 39.2% of all revenues totaling $28.6 million compared to $10.7 million or 39.0% of all revenues totaling $27.7 million in the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This report consists of several parts including management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statement provides information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Banks County School District, the General Fund, Capital Projects Fund and Debt Service Fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
i

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Position and the Statement of Activities provides the basis for answering this question. These financial statements include all district's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net position and any changes in those assets. The change in net position is important because it notes that for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Position and the Statement of Activities reflect the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled within the financial statements.
Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
ii

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE

Recall that the Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for this fiscal year and the prior year.

Table 1 Net Position

Governmental Activities

Fiscal

Fiscal

Year 2013

Year 2012

Assets Current and Other Assets Capital Assets, Net

$ 11,817,613.94 $ 16,249,141.83 51,590,701.86 47,781,534.38

Total Assets

$ 63,408,315.80 $ 64,030,676.21

Liabilities Accounts Payables and Other Current Payables Salaries Payable Long-Term Liabilities

$ 1,784,976.79 $ 1,084,371.00

2,742,132.75

2,763,490.24

9,512,330.82 12,664,515.46

Total Liabilities

$ 14,039,440.36 $ 16,512,376.70

Net Position Net Investment in Capital Assets Restricted Unrestricted

$ 45,810,140.80 $ 43,627,118.37

3,302,746.63

2,955,848.28

255,988.01

935,332.86

Total Net Position

$ 49,368,875.44 $ 47,518,299.51

Table 2 shows the Changes in Net Position for this fiscal year and the prior year.

iii

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Table 2 Change in Net Position

Revenues Program Revenues: Charges for Services and Sales Operating Grants, Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses: 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 Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Position

Governmental Activities

Fiscal Year

Fiscal Year

2013

2012

$

469,271.47 $

493,568.04

16,873,526.18

16,462,476.20

$ 17,342,797.65 $ 16,956,044.24

$ 7,402,573.67 $ 6,733,359.02

5,514.79

5,153.73

2,986,852.24 98,172.79

3,046,735.84 78,820.94

456,982.00 12,110.63
274,699.92

539,083.00 18,801.06
332,133.25

$ 11,236,906.04 $ 10,754,086.84

$ 28,579,703.69 $ 27,710,131.08

$ 17,565,730.24 $ 17,976,365.17

507,726.66 833,560.82 245,330.55 465,742.04 1,414,910.44 195,671.73 1,694,038.07 1,668,575.85
30,208.50 49,190.96

561,748.09 985,709.57 310,132.87 413,526.67 1,394,188.56 191,317.32 1,687,713.46 1,631,190.70
30,649.50 46,481.07

145,349.32 1,633,166.23
279,926.35

172,976.19 1,654,663.56
442,482.36

$ 26,729,127.76 $ 27,499,145.09

$ 1,850,575.93 $

210,985.99

iv

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted state entitlements.
Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2013

Year 2012

Net Cost of Services

Fiscal

Fiscal

Year 2013

Year 2012

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 Central Support Services Other Support Services Operations of Non-Instructional Services: Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$ 17,565,730.24 $ 17,976,365.17 $ 5,761,143.91 $ 6,746,879.87

507,726.66 833,560.82 245,330.55 465,742.04 1,414,910.44 195,671.73 1,694,038.07 1,668,575.85
30,208.50 49,190.96

561,748.09 985,709.57 310,132.87 413,526.67 1,394,188.56 191,317.32 1,687,713.46 1,631,190.70
30,649.50 46,481.07

355,811.74 211,720.45 -90,919.84 -131,125.65 691,573.35 179,960.03 912,472.99 1,065,090.97
30,204.23 30,020.06

341,272.50 217,042.93
19,272.56 -63,979.87 754,262.83 174,162.12 895,293.08 831,728.40 30,646.16 22,976.86

145,349.32 1,633,166.23
279,926.35

172,976.19 1,654,663.56
442,482.36

-20,017.82 110,469.34 279,926.35

12,244.40 118,816.65 442,482.36

Total Expenses

$ 26,729,127.76 $ 27,499,145.09 $ 9,386,330.11 $ 10,543,100.85

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $28.6 million and total expenditures of $33.7 million compared to $27.9 million in revenue and $30.8 million of expenses for the prior year. Of the $33.7 million of expenditures, $3.4 million pertained to principal and interest on debt services.

General Fund Budgeting Highlights

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund.

During the course of fiscal year 2013, the School District amended its general fund budget as needed. The School District uses site-based budgeting as a part of the budget process. The budgeting systems are designed to control total site budgets but provide flexibility for site management.

v

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

For the General Fund, the actual revenues of $25.2 million were over the final budgeted amounts of $23.8 million by $1.4 million. This difference (actual vs. final budget) was due to an increase in the miscellaneous income of $272,699.92, decrease in federal funds of $78,997.38, increase in property taxes of $902,077.14, an increase in charges for services of $126,281.47 and an increase in state funds of $107,012.05. The miscellaneous revenue over final budget was due to the inclusion of the principals' accounts in our financial statements, but not in the budget.
The actual expenditures of $25.0 million were under the final budgeted amount of $25.4 million by $0.4 million. The expenses from the school activity accounts are included in the actual expenses, but were not included in the budget amounts. General Fund revenues were more than expenditures by $203,245.90.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2013, the School District had $51,590,701.86 invested in capital assets, all in governmental activities compared to $47,781,534.38 for the prior year. Table 4 reflects a summary of these balances net of accumulated depreciation for the current year and the prior year.
Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2013

Year 2012

Land Land Improvements Building and Improvements Equipment Construction In Progress

$

534,510.00 $

3,484,370.86

39,613,014.10

2,580,416.33

5,378,390.57

534,510.00 3,681,282.57 40,179,911.05 2,508,084.67
877,746.09

Total

$ 51,590,701.86 $ 47,781,534.38

Due to the implementation of H.B. 1187, the School District has completed numerous construction projects including new buildings, additions and renovations.

DEBT

At fiscal year ended June 30, 2013, the School District had $9,512,330.82 in long-term liabilities compared to $12,664,515.46 in long-term liabilities at the end of June 30, 2012. This decrease of $3,152,184.64 is due to bond payments of $3,152,184.64. The $9,512,330.82 in long-term debt at the end of 2013 was made up of $507,184.64 due within one year.

vi

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2013

Year 2012

Bonds Payable Series 2005 Bonds Payable Series 2007 Bonds Payable Series 2011
(including premium)

$ $ 9,512,330.82

2,580,000.00 465,000.00
9,619,515.46

Total
CURRENT ISSUES

$ 9,512,330.82 $ 12,664,515.46

The following are the currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations:

Economic Slowdown State funding for education has been declining and as a result more pressure is being placed on the local School Districts to prioritize its educational programs and provide additional local funding. Despite challenges, the Banks County School District is strong financially, and we remain optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students.

Capital Improvements The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. In 2007 the School District completed construction of a new elementary school, a new transportation facility, and an addition to the high school cafeteria. The School District has also constructed nine new classrooms, an administrative suite, expanded the kitchen at the primary school and expanded the athletic complex at the high school. The School District is currently in the process of adding 20 class rooms to the high school. The School District regularly monitors anticipated capital outlay needs.

On March 15, 2010, the voters of Banks County authorized the continuance of a one percent sales tax to raise no more than $19,000,000.00 or to be collected for 20 consecutive quarters, whichever comes first. In conjunction with the continuing of this one percent sales tax, the voters authorized the School District to issue general obligation bonds in the amount of $15,000,000.00. The School District issued $9,030,000.00 of the approved $15,000,000.00 general obligation bonds. The proceeds from these bonds will be used for (i) adding to, renovating, improving and equipping existing school buildings and facilities, including but not limited to Banks County High School, transportation facilities, physical education/athletic fields and facilities, classrooms, agricultural and other facilities, (ii) acquiring, constructing, equipping and furnishing new school buildings and facilities, including but not limited to a new elementary school, an administrative facility and other new school buildings and facilities, (iii) acquiring technology equipment, and security equipment and other school equipment, (iv) acquiring school buses and other school vehicles, (v) acquiring textbooks and band instruments and (vi) acquiring any capital property necessary or desirable for the foregoing purposes both real and personal, necessary or desirable for the foregoing purposes.
vii

BANKS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information contact, Mr. Michael E. Beasley, Finance Director for the Banks County School System, 102 Highway 51 South, Homer, Georgia 30547. You may also email your questions to Mr. Beasley at mbeasley@banks.k12.ga.us.
viii

BANKS COUNTY BOARD OF EDUCATION

BANKS COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2013
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Capitalized Bond and Other Debt Issuance Costs Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Other (Bus Replacement) Unrestricted
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

7,393,699.40

244,472.48

826.08 1,322,563.93 2,169,078.50
568,597.34 14,146.62 27,904.51 76,325.08
5,912,900.57 45,677,801.29

$

63,408,315.80

$

603,386.97

2,742,132.75

468,409.04

110,550.00

193,319.78

409,311.00

507,184.64 9,005,146.18

$

14,039,440.36

$

45,810,140.80

290,528.92 2,439,721.43
431,733.70 140,762.58 255,988.01

$

49,368,875.44

The notes to the basic financial statements are an integral part of this statement. - 1 -

BANKS COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2013

GOVERNMENTAL ACTIVITIES
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 Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

17,565,730.24

507,726.66 833,560.82 245,330.55 465,742.04 1,414,910.44 195,671.73 1,694,038.07 1,668,575.85
30,208.50 49,190.96

145,349.32 $ 1,633,166.23
279,926.35

$

26,729,127.76 $

165,367.14 303,904.33
469,271.47

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

11,383,894.83 $

151,914.92 621,840.37 336,250.39 596,867.69 723,337.09
15,711.70 781,565.08 603,484.88
4.27 19,170.90

1,218,792.56

$

16,452,834.68 $

420,691.50 $ 420,691.50 $

-5,761,143.91
-355,811.74 -211,720.45
90,919.84 131,125.65 -691,573.35 -179,960.03 -912,472.99 -1,065,090.97 -30,204.23 -30,020.06
20,017.82 -110,469.34 -279,926.35
-9,386,330.11

$

7,402,573.67

5,514.79

2,986,852.24 98,172.79
456,982.00 12,110.63
274,699.92

$

11,236,906.04

$

1,850,575.93

47,518,299.51

$

49,368,875.44

- 3 -

BANKS COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2013

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,193,442.10 $ 2,138,308.29 $ 2,061,949.01 $ 7,393,699.40

244,472.48

244,472.48

1,079,090.78 1,748,387.00
568,597.34 14,146.62 27,904.51

449.29 420,691.50

376.79 243,473.15

826.08 1,322,563.93 2,169,078.50
568,597.34 14,146.62 27,904.51

$ 6,631,568.35 $ 2,559,449.08 $ 2,550,271.43 $ 11,741,288.86

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances
Total Liabilities and Fund Balances

$

546,153.92 $

2,742,132.75

468,409.04

679,975.66 $ 4,436,671.37 $

57,233.05 $
193,319.78 409,311.00
659,863.83 $

0.00 $

603,386.97 2,742,132.75
468,409.04 193,319.78 409,311.00 679,975.66

0.00 $ 5,096,535.20

$

27,904.51

$

27,904.51

403,386.99 $ 1,899,585.25 $ 2,550,271.43

4,853,243.67

1,651,645.67

1,651,645.67

111,959.81

111,959.81

$ 2,194,896.98 $ 1,899,585.25 $ 2,550,271.43 $ 6,644,753.66

$ 6,631,568.35 $ 2,559,449.08 $ 2,550,271.43 $ 11,741,288.86

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

BANKS COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2013

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Accrued Interest Payable Bond Issuance Costs, Net of Amortization Bond Premiums, Net of Amortization
Total Long-Term Liabilities

$ 6,644,753.66

$

534,510.00

5,378,390.57

4,922,792.57

46,561,909.66

4,888,701.17

-10,695,602.11

51,590,701.86

679,975.66

$ -9,030,000.00 -110,550.00 76,325.08 -482,330.82

-9,546,555.74

Net Position of Governmental Activities (Exhibit "A")

$ 49,368,875.44

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

BANKS COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 7,429,555.14 98,172.79
13,762,019.05 $ 3,147,797.62 469,271.47
274,699.92
$ 25,181,515.99 $

$ 420,691.50
4,230.54

$ 2,986,852.24
7,880.09

7,429,555.14 3,085,025.03 14,182,710.55 3,147,797.62
469,271.47 12,110.63
274,699.92

424,922.04 $ 2,994,732.33 $ 28,601,170.36

$ 16,473,190.39 $

74,750.89

$ 16,547,941.28

507,726.66 833,560.82 245,330.55 459,096.59 1,384,440.23 177,353.73 1,683,047.72 1,458,555.98
30,208.50 49,190.96 145,349.32 1,531,218.64

5,187,029.89

507,726.66 833,560.82 245,330.55 459,096.59 1,384,440.23 177,353.73 1,683,047.72 1,458,555.98
30,208.50 49,190.96 145,349.32 1,531,218.64 5,187,029.89

$ 3,045,000.00 387,111.00

3,045,000.00 387,111.00

$ 24,978,270.09 $ 5,261,780.78 $ 3,432,111.00 $ 33,672,161.87

$

203,245.90 $ -4,836,858.74 $ -437,378.67 $ -5,070,991.51

$

8,500.07 $ 389,224.35 $

397,724.42

$

-8,500.07

-389,224.35

-397,724.42

$

-8,500.07 $ -380,724.28 $ 389,224.35 $

0.00

$

194,745.83 $ -5,217,583.02 $

-48,154.32 $ -5,070,991.51

2,000,151.15

7,117,168.27

2,598,425.75

11,715,745.17

$ 2,194,896.98 $ 1,899,585.25 $ 2,550,271.43 $ 6,644,753.66

The notes to the basic financial statements are an integral part of this statement. - 6 -

BANKS COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2013

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Position and amortized over the term of the debt, using the straight-line method. The details of this difference in the current period are as follows:
Amortization of Bond Issuance Costs Amortization of Bond Premium
Total Bond Issuance Costs
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of:
Bond Principal Retirements
Change in Net Position of Governmental Activities (Exhibit "B")

$ -5,070,991.51

$ 4,806,254.10 -989,097.82

3,817,156.28

-7,988.80

-21,466.68

$

-18,318.00

107,184.64

88,866.64

3,045,000.00 $ 1,850,575.93

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

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other
Total Assets
LIABILITIES Funds Held for Others
NET POSITION Held in Trust for Private Purposes

BANKS COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2013

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$ 361,788.27

$

20,000.00

10,482.76

$

20,000.00 $ 372,271.03

$ 372,271.03

$

20,000.00

The notes to the basic financial statements are an integral part of this statement. - 8 -

BANKS COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2013
ADDITIONS Contributions Donors
DEDUCTIONS Scholarships Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

20,000.00

0.00

$

20,000.00

0.00

$

20,000.00

The notes to the basic financial statements are an integral part of this statement. - 9 -

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BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Banks County Board of Education (School District) 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 School District is a primary government and consists of all the organizations that compose its legal entity.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Banks County Board of Education.
District-wide Statements:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds. All remaining governmental funds are aggregated and reported as nonmajor funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
- 11 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports a trust arrangement which provides funds for scholarships.
Agency funds account for assets held by the School District as an agent for various individuals, the local public library, and the individual school accounts for clubs, student organizations, awards, gifts, etc.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District 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.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenue to be available if they are collected within 120 days after year end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted resources available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or nongovernmental entities. As of June 30, 2013, the School District has not entered into any arrangements that meet the qualifications to be reported as a SCA in accordance with this standard.
In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature.

- 12 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

In fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The School District changed its presentation of net assets to net position for fiscal year 2013. There were no other applicable reporting changes for the School District.
CASH AND CASH EQUIVALENTS
Composition of Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning 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 and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District 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 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 of the United States government,
5. Prime banker's acceptances,
6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, 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 basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 13 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

PROPERTY TAXES
The Banks County Board of Commissioners adopted the property tax levy for the 2012 tax digest year (calendar year) on September 13, 2012 (levy date). Taxes were due on December 20, 2012 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2012 tax digest are reported as revenue in the governmental funds for fiscal year 2013. The Banks County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2013, for maintenance and operations amounted to $7,317,953.50.
The tax millage rate levied for the 2012 tax year (calendar year) for the Banks County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.508 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $106,086.85 during fiscal year ended June 30, 2013.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $2,986,852.24 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/ expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

- 14 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets Works of Art/Historical Treasures Software Development or Obtained for Internal Use Portable Classrooms

All $ 10,000.00 $ 20,000.00 $ 5,000.00 $ 100,000.00
All $ 20,000.00 $ 8,000.00

N/A 25 years
30 to 80 years 5 to 25 years
5 to 100 years N/A 10 years 25 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principals, the 2007 Series G.O. bond issuance costs should be amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Net investment in capital assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
Restricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

- 15 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

FUND BALANCES
The School District's fund balances are classified as follows:

Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned The residual classification for the General Fund. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2013, are as follows:

Nonspendable Inventories
Restricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service
Assigned School Activity Accounts Subsequent Period Expenditures Other
Unassigned

$

27,904.51

$

140,762.58

262,624.41

1,899,585.25

2,550,271.43

4,853,243.67

$

150,437.67

1,501,008.00

200.00

1,651,645.67 111,959.81

Fund Balance, June 30, 2013

$ 6,644,753.66

The Board of Education recognizes that the maintenance of a fund balance is essential to the preservation of the financial integrity of the District and is fiscally advantageous for both the District and its taxpayers. The School District seeks to maintain the highest possible credit ratings which are dependent, in part, on the School District's maintenance of an adequate fund balance. Fund balance is a measurement of available financial resources and is the difference between total assets and liabilities in each fund.
When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

- 16 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund and function. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) 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 of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one 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 of the counties or municipalities of the State of Georgia,

- 17 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

5. Bonds of any public authority created by the laws of the 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 or debt obligations issued by or securities guaranteed 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
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2013, the bank balances were $7,955,168.29. The bank balances were covered by Federal depository insurance or collateralized with securities held by the pledging financial institution in the School District's name.

CATEGORIZATION OF INVESTMENTS
The School District's investments as of June 30, 2013, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Debt Securities U. S. Treasury Money Market Funds

$

244,472.48

The U. S. Treasury Money Market Funds are invested in an Institutional Treasury Portfolio Fund managed by First American Funds. The Fund normally invests at least 80% of assets in U. S. Treasury Securities and repurchase agreements for those securities. The weighted average maturity of the fund is approximately 51 days. The fund is rated AAAm by Standard and Poor's and AAA-mf by Moody's.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.
At June 30, 2013, $244,472.48 of the School District's applicable investments were uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 Inventories

- 18 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2012

Increases

Decreases

Balances June 30, 2013

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$

534,510.00

$

534,510.00

877,746.09 $ 4,647,610.36 $

146,965.88

5,378,390.57

Total Capital Assets Not Being Depreciated

$

1,412,256.09 $ 4,647,610.36 $

146,965.88 $

5,912,900.57

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 46,561,909.66 4,593,077.55 $ 4,922,792.57

305,609.62 $

$ 9,986.00

46,561,909.66 4,888,701.17 4,922,792.57

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

6,381,998.61 2,084,992.88 1,241,510.00

566,896.95 225,289.16 196,911.71

1,997.20

6,948,895.56 2,308,284.84 1,438,421.71

Total Capital Assets, Being Depreciated, Net $ 46,369,278.29 $

-683,488.20 $

7,988.80 $

45,677,801.29

Governmental Activity Capital Assets - Net

$ 47,781,534.38 $ 3,964,122.16 $

154,954.68 $

51,590,701.86

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$

$

4,724.49

21,662.38

8,157.49

149,310.74

732,764.48
183,855.10 72,478.24

$

989,097.82

NOTE 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2013, consisted of the following:

Transfers to

Transfers From

District-wide

Capital

General Fund

Projects

District-wide Capital Projects

$

Debt Service Fund

8,500.07 $

389,224.35

Total

$

8,500.07 $

389,224.35

Transfers were used to (1) move local revenue collected by the General Fund to the District-wide Capital Projects Fund for the purpose of reimbursing a local capital construction related expenditures and (2) move Education Special Local Option Sales Tax (ESPLOST) revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund for current year bond principal and interest payments.
- 19 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

NOTE 8: RISK MANAGEMENT
The School District 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; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk of loss associated with vehicles. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2012

$

2013

$

0.00 $ 0.00 $

6,599.96 $ 23,618.00 $

6,599.96 $ 23,618.00 $

0.00 0.00

The School District 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 School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.

- 20 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

The School District has purchased a surety bond to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent

$

100,000.00

NOTE 9: LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

General Government - Series 2011

2.00% - 5.00% $

Amount 9,030,000.00

Voters have authorized $5,970,000.00 in general obligation debt which was not issued as of June 30, 2013.

The changes in Long-Term Debt during the fiscal year ended June 30, 2013, were as follows:

Balance July 1, 2012

Additions

Governmental Activities

Balance

Deductions

June 30, 2013

Due Within One Year

G.O. Bonds

$ 12,075,000.00 $

Bond Premiums Amortized

589,515.46

0.00 $

3,045,000.00 $ 107,184.64

9,030,000.00 $ 482,330.82

400,000.00 107,184.64

$ 12,664,515.46 $

0.00 $ 3,152,184.64 $ 9,512,330.82 $

507,184.64

At June 30, 2013, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2014 2015 2016 2017 2018

$

400,000.00

2,020,000.00

2,110,000.00

2,215,000.00

2,285,000.00

327,650.00 $ 278,150.00 179,900.00
93,925.00 30,350.00

107,184.63 107,184.63 107,184.63 107,184.63
53,592.26

Total Principal and Interest

$ 9,030,000.00

909,975.00 $

482,330.78

NOTE 10: PRIOR YEAR DEFEASEMENT OF DEBT
In fiscal year 2004, the School District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's basic financial statements. At June 30, 2013, $2,210,000.00 of bonds are outstanding and are considered defeased.
NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $1,638,418.54 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

- 21 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $1,572,960.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $10,782.54
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $54,676.00
Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.
NOTE 12: SIGNIFICANT 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 costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 13: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2013, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2013, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2013, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is

- 22 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2013:
For certificated teachers, librarians and regional educational service agencies and certain other
eligible participants:

July 2012 - February 2013 March 2013 - June 2013

$912.34 per member per month $937.34 per member per month

For non-certificated school personnel:

July 2012 - June 2013

$446.20 per member per month

No additional contribution was required by the Board for fiscal year 2013 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2013 2012 2011

100% 100% 100%

$

2,670,545.56

$

2,550,952.08

$

2,326,845.80

NOTE 14: RETIREMENT PLANS
TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.

- 23 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 12.28% effective July 1, 2013.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2013 2012 2011

100% 100% 100%

$

1,537,071.56

$

1,416,141.98

$

1,372,957.45

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.
DEFINED CONTRIBUTION PLAN
In 1996, the Banks County Board of Education began an employer paid 403(b) annuity plan for the group of employees covered under the Public School Employees' Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.

- 24 -

BANKS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "I"

The Board selected Lincoln Life as the provider of this plan. For each employee covered under PSERS, the Board began matching contributions up to $25.00 per month

The employee becomes vested in the plan with five years of experience. Employees who had already achieved five years of experience at the time the plan was implemented were vested upon enrollment.

Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment and five years of service to Banks County Board of Education. If an employee terminates employment prior to achieving five years of service, funds paid on behalf of the non-vested employee are credited back to the Board.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2013 2012 2011

100% 100% 100%

$

11,425.00

$

12,640.00

$

12,540.00

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BANKS COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2013

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Miscellaneous
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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers Out Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 6,527,478.00 $ 6,527,478.00 $ 7,429,555.14 $

92,000.00

92,000.00

98,172.79

13,649,808.00

13,655,007.00

13,762,019.05

3,119,985.00

3,226,795.00

3,147,797.62

342,990.00

342,990.00

469,271.47

102,000.00

2,000.00

274,699.92

902,077.14 6,172.79
107,012.05 -78,997.38 126,281.47 272,699.92

$ 23,834,261.00 $ 23,846,270.00 $ 25,181,515.99 $ 1,335,245.99

$ 16,850,888.00 $ 16,968,591.00 $ 16,473,190.39 $ 495,400.61

490,835.00 910,753.00 304,119.00 424,156.00 1,314,474.00 189,007.00 1,660,833.00 1,453,186.00
30,650.00 147,086.00
1,573,855.00

490,835.00 923,888.00 304,119.00 426,874.00 1,328,536.00 189,007.00 1,662,093.00 1,456,931.00
30,650.00 47,086.00
1,573,855.00

507,726.66 833,560.82 245,330.55 459,096.59 1,384,440.23 177,353.73 1,683,047.72 1,458,555.98
30,208.50 49,190.96 145,349.32 1,531,218.64

-16,891.66 90,327.18 58,788.45 -32,222.59 -55,904.23 11,653.27 -20,954.72 -1,624.98
441.50 -2,104.96 -145,349.32 42,636.36

$ 25,349,842.00 $ 25,402,465.00 $ 24,978,270.09 $ 424,194.91

$ -1,515,581.00 $ -1,556,195.00 $

203,245.90 $ 1,759,440.90

$

$

-7,000.00 $

-7,000.00

$

-7,000.00 $

-7,000.00 $

$ -1,522,581.00 $ -1,563,195.00 $

2,836,282.01

2,701,593.49

8,605.56

-8,500.07 $

-8,500.07 7,000.00

-8,500.07 $

-1,500.07

194,745.83 $ 1,757,940.83

2,000,151.15

-701,442.34

-8,605.56

Fund Balances - Ending

$ 1,313,701.01 $ 1,147,004.05 $ 2,194,896.98 $ 1,047,892.93

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $340,815.42 and $324,686.14, respectively.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 27 -

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2013

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Forest Service Schools and Roads Cluster Pass-Through From Office of the State Treasurer Schools and Roads - Grants to Counties
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund English Language Acquisition Grants Improving Teacher Quality State Grants Rural Education Twenty-First Century Community Learning Centers
Total Other Programs
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555
10.666

N/A

N/A

$

$

(2) 1,497,838.81 (1)
1,497,838.81

N/A $

(3) 1,497,838.81

84.027 84.173
84.010
84.048 84.410 84.365 84.367 84.358 * 84.287

N/A

$

N/A

$

507,745.69 17,328.09
525,073.78

N/A

$

685,516.19

N/A

$

N/A

N/A

N/A

N/A

N/A

$

$

26,897.14 1,176.00
21,091.68 96,002.57 72,709.65 497,922.26
715,799.30
1,926,389.27

$

150,217.55

Total Expenditures of Federal Awards N/A = Not Available

$

3,574,445.63

- 28 -

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2013

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $86,689.43.
(2) Expenditures for the funds earned on the School Breakfast Program ($261,300.38) were not maintained separately and are included in the 2013 National School Lunch Program.
(3) Funds earned on this program, in the amount of $576.61 , do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Banks County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 29 -

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2013

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Move on When Ready Preschool Handicapped Program Teachers' Retirement Vocational Education
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of the State Treasurer Public School Employees' Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

728,166.00

154,027.00

1,866,231.00

181,412.00

994,343.00

95,936.00

1,778,395.00

1,349,990.00

507,494.00

3,382,694.00

409,015.00

191,944.00

135,293.00

76,519.00

301,835.00

88,638.00

61,744.00

509,161.00 606,660.00 709,894.00
96,198.00 -2,114,084.00

414,271.00 60,073.00
456,982.00
41,356.00 12,286.51
100.00 38,875.00 10,782.54 561,112.00

$

728,166.00

154,027.00

1,866,231.00

181,412.00

994,343.00

95,936.00

1,778,395.00

1,349,990.00

507,494.00

3,382,694.00

409,015.00

191,944.00

135,293.00

76,519.00

301,835.00

88,638.00

61,744.00

509,161.00 606,660.00 709,894.00
96,198.00 -2,114,084.00

414,271.00 60,073.00
456,982.00
41,356.00 12,286.51
100.00 38,875.00 10,782.54 561,112.00

$ 420,691.50 54,676.00

420,691.50 54,676.00

$ 13,762,019.05 $ 420,691.50 $ 14,182,710.55
(1) The Quality Basic Education Formula Grants shown above include on-behalf payments of $1,572,960.00 from the Department of Education to the Department of Community Health for health insurance for School District employees.

See notes to the basic financial statements.

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BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2013

SCHEDULE "4"

PROJECT
Adding to, renovating, improving, equipping and furnishing existing school buildings and facilities, including but not limited to Banks County High School, transportation facilities, physical education/athletic fields and facilities, classrooms, agricultural facilities and other facilities
Acquiring, constructing, equipping and furnishing new school buildings and facilities, including but not limited to a new elementary school, an administrative facility and other new school buildings and facilities
Acquiring technology equipment, safety and security equipment and other school equipment
Acquiring school buses and other school vehicles
Acquiring textbooks and band instruments.
Acquiring any capital property necessary or desirable for the foregoing purposes, both real and personal
Payment of a portion of the principal of and interest on the Banks County School District (Georgia) General Obligation Sales Tax Bonds, Series 2005

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

$ 7,000,000.00 $ 7,000,000.00 $ 4,865,181.30 $ 783,320.41

500,000.00

0.00

1,900,000.00

1,900,000.00

300,901.19 1,146,988.11

350,000.00 100,000.00

350,000.00 100,000.00

87,198.22

330,179.89

8,650,000.00

5,650,000.00

500,000.00

0.00

$ 19,000,000.00 $ 15,000,000.00 $ 5,253,280.71 $ 2,260,488.41

7/1/2013
8/31/2017 8/31/2017 8/31/2017 8/31/2017 8/31/2017
1/31/2013

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of Banks County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$ 2,796,627.99

Current Year

387,111.00

Total

$ 3,183,738.99

See notes to the basic financial statements.

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BANKS COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2013

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development
TOTAL QBE FORMULA FUNDS

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

875,926.00 $

940,576.34 $

8,690.84 $

949,267.18

176,807.00

166,792.92

166,792.92

2,226,593.00

2,261,802.69

15,469.50

2,277,272.19

206,560.00

326,830.00

326,830.00

1,182,915.00

1,190,207.10

8,966.85

1,199,173.95

109,472.00 2,108,953.00 1,600,208.00
605,473.00

145,924.73 2,348,948.26 2,162,006.03
505,001.08

18,474.99 33,956.58 30,381.45

145,924.73 2,367,423.25 2,195,962.61
535,382.53

383,928.00 288,829.00 2,126,669.00 605,771.00 609,363.00 473,552.00 215,788.00 160,128.00
95,171.00

661,529.03 667,962.88 667,202.50 871,219.46
457,585.78 439.09
84,132.38 180,228.20

2,124.61 5,061.75 348,084.21 5,190.44 4,580.00 2,591.03

663,653.64 673,024.63 1,015,286.71 876,409.90
4,580.00 460,176.81
439.09 84,132.38 180,228.20

$

14,052,106.00 $ 13,638,388.47 $ 483,572.25 $ 14,121,960.72

357,553.00 73,376.00

214,817.88

15,554.90

230,372.78

$

14,483,035.00 $ 13,853,206.35 $ 499,127.15 $ 14,352,333.50

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees.

See notes to the basic financial statements.

- 33 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 23, 2014

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Banks County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Banks County Board of Education as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise Banks County Board of Education's basic financial statements and have issued our report thereon dated April 23, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Banks County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Banks County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Banks County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and
2013YB-41

corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS-6061-13-01 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Banks County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Banks County Board of Education in a separate letter dated April 23, 2014.
Banks County Board of Education's Response to Findings
Banks County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Banks County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:bf 2013YB-41

Greg S. Griffin State Auditor

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 23, 2014

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Banks County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Banks County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Banks County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Banks County Board of Education's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Banks 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 on compliance for each major Federal program. However, our audit does not provide a legal determination of Banks County Board of Education's compliance.
2013SA-10

Opinion on Each Major Federal Program
In our opinion, the Banks County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013.
Report on Internal Control over Compliance
Management of Banks County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Banks County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Banks County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:bf 2013SA-10

Greg S. Griffin State Auditor

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

BANKS COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6061-11-01 FS-6061-12-01 FS-6061-12-02

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-6061-12-02

In the future we will implement a review of the financial statements during the preparation of the statements. Upon completion of the financial statements we will perform an additional comprehensive review of the statements and supporting schedules.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

Unmodified

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

Yes None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

No None Reported

Type of auditor's report issued on compliance for major programs: All major programs

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.287

Child Nutrition Cluster Twenty-First Century Community Learning Centers

Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee?

$300,000.00 No

- 1 -

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-6061-13-01 Financial Statement Preparation

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Description: This is a repeat finding (FS-6061-12-02) from the year ended June 30, 2012. The original financial statements, as presented for audit, contained significant and material errors and omissions.

Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Condition: The following deficiencies were noted in the School District's financial statements presented for audit:
A Private Purpose Trust Fund totaling $20,000.00 was recorded as an Agency Fund in error. This was material to the Fiduciary Funds. An adjustment was proposed and accepted to correct this error.
Net Investment in Capital Assets was understated by $3,249,438.94. This error was material to the District-wide financial statements. An adjustment was proposed and accepted to correct this error.
The Schedule of State Revenue (Schedule 3) did not include $420,691.50 of Georgia State Financing and Investment Commission revenue recognized as revenue in the current year. An adjustment was proposed and accepted to correct this error.
Numerous other audit and reclassification adjustments were proposed and accepted by the School District to properly present the School District's District-wide and fund financial statements.

Cause: In discussing this deficiency with the Finance Director, he stated the financial reports were prepared using the prior year model, which unfortunately had errors that he did not realize existed, and some new reporting requirements.

Effect or Potential Effect: Significant and material misstatements were included in the financial statements presented for audit.

Recommendation: The School District should establish and implement controls over the financial statement reporting process as required by the Financial Management for Georgia Local Units of Administration.

- 2 -

BANKS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. In the future we will review any changes made to our financial statements and incorporate these changes in the current year financial statement preparation. Upon completion of the financial statements we will perform an additional comprehensive review of the statements and supporting schedules.

Contact Person: Telephone: Fax: Email:

Mike Beasley, Finance Director (706) 677-2224 (706) 677-2223 mbeasley@banks.k12.ga.us

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

- 3 -