Audit report, Barrow County Board of Education, Winder, Georgia, year ended June 30, 1998

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

BARROW COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D

STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN FUND BALANCES

FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND

8

E

STATEMENT OF CASH FLOWS

FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND

9

F NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

10

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

25

CAPITAL PROJECTS FUND

I

COMBINING BALANCE SHEET

26

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

27

DEBT SERVICE FUND

K

COMBINING BALANCE SHEET

28

L

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

29

BARROW COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

EXmBITS

COMBINING STATEMENTS

FIDUCIARY FUND TYPES

M

COMBINING BALANCE SHEET

30

N

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

31

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

32

2 SCHEDULE OF STATE REVENUE

33

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

34

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

3S

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

S

OVERALL

37

6

BY PROGRAM

38

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FIND~GS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

BARROW COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 19, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Barrow County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Barrow County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Barrow County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose fmancial statements based on our audit.
Except as discussed in paragraphs three and four, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 1~98, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues, requires disclosure ofcertain matters regarding the year 2000 issue. Barrow County Board ofEducation has included such disclosures in the significant commitments section ofthe Notes to the Financial Statements. Because ofthe unprecedented nature ofthe year 2000 issue, itseffects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. Accordingly, insufficient audit evidence
98ARL-13A

exists to support Barrow County Board ofEducation's disclosures with respect to the year 2000 issue made in the Notes to the Financial Statements. Further, we do not provide assurance that Barrow County Board ofEducation is or will be year 2000 ready, that Barrow County Board ofEducation's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Barrow County Board ofEducation does business will be year 2000 ready.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: .
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose fmancial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose fmancial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects ofsuch adjustments, ifany, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph, and except for the effects ofsuch adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures as discussed in the fourth paragraph and except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Barrow County Board ofEducation as of June 30, 1998, and the results ofits operations and the cash flows ofits nonexpendable trust fund for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated March 19, 1999, on our consideration ofthe Barrow County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. .
98ARL-13A

Our audit was performed for the purpose offorming an opinion on the general purpose financial statements of the Barrow County Board of Education taken as a whole. The accompanying combining statements (Exhibits G through N) and the financial schedules (Schedules 1 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management mid Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effect of adjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service, inventories as discussed in the third paragraph, and except for the effects ofsuch adjustments, ifany, as might have beell determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures as discussed in the fourth paragraph and except for the effects ofthe matters referred to in the fifth paragraph such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

CLV:jb 98ARL-13A

Claude L. Vickers State Auditor

BARROW COUNTY BOARD OF EDUCATION
\

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

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount Available in Debt Service Fund
Amount to be Provided in Future Years For Payment of Bond Debt

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

388,013.09 $

121,n6.71 $

120,976.12

2,000,000.00

200,000,00

16,958,448.58

622,930.88

412,400.17

5,098,56

67,547,65 16,924.75

Total Assets

$ 3,010,943.97 $

818,649.28 $ 17,084,523,26

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Funds Held for Others General Obligation Bonds Payable
Total Liabilities
fUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For Endowment Corpus For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue Unreserved Undesignated
Total Fund Equity

$

92,115.58 $

98,568,35

26,100,00

282,401.26

10,545.00

$

155,319.59

45,100.79

$

118,215,58 $

391,514.61 $

200,420.38

$

5,124.20

$ 2,892,728.39 $ 2,892,728.39 $

67,547.65 16,924,75
$
337,538.07
427,134.67 $

16,884,102.88 0.00
16,884,102.88

Total Liabilities and Fund Equity

$ 3,010,943.97 $

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

818,649,28 $ 17,084,523.26

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS

ACCOUNT GROUP GENERAL LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30,1998

JUNE 30,1997

$ 2,178,660.23 $

17,054.09

$ 2,826,480.24 $ 15,713,793.79

2,000,000.00

45,130.n

21,203,579.35

11,688,736.52

761,171.78

1,801,601.39

723,350.00

$

4,939,832.01

67,547.65 16,924.75
4,939,832.01

37,578.70 17,838.n
3,519,001.48

29,050,167.99

2 9 ,050,167.99

32,335,998.52

$ 4,939,832.01 $

62,184.86 $

33,990,000.00 $ 59,906,133.38$ 64,036,297.78

$

190,683.93 $

142,026.05

308,501.26

228,638.22

10,545.00

1,250.97

155,319.59

46,512.42

45,100.79

368,718.82

$

9,254.71

9,254.71

7,038.25

$

33,990,000.00

33,990,000.00

35,855,000.00

$

9,254.71 $

33,990,000.00 $ 34,709.405.28 $ 36,649,184.73

$ 4,939,832.01 $
0.00 ~ 4,939,832.01 $ $ 4,939,832.01 $

14,914.68
38,015.47 52,930.15

$

104,725.97

$

5,124.20

8,401.24

4,939,832.01

3,519,001.48

14,914.68

14,914.68

67,547,65 16,924.75 16,884,102.88

37,578,70 17,838.n 19,294,752.58

3,268,281.93

4,389,899.63

$ 25,196,728.10 $ 27,387,113.05

62,184.86 $

33,990,000.00 $ 59,906,133.38 $ 64,036,297.78

-3-

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

FUND BALANCE JUNE 30
The notes to the general purpose financial statements are an integral part of this statement. -4-

$

2,892,728.39 $ = =.4..;;;27.."1..3.4;,,,;,;,;;.6.7...

EXHIBITHB"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 1998

JUNE 30, 1997

$ 26,695,706.87 $ 25,203,697.71

2,765,649.18

2,246,923.34

$ 4,732,682.55

16,162,603.67

12,199,741.63

$ 1,227,392.04

170,002.26

3,233,323.10

2,079,259.47

$ 1,227,392.04 $ 4,902,684.81 $ 48,857,282.82 $ 41l29,622.15

$

2,052.71

3,635,989.03 $
$ 3,638,041.74 $ $ -2,410,649.70 $

$
1,865,000.00 1,607,996.88
8,857.40 3,481,854.28 $ 1,420,830.53 $

27,612,897.06 $
1,082,687.80 1,326,313.22
950,417.11 646,809.74 2,870,449.94 823,566.53 3,141,741.22 1,927,402.41 264,833.30 180,968.73 2,502,298.43 340,278.10 3,926,272.41
1,865,000.00 1,607,996.88
8,857.40
51,078,790.28 $
-2,221 ,507.46 $

23,673,857.37
890,904.63 1,On,918.68
901,867.05 630,892.75 2,410,222.72 746,27098 2,459,n6.07 1,730,762.59 273,215.11 158,631.34 2,3n,086.76. 249,943.n 6,855,397.78
590,000.00 1,118,532.50
4,238.21
46,149,517.41
-4,419,895.26

$

61,391.33

15,000,000.00

11,082.50

$

13,137.50

11,386.26

-13,137.50

-11,386.26

$

0.00 $ 15,072,473.83

$ -2,410,649.70 $ 19,294,752.58

1,420,830.53 $ 3,519,001.48

-2,221,507.46 $ 27,336,250.48

10,652,578.57 16,689,015.23

29,968.95 -914.02

-8,701.91 3,358.59

$ 16,884,102.88 $ 4,939,832.01 $ 25,143,797.95 $ 27,336,250.48 -5-

THIS PAGE LEFT BLANK

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

EXHIBIT "C

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 24,485,352,00 $ 25,962,333,46

11,979,955,00 95,000.00

11,429,921.12 798,026,27

Total Revenues

$ 36,560,307.00 $ 38,190,280.85

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 Food Services Operation Community Services Operations
Capital Outlay

$ 24,690,704,00 $ 25,9n,355.51

863,792.00 867,286.00 923,000.00 649,600,00 2,821,800,00 583,000.00 2,686,800.00 1,820,200.00 252,125.00
2,000.00
400,000.00

941,838.05 1,242,682.58
923,059.58 537,789.98 2,868,935.85 821,513,82 3,113,160.78 1,924,448.15 264,833.30
8,836.90 1,193.08 339,571,12 290,283.38

Total Expenditures

$ 36,560,307,00 $ 39,255,502,08

Excess of Revenues over (under) Expenditures

$

..::0;.::.0.::;.0 $ -1,065,221.23

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses
Total Other Financing Sources (Uses)

$ _---'-1""'3,L.:,;13;.:.7;.::,5.::;.o
$_---'-1""'3!L.:,;13;.:.7;.::.5~0

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $

0,00 $ -1,078,358.73

FUND BALANCE JULY 1, 1997

3,981,342.33

3,971,087.12

Adjustments Food Inventory - Net Change in Period
Donated Commodities Purchased Foods

-8,057.n

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 523,156,00 $ 733,373.41

2,622,713.00

2,765,649,18

1,028,650.00

1,037,902.53

$ 4,174,519.00 $ 4,536,925.12

$ 1,335,370,00 $ 1,635,541,55

121,217.00 38,031.00
6,901.00 102,372.00

140,849.75 83,630.64 27,357.53 109,019,76
1,514.09

9,950.00 6,262,00

28,580.44 2,954.26

165,360.00 2,387,056.00
2,000.00

172,131.83 2,501,105.35
706.98

$ 4,174,519.00 $ 4,703,392,18

$

0.00 $ -166,467,06

$

13,137.50

$ _ _..;.;13.,1;,.;:;3..;.;7.",,50;..

$

0,00 $ -153,329,56

6n,238.43

551,409.30

51,257.52

29,968,95 -914.02

FUND BALANCE JUNE 30.1998

$ 3,973,284.56 $ 2,892,728.39

$ 728,495.95 $_--.42.7.,1.3..4...6..7..

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

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT liD"

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES

FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND

YEAR ENDED JUNE 30, 1998

OPERATING REVENUES
Donations OPERATING EXPENSES
Current Support Services Business Administration Community Services Operations
Total Operating Expenses Operating Income NONOPERATING REVENUES Interest Earned Net Income FUND BALANCE JULY 1

BARROW COUNTY, GEORGIA BOARD
OF EDUCATION SCHOLARSHIP
FUND, INCORPORATED

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

$

900,00 $

900,00 $

2,043,33

$

50.80 $

50,80 $

15,00

700,00

700.00

200.00

$

750,80 $

750.80 $

215.00

$

149.20 $

149,20 $

1,828,33

1,918.38

1,918,38

2,286,06

$

2,067.58 $

2,067.58 $

4,114,39

50,862,57

50,862.57

46,748,18

FUND BALANCE JUNE 30

$

52,930.15 $

52,930.15 $====50..,.8.=6=2.=57=

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

BARROW COUNTY BOARD OF EDUCATION STATEMENT OF CASH FLOWS
FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND
YEAR ENDED JUNE 30, 1998

EXHIBIT"E"

Cash Flows from Operating Activities: Donations Cash Paid for Dues and Fees Cash Paid for Scholarships
Net Cash Provided (Used) by Operating Activities
Cash Flows from Investing Activities: Purchase of Investment Securities Interest Received on Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - July 1

BARROW COUNTY, GEORGIA BOARD OF EDUCATION
SCHOLARSHIP FUND,
INCORPORATED

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

$

900,00 $

900.00 $

2,043.33

-50.80

-50.80

-15.00

-700.00

-700.00

-200,00

$

149.20 $

149.20 $

1,828.33

$

-45,130,77 $

-45,130.77

1,918.38

1,918.38 $

2,286.06

$

-43,212.39 $

-43,212.39 $

2,286.06

$

-43,063.19 $

-43,063,19 $

4,114.39

50,862.57

50,862.57

46,748.18

Cash and Cash Equivalents - June 30

$

7,799.38 $

7,799.38 $_==50=,8=6=2=.5=7

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

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Barrow County Board ofEducation (Board) was established under the laws ofthe State of Georgia and op~rates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances ofthese accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives.
-10 -

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
FIDUCIARY FUND TYPES - the funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include:
NONEXPENDABLE TRUST FUND Barrow County, Georgia Board of Education Scholanhip Fund, Incorporated - the fund used to account for an endowment of which the corpus is to be invested and preserved intact with the resultant income to be used to administer, secure and manage funds and assets to provide educational scholarships for students in Barrow County and for other general purposes.
AGENCY FUNDS - the funds used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balancesheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
All nonexpendable trust funds are accounted for on a flow ofeconomic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are'Included on the balance sheet. Operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets.
- 11 -

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998 .

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Agency funds are purely custodial in nature and do not involve measurement of results of operations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectibl~ within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30,1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
The accrual basis of accoUIiting, as required by generally accepted accounting principles, is utilized by nonexpendable trust funds. Under the accrual basis ofaccounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Barrow County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is
.. 12 -

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.

The budget process begins when the Board's administration prepares a tentative budget for the Board's approval~ After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.

INVESTMENTS

COMPOSmON OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

(1) Obligations issued by the State of Georgia or by other states,

(2) Obligations issued by the United States government,

(3) Obligations fully insured or guaranteed by the United States government or a United States

government agency,

.

(4) Obligations of any corporation ofthe United States government,

(5) Prime banker's acceptances,

- 13-

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8).. Obligations of other political subdivisions ofthe State of Georgia.

RECEIVABLES

Receivables consist ofgrant 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 re~_orded on the general purpose fmancial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Barrow County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on September 20, 1997(levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Barrow County Tax Commissioner bills and collects the property taxes for the Board ofEducation, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the Board.

Tax millage rates levied for the 1997 tax year (calendar year) for the Barrow County Board ofEducation were as follows (a mill equals $1 per thousand dollars ofassessed value):

School Operations School Bonds

18.42 mills 1.10 mills

12j2mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax collected by the State and remitted to the Board during the fiscal year amounted to $4,000,877.21 and was recorded in the Debt Service Fund. The State will terminate collection of this tax once an additional $16,999,122.79 has been collected or on June 30, 2002 whichever occurs first.

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BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, flist-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
GENERAL OBLIGATION BONDS
The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The Board has the following types of interfund transactions:
Reimbursements of expenditures/expenses initially made from a fund that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations or cash flows' in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.

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BARROW COUNTY BOARD OF EDUCATION

EXIllBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by
surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond
and the market value ofsecurities pledged shall be equal to not less than 11 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination ofthe following:
. (l) 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 ofindebteclness or other direct obligations ofthe United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. .
CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $10,031,476.39. The amounts of the total bank balances are classified into three categories of credit risk:

- 16-

BARROW COUNTY BOARD OF EDUCATION

ExmBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)
The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category

Bank Balance

1

$ 4,581,136.51

2

0.00

3

5.450.339.88

Total

$10.031.476.39

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

Category 1 - Insured or registered, or securities held by the Board or the Board's agent in the Board's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Board's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Board's name.

Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool.

At June 30, 1998, the carrying value ofthe Board's total investments was $16,958,448.58. The investments are classified as to risk categories as follows:

Type of Investment
U. S. Government
Local Government Investment Pools
Total Investments

Risk Categories

1

2

$ 14,15849008 $

Carrying

Fair

3

Amount

Value

0,00 $ 14,158,490.08 $ 14,194,622.95

2,799,958.50 2.799,958.50 $ 1695844858 $ 16994581 45

- 17 -

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS
The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the Board owns no identifiable securities. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm. rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety ofcapital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds ofthe State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30,1998 was .96 years.
Note 3: NON-MONETARY TRANSACTIONS
The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The Board is exposed to various risks ofloss related to torts; theft of, damage to, and destruction ofassets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk of loss associated with torts, assets and errors or omissions. However, the errors or omissions policy excludes coverage for sexual harassment and
- 18-

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 4: RISK MANAGEMENT

discrimination. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to these risks in the past three years.

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

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

1997 1998

Beginning ofYear Liability

Claims and Changes in Estimates

$

0.00 $

980.00 $

$

0.00 $

1,270.00 $

Claims Paid

End ofYear Liability

980.00 $

0.00

1,270.00 $

0.00

The Board participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992 to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The Board pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000.00 aggregate to more than seventy-five percent (75%) of the standard experience rated premium during the policy term, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss.

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

Position Covered

Amount

Superintendent

$ 103,000.00

Note 5: GENERAL LONG-TERM DEBT

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

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BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: GENERAL LONG-TERM DEBT

Pumose

Interest Rates

Amount

General Government - Series 1997 General Government - Series 1995A General Government - Refunding - Series 1995B General Government - Refunding - Series 1993 General Government - Series 1990 General Government - Series 1973

4,00% - 5,00% 4.00% - 5.40% 3.90% - 5.40% 3.15% - 4.75% 5.90% - 7.05% 5.00% - 6.00%

$13,770,000.00 9,920,000.00 5,750,000.00 4,155,000.00 190,000.00 205,000.00

$33.990.000.00

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

General Obligation
Bonds

Balance July 1, 1997

$35,855,000.00

Deductions Payments

1,865,000.00

Balance June 30, 1998

$33.990.000.00

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

Fiscal Year Ended June 30

General Obligation
Bonds

1999 2000 2001 2002 2003 2004 -2008 2009 -2013 2014 - 2018

$ 4,840,132.50 5,031,530.00 5,210,822.50 5,424,315.00 4,106,010.00 9,326,415.00 9,518,420.00 3,845.440.00

Total Principal and Interest

$47.303.085.00

- 20-

BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 6: PRIOR YEAR DEFEASEMENT OF DEBT

In fiscal year 1996 the Board defeased certain general obligation bonds by placing the proceeds ofnew 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 Board's general purpose financial statements. At June 30,1998, $5,295,000.00 ofbonds are outstanding and are considered defeased.

Note 7: ON-BEHALFPAYMENTS

The Board has recognized revenues and expenditures in the amount of $634,533.38 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $492,432.74

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $21,422.64

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$120,678.00

Note 8: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, 1998, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

Southwest Barrow Elementary School New Barrow County High School
GSFIC-99/98S-607-001

$ 5,277,264.04 36,000.00 $ 751.501.00

$ 5.313.264.04 $. 751.501.00

The amounts described in this note are not reflected in the general purpose financial statements.

- 21 -

BARROW COUNTY BOARD OF EDUCATION

EXillBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 8: SIGNIFICANT COMMITMENTS
At June 30, 1998, the Board had $76,373.24 in outstanding contractual commitments for the purpose of making computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Board's financial accounting system, instructional computer equipment and heating and air conditioning control equipment. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As of June 30, 1998, the Board's financial accounting system, instructional computer equipment and heating and air conditioning control equipment were determined to be at the Awareness Stage.
The Board's fmancial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department of Education). As ofJune 30, 1998, the State had not contracted for the remediation ofeither the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department ofEducation has remediated the Wang VS operating system and the updated system was installed at all GENESIS sites as ofDecember 9, 1998. The Georgia Department ofEducation has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software.
Note 9: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grailt terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position.

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BARROW COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 9: CONTINGENT LIABILITIES

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

Note 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 2,852,261.75 $ 2,492,860.62 $ 2,246,788.17

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BARROW COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 1998

EXHIBIT~

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30,1998 JUNE 30,1997

$ 294,784.88 $

30,8n.95

$ 325,662.83 $ 427,410.83

200,000.00

200,000.00

200,000.00

14,897.00

21,743.31 $ 375,759.86

412,400.17

284,077.18

67,547.65 16,924.75

67,547.65 16,924.75

37,578.70 17,838.77

Total Assets

$ 594,154.28 $

52,621.26 $ 375,759.86 $ 1,022,535.40 $ 966,905.48

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Salaries Payable

Expired Grant Balances Payable

Total Uabilities

$

FUND EQUITY

Fund Balances

Reserved

For Continuation of Federal Programs

For Inventories

Food

Donated Commodities

$

Purchased Food

Unreserved

Undesignated

Total Fund Equity

$

52,719.00 $ 119,424.81 172,143.81 $
67,547.65 16,924.75 337,538.07 $ 422,010.47 $

$ 10,904.70 41,716.56
52,621.26 $

203,886.12 $ 34,944.65 121,259.89 10,545.00
370,635.66 $

203,886.12 $ 98,568.35
282,401.26 10,545.00
595,400.73 $

125,718.87 61,139.09 228,638.22
415,496.18

$
0.00 O.OP $

5,124.20 $

5,124.20 $

8,401.24

0.00 5,124.20 $

67,547.65 16,924.75
337,538.07
427,134.67 $

37,578.70 17,838.77
487,590.59
551,409.30

Total Uabilities and Fund Equity

$ 594,154.28 $

52,621.26 $ 375,759.86 $ 1,022,535.40 $ 966,905.48

see notes to the general purpose financial statements.

- 24-

See notes to the general purpose financial statements.

- 25-

BARROW COUNTY BOARD OF EDUCATION COMBINING BAlANCE SHEET CAPITAL PROJECTS FUND JUNE 3D. 1998

EXHIBIT,..

~ Cash and Cash Equivalents Investments Accounts Receivable

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

. LOTTERY PROJECT

TOTALS

JUNE 30.1998

JUNE 30,1997

$

29,063.94 $

62,369.44 $

29,542.74 $

120,976.12 $ 14,764,532.80

16,958,448.58

16,958,448.58

4,945,451.02

5,098.56

5,098.56

Total Assets

$ 16,987,512.52 $

62,369.44 $

34,641.30 $ 17,084,523.26 $ 19,709,983.82

LIABILITIES AND FUND EQUITY

LIABILITIES

Contracts Payable

$

Retainages Payable

Total Liabilities

$

FUND EqUITY

Fund Balances

Reserved

For Purposes of Bond Issue

$

Unreserved

Undesignated

Total Fund Equity

$

58,308.85 $ 45,100.79 103,409.64 $
16,884,102.88 0.00 $
16,884.102.88 $

62,369.44 $ 62.369.44 $
0.00 $ 0.00 $

34,641.30 $ 34,641.30 $

155,319.59 $ 45,100.79
200A20.38 $

46,512.42 368,718.82
415,231.24

$ 0.00 0.00 $

16,884,102.88 $ 0.00
16,884,102.88 $

19,294,752.58 0.00
19,294,752.58

Total Liabilities and Fund Equity $ 16,987,512.52 $

62,369.44 $

34,641.30 $ 17,084,523.26 $ 19,709,983.82

See notes to the general purpose financial statements.

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See no~es to the general purpose financial statements.

27 -

BARROW COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30, 1998

EXHIBIT 10K"

. ASSETS Cash and Cash Equivalents Investments Accounts Receivable

PROPERTY TAXES FOR
BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30,1998

JUNE 30, 1997

$

583,341.07 $ 1,595,319,16 $ 2,178,660.23 $

472,905.24

2,000,000.00

2,000,000.00

3,000,000,00

33,878,80

727,292,98

761,171.78

46,096,24

Total Assets

$ 2,617,219,87 $ 2,322,612,14 $ 4,939,832,01 $ 3,519,001,48

FUND EQUITY
Fund Balances Reserved For Debt Service Unreserved Undesignated

$ 2,617,219.87 $ 2,322,612,14 $ 4,939,832,01 $ 3,519,001,48

0.00

0.00

0,00

0,00

Total Fund Equity $ 2,617,219,87 $ 2,322,612,14 $ 4,939,832,01 $ 3,519,001.48

See notes to the general purpose financial statements. -28 -

BARROW COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30, 1998

EXHIBIT"L"

REVENUES
Taxes Other Funds
Total Revenues
EXPENDITURES
Debt Service Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Accrued Interest on Bonds Sold
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1

PROPERTY TAXES FOR
BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 1998

JUNE 30, 1997

$

731,805,34 $ 4,000,877.21 $ 4,732,682.55 $ 1,313,299.50

161,742.27

8,259,99

170,002,26

154,030.37

$

893,547.61 $ 4,009,137,20 $ 4,902,684.81 $ 1,467,329.87

$

635,000.00 $ 1,230,000,00 $ 1,865,000,00 $

590,000.00

1,090,007.50

517,989.38

1,607,996.88

1,118,532.50

8,857,40

8,857,40

4,238.21

$ 1,733,864,90 $ 1,747,989,38 $ 3,481,854.28 $ 1,712,770.71

$

-840,317.29 $ 2,261,147.82 $ 1,420,830,53 $

-245,440.84

61,391,33

$

-840,317.29 $ 2,261,147.82 $ 1,420,830,53 $

-184,049,51

3,457.537,16

61,464.32

3,519,001.48

3,703,050,99

FUND BALANCE JUNE 30

$ 2,617,219,87 $ 2,322.612,14 $ 4,939,832.01 $ 3.519,001.48

See notes to the general purpose financial statements,

- 29-

BARROW COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE 30. 1998

EXHIBIT"M"

ASSETS Cash and Cash Equivalents Investments

NONEXPENDABLE TRUST FUND
BARROW COUNTY, GEORGIA BOARD OF EDUCATION
SCHOLARSHIP FUND,
INCORPORATED

AGENCY FUNDS

TOTALS

JUNE 30,1998

JUNE 30,1997

$

7,799.38 $

9,254.71 $

17,054.09 $

14,615.32

45,130.n

45,130.n

43,285.50

Total Assets

$

52,930.15 $

9,254.71 $

62,184.86 $

57,900.82

LIABILITIES AND FUND EQUITY

LIABILITIES

Funds Held for Others

FUND EQUITY

Fund Balances

Reserved

For Endowment Corpus

$

Unreserved

Undesignated

Total Fund Equity

$

$

9,254;71 $

9,254.71 $

7,038.25

14,914.68 38,015.47 52,930.15

$

14,914.68 $

14,914.68

38,015.47

35,947.89

$

52,930.15 $

50,862.57

Total Liabilities and Fund Equity

$

52,930.15 $

9,254.71 $

62,184.86 $

57,900.82

See notes to the general purpose financial statements.

-30 -

BARROW COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30.1998

EXHIBIT"N"

LIABILITIES

Funds Held for Others

$

MURRAY KENNEDY MEMORIAL FUND

ASSETS

Cash and Cash Equivalents

$

LIABILITIES

Funds Held for Others

$

SUNSHINE FUND

ASSETS

Cash and Cash Equivalents

$

LIABILITIES

Funds Held for Others

$

TOTALS - AGENCY FUNDS

ASSETS

Cash and Cash Equivalents

$

LIABILITIES

Funds Held for Others

$

3,882.30 $

15.468.92 $

13,281.92 $ _ _.....6. .,0.6..9.;,;;3.0..

3,028.38 $ 3,028.38 $

29.46 $ 29.46 $

0.00 $ _ _..-013,.05.7...8..4.. 0.00 $ _ _....3. ,0.5.7..84..
11oO

127.57 $ 127.57 $

0.00 $ 0.00 $

0.00 $ 0.00 $

1.2._7.5..7.. 12_.7,;;;.5.7.

7,038.25 $

15,498.38 $

13.281.92 $ _ _....9..,2.5..4..7..1,;.

7,038.25 $

15.498.38 $

13,281.92 $ _ _....9..,20;;;54.-.7.1. ,;.

See notes to the general purpose financial statements.

- 31 -

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

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U, S, Department of Pass-Through from Georgia Department of Education Food and Nutrition Program Food Services . SChool Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
. Total U, S, Department of Agriculture
Education, U, S, Department of Pass-Through from Georgia Department of Education Elementary and Secondary Education Act Title I
Grants to Local Educational Agencies
1998 Grant State School Improvement Grants
1998 Grant TrtlelJ
Eisenhower Professional Development 1997 Grant 1998 Grant
TrtleVi Innovative Education Program Strategies 1998 Grant
Individuals with Disabilities Education Act Part B - Special Education Flow Through 1997 Grant 1998 Grant Preschool 1998 Grant
Safe and Drug-Free Schools 1998 Grant
Vocational Education - Basic Grants to States
High School Program Basic Grant 1998 Grant
Tech-Prep Education 1998 Grant
Total U. S, Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 10,553
* 10,555 10,550

NlA

$

206,474,46

(2)

NlA

766,445,08 $ 2,327,580,59 (3)

NlA

172,739,86

172,739,86

$ 1,145,659.40 $ 2,500,320.45

84.010 84,218
84,281 84,281
84,298

NlA

$

NlA

NlA NlA

NlA

933,967,00 $ 14,170,28
46,476,00 32,339,00

936,997,53 (3) 14,170,26
8,401,24 41,351,80
32,339,00

84.027

NlA

84,027

NlA

84.173

NlA

84.186

NlA

403,864.86 76,059,32 33,811,00

301,28 403,563.58
76,059,32
33,811,00

84,048 84,243

NlA

74,404.79

74,579,04 (3)

NlA

4,897,55

4,897,55

$ 1,619,989.78 $ 1,626,471.60

Total Federal Financial Assistance

$ 2.765,649,18 $

NlA = Not Applicable

Notes to the Schedule of ExPenditures of Federal Awards

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

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

The Board did not provide Federal Assistance to any Subrecipenl

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Barrow County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the financial statements for the governmental funds.

4,126,792.05

See notes to the general purpose financial statements.

- 32

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

SCHEDULE "2"

AGENCYIFUNDING
GRANTS Community Affairs, Department of Govemor's Emergency Funds (1)
Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Limited English Speaking Program Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Apprenticeship Program At-Risk Summer School Program Environmental Science Program Gifted Technology Health Insurance Innovative Programs Mentor Teacher Program Pay for Performance Program Preschool Handicapped Program PSATExams Teachers' Retirement Lottery Program Instructional Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employ~es Retirement
CONTRACT Education, Georgia Department of Leadership Development Program

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

2,000.00

$

2,000.00

14,452,374.00 2,976,284.00
524,5n.00 621,701,00 197,035,00 3,962,621.00
807,311.00 161,322.00
4,449.00 537,036,00 980,591.00 120,036,00 933,383.00 61,428.00 86,527.00 -2,888,493,00 1,336,005,00
$ 4;408.62
193,637.00 44,992.57 21,867.98
2,500.00 4,300,00 492,432.74 5,000.00 18,800,00 70,000,00 85,086.91
20.00 21,422.64
120,678,00

175,456.00
208,587.00 349,330.41

14,452,374,00 2,976,284,00
524,5n.00 621,701.00 197,035.00 3,962,621.00
807,311.00 161,322.00
4,449.00 537,036.00 980,591.00 120,036.00 933,383.00 61,428.00
86,527,00 -2,888,493,00 1,336,005.00
175,456.00 4,408.62
193,637.00 44,992,57 21,867,98
2,500.00 4,300,00 492,432.74 5,000.00 18,800.00 70,000.00 85,086.91
20,00 21,422.64
208,587.00
349,330.41
120,678.00

1,000.00

1,000.00

$ 25,962,333,46 $

733,373,41 $ 26,695,706,87

(1) The purpose of the funds are to assist with expense in connection with a Youth Leadership Training Program,

See notes to the general purpose financial statements,

- 33-

BARROW COUNTY BOARD OF EDUCATION SCHEDULE OF APPROveD LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

$ 21,000,000,00 $ 21,000,000.00 $

1,367,568.40 $

(1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board's current estimate of total cost for each project. Includes all cost from project inception to completion,
(3) The voters of Barrow County approved the imposition of a 1% sales tax to fund the above projects,
Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. (4) In addition to the expenditures shown above, the Board incurred current year interest expenditures in the amount of $517,989.38 to provide advanced funding for the above projects,

..0...0._.0

See notes to the general purpose financial statements.

34-

BARROW COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30.1998

SCHEDULE "4"

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

INSTRUCTIONAL TECHNOLOGY CLASSROOM TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

$

210,545.38 $

3,049.00

284,727.10 $
40,413.39 4,111.17 6,559.07
26,587.44 265.35 342.23

TOTAL
495,272.48
43,462.39 4,111.17 6,559.07
26,587.44 265.35 342.23

Total Expenditures

$

213,594.38 $

363,005.75 $====57=6=,6;,;;0=0';,,;,1=3

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

$

321,680.93

213,594.38 41,324.82

$

576,600.13

See notes to the general purpose financial statements. - 35-

THIS PAGE LEFT BLANK

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

SCHEDULE "5"

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

. FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$ 19,508,319.00 $

647,372,00

$ 22,651,117,28 1,419,161.92 $
$ 24,070,279,20

1,288,267,56

-267,614.94 $ 23,802,664,26

$

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

See notes to the general purpose financial statements. - 37 -

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

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs (") Identifies Fourteen Weighted Programs, See notes to the general purpQS8 financial statements,

$

57,137,00

139,898,00

$

57.137,00 $

139,898,00

$

197,035,00 100 $

197,035,00 $

0,00 0,00
...0..,0.0.

- 38

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$ 1,712,519.10 $ 2,011,712.22 $

60,542.91 $ 2,072,255.13

4,267,227.90

4,821,262.64

259,582.18

5,080,644.82

$ 5.979,747.00 $ 6,832,974.86 $

320,125.09 $ 7,153,099.95 $

0.00

1,979,643.30

2,635,372.31

97,125.24

2.732,497.55

0.00

3,221,695.70

3,871,645.54

299.887.60

4,171,533.14

0.00

1,261,618.20

2,100,608.63

207,754.38

2.308,363.01

0.00

798,098.40

1,128,977.47

2,506.26

1.131,483.73

0.00

699,717.00

979,591.28

247,029.69

1,226,620.97

0.00

$ , 13.940,519.60 $ 17,549.170.09 $ 1.174,428.26 $ 18,723,598.35

$ 2.497,568.40 $

1,181,940.76 $ 705,151.71
1,479.363.46 145,240.72 56,400.13

2.262.02 $ 8.141.57 94.096.62
318.70

1.184.202.78 713,293.28
1,573,460.08 145.559.42 56.400.13

$ 2,497.568.40 $ 3,568,096.78 $

104.818.91 $ 3,672,915.69

0.00

181-,087.20

282,204.39

3,566.99

285.n1.38

0.00

$ 2,678,655.60 $ 3,850,301.17 $

108,385.90 $ 3.958,687.07

$

472,119.30 $

493,224.44 $

5,453.40 $

498.677.84

0.00

$ 17,091,294.50 $ 21.892.695.70 $ 1,288.267.56 $ 23,180.963.26

$

455,443.20 $

758,421.58

$

758,421.58

0.00

104,087.70

$

130,894.36

130,894.36

0.00

$

559.530.90 $

758.421.58 $

130,894.36 $

889.315.94

$ 17,650,825.40 $ 22.651,117.28 $ 1.419,161.92 $ 24,070.279.20 $

0.00

$

57.137.00

139,898.00

$ _.....1.9.7.0..3.50..0.

$

86.n6.11 . $

86.n6.11

110,258.89

110,258.89

$

197.035.00 $

197,035.00 $

0.0.0.

- 39 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 19, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Barrow County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Barrow County Board ofEducation as of and for the year ended June 30, 1998, and have issued our report thereon dated March 19, 1999. This report was qualified for scope limitations and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. Except as discussed in paragraphs two and three, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
We did not observe the taking of either the Federal donated commodities inventory or the purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
We were unable to examine sufficient audit evidence regarding year 2000 disclosures as required by
Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues.
This bulletin requires disclosure of certain matters regarding the year 2000 issue in order for financial statements to be prepared in conformity with generally accepted accounting principles.
Compliance .
As part of obtaining reasonable assurance about whether Barrow County Board of Education's fmancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of . laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those
98YB-40

provisions was not an objective ofour audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Barrow County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgement, could adversely affect Barrow County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6071-98-01.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. The reportable condition noted above is considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
CLV:jb 98YB-40

CLAUDE L. VICKERS
STATE AUDI10R
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 19, 1999

Honorable Roy E. Barnes, Governor Membersofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Barrow County Board ofEducation
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Barrow County Board of Education with the types of compliance
requirements described in the u.s. Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Barrow County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Barrow County Board of Education's management. Our responsibility is to express an opinion on Barrow County Board ofEducation's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Barrow County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Barrow County Board of Education's compliance with those requirements.

98SA-10

In our opinion, the Barrow County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management of Barrow County Board of Education is responsible for establishing and maintaining .effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Barrow County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion oil compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control.that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that 'noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record.
CLV:jb 98SA-I0

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

BARROW COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6071-93-02 FS-6071-97-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6071-97-01

Due to current staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the financial statements.

SECTIONN FINDINGS AND QUESTIONED COSTS

BARROW COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Barrow County Board of Education's financial statements was qualified for scope limitations and for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Barrow County Board ofEducation disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit ofthe Barrow County Board of Education disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Barrow County Board ofEducation did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Barrow County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Reguired to be Reported by Section .510Ca) ofOMB Circular A-133 The Barrow County Board ofEducation's audit did not disclose audit findings required to be reported
. by section .5lO(a) ofOMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Barrow County Board ofEducation was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
- 1-

BARROW COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6071-98-01 The Barrow County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the fonnal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements ofthe Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory ofland, buildings and equipment owned by the Board and should include but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location, and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-