Audit report, Berrien County Board of Education, Nashville, Georgia, year ended June 30, 1998

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

BERRIEN 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

6

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

21

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

23

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

25

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 SCHEDULE OF EXPENDITURES

LOTIERY PROGRAMS

29

BERRIEN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL,INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

31

7

BY PROGRAM

32

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 FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

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

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Berrien County Board ofEducation
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION -
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Berrien 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 Berrien County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditin~ 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 ofmaterial 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.
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.

98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose

financial statements. To conform to generally accepted accounting principles, these accounts should

be included in the general purpose financial statements.

.

* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department 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 financial statements of these variances or omissions have not been determined, but are believed to be material.

In our opinion, 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 of the Berrien County Board ofEducation as ofJune 30, 1998, 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 July 19, 1999, on our consideration of the Berrien County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants.

The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Berrien County Board ofEducation is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Berrien County Board ofEducation does business are or will become year 2000 compliant.

Our audit was performed for the purpose offorming an opinion on the general purpose financial statements of the Berrien County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.

98ARL-13B

A copy of this report has been filed as a pennanent 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,
W~
R ssell W. Hinton State Auditor
RWH:jb 98ARL-13B

BERRIEN COUNTY BOARD OF EDUCATION

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

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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 1,211,450.79 $

679,937.96 $

114,155.33

10,807,616.12

79,232.76

98,657.60

277,552.14

1,843.05

20,798.00 13,215,37

Total Assets

$ 1.292.526.60 $

812,608.93 $ 11 .199,323.59

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable salaries Payable Expired Grant Balances Payable Capital Lease Agreements General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For Special Local Option Sales Tax Purposes Unreserved Undesignated
Total Fund Equity

$

250.10 $

37,543,41

1,350,00

116,717.18

200.00

16,870.46

$

1.800.10 $

171.131.05

$

443,945.27

$ 1,290,726.50 $ 1.290,726,50 $

20,798.00 13,215.37
$
163,519.24
641.477.88 $

10,681,953.10 517,370.49
0.00
11,199,323.59

Total Liabilities and Fund Equity

$

1,29~,526.60 $

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

812.608,93 $ 11,199,323.59

EXHIBIT "A"

DEBT SERVICE
FUND

$

21,294.58

ACCOUNT GROUP
GENERAL LONG-TERM
DEBT

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

$ 2.026,838.66 $ 1,5n,905.92

10.807,616.12

455,442.50

134,228.47

1,843.05

$

21,294.58

20,798.00 13,215.37
21,294.58

18,839.05 13,196.52

11,323,705.42 267.n9.80

11,323,705.42 267.n9.80

384,517.01

$

21,294.58 $ 11,612.779.80 $ 24,938,533.50 $ 2.128,686.97

$

37,793.51 $

118,067.18

17,070.46

$

267,n9.80

267,n9.80

11,345,000.00

11,345,000.00

$ 11,612,n9.80 $ 11,785,710.95 $

150,800.90 136,197.87
54,802.43 384,517.01
726,318.21

$

21,294.58

0.00

$

21,294.58

$

443,945,27 $

21,294.58

86,561.78

20,798.00 13,215.37 10,681,953.10 517,370.49
1,454,245.74
$ 13.152.822.55 $

18.839.05 . 13.196.52
1,283.n1.41 1,402,368.76

$

21.294.58 $ 11.612,779.80 $ 24.938,533.50 $ 2.128,686.97

-3-

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

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterprise Operations
Capital Outlay Debt Service
Principal Interest
Total Expendnunes
Excess of Revenues over (under) Expendnunes
OTHER FINANCING SOURCES (USES)
Accrued Interest on Bonds Sold Proceeds from General Obligation Bonds
Par Value Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

GOVERNMENTAL
SPECIAL REVENUE
FUND

$ 11,048,158.71 $
2,442,963.10 259,018,52
$ 13,750,140.33 $

422,855.69 3,076,225.05
311,397.09
3,810,4n.83

$ 8,882,461.37 $

426,641.82 428,687.54 293,038.97 307,813.26 861,025.12
86,394.15 992,540.92 811,131.42 107,399.34 179,159.80

2,609.68 104,664.04

116,737.21 26,954.03

$ 13,627,258.67 $

$

122,881.66 $

.814,660.30
248,952.51 183,950.37 180,952.71
23,124.79 5,191.00
902,236.31 1,022,368.05
24,065.63
3,405,501.67 404,976.16

$

$

-38.75

$

-38.75 ,$

$

122,842.91 $

1,167,883.59

38.75
38.75
405,014.91 234,485.17
1,958.95 18.85

FUND BALANCE JUNE 30

$

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

1,290,726.50 $

64..1.,4..n."';,;;;8.8.

EXHIBIT"B"

FUND TYPES CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30.1998

JUNE 30.1997

$

$

515,603.52

207.248.33

$

722.851.85 $

0.00 $ 0.00 $

11.471.014.40 $ 3.076.225.05 2,958,566.62
777.663.94
18.283.470.01 $

10,640.983.74 1.851.613.93 2,469,552.90 481,609.81
15.443.760.38

$

$

230,407.14

638,121.12

$

868,528.26 $

$

-145.676.41 $

0.00 $
0.00 $ 0.00 $

9.697,121.67 $
675,594.33 612,637.91 293,038.97 488,765.97 861,025.12 316,801.29 1,015,665.71 816,322.42 107,399.34 1,081,396.11 1,022,368.05
2,609.68 766,850.79
116,737.21 26,954.03
17.901.288.60 $
382,181.41 $

9,085,940.22
598,477.32 473.620.06 331,183.90 442.287.99 881,068.24
99,539.18 969,070.80 707,761.97 166,536.10 870,470.85 1,055,765.24
252,899.00
108,745.59 34.945.65
16,078.312.11
-634.551.73

$ $ 11,345,000.00
$ 11,345.000.00 $ $ 11,199,323.59 $
0.00

21,294.58 $ 21,294.58 $

21,294.58
11,345,000.00 38.75 $ -38.75
11 .366.294.58 $

8,958.43 -8.958.43
0.00

21,294.58 $ 0.00

11,748.475.99 $ 1,402,368.76

-634,551.73 2,029,044.84

1,958.95 18.85

6,339.12. 1.536.53

$ 11,199.323.59 $

21.294.58 $ 13,152,822.55 $ 1,402,368.76 -5-

BERRIEN 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

$ 10,448,228,30 $ 11,048,158.71

2,326,027,26 111,055,17

2,442,963,10 259,018.52

Total Revenues

$ 12,885,310,73 $ 13,750,140,33

EXPENDITURES

Current Instruction Support Services Pupil Services Improvemenfof 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 Enterprise Operations
Capital Outlay Debt Service

$ 8,770,737,24 $ 8,882,461.37

415,154.20 448,134.63 277,786,11 305,343,94 869,410,24
95,042,72 1,083,002.90
744,095,24 107,190.28 190,699.74

426,641,82 428,687,54 293,038.97 307,813.26 861,025.12
86,394,15 992,540,92 811,131.42 107,399.34 179,159.80

4,100.00 220,922.80

2,609.68 104,664.04 143,691.24

Total Expenditures

$ 13,531,620.04 $ 13,627,258.67

Excess of Revenues over (under) Expenditures

$ -646,309,31 $

122,881.66

OTHER FINANCING SOURCES IUSES)

Other Sources Other Uses

$

-38.75

Total Other Financing Sources (Uses)

$

-38.75

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

-646,309.31 $

122,842.91

FUND BALANCE JULY 1, 1997

1,180,320.94

1,167,883.59

Adjustments Food Inventory - Net Change in Period
Purchased Food

1,401.53

FUND BALANCE JUNE 30, 1998

$ 535,413,16 $ 1,290,726,50

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 364,647.00 $ 422,855.69

2,605,865.00

3,076,225.05

285,000,00

311,397,09

$ 3,255,512,00 $ 3,810,4n.83

$ 833,048.30 $ 814,660,30

260,606,70 192,225.00
3,500,00 151,564,00

248,952.51 183,950,37
180,952,71

25,166,00
837,902,00 951,328.09

23,124.79 5,191,00
902,236.31 1,022,368,05
24,065.63

$ 3,255,340.09 $ 3,405,501,67

$

171,91 $ 404,976.16

$

38.75

$

38.75

$

171.91 $ 405,014.91

271,372.04

215,646.12

10,258.11

18.85

$ 281,802.06 $ 620,679,88

The notes to the general purpose financial statements are an integral part of this statement -6-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Berrien County Board ofEducation (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results 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 ofEduc~tion and from the Federal government to accomplish specific educational objectives.
-7-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction ofmajor 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.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., 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.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). ''Measurable'' means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, 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 of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment
-8-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
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.
BUDGET
The Berrien County Board of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Statement ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" ofthis report:

-9-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

Special Revenue
Fund

FUND BALANCE JULY 1, 1997

$ 234,485,17

Adjustments Inventories - July 1, 1997 Food Donated Commodities

-18,839.05

Fund'Balance July 1,1997 (Budget Basis)

$ 215,646.12

Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses

405,014.91

Adjustments Food Inventory - Net Change in Period Purchased Food

18.85

FUND BALANCE JUNE 30, 1998 (Budget Basis)

$ 620,679.88

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:

-10 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

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

(2) Obligations issued by the United States government,

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

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

(5) Prime banker's acceptances,

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

(7) Repurchase agreements, and

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

RECEIVABLES

Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from infonnation available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would ner;essitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Berrien County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on October 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 Berrien 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.

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

School Operations

11.25 mills

- 11 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt retirement. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $515,603.52
and was recorded in the Capital Projects Fund. The State will terminate collection of this tax once an
additional $8,684,396.48 has been collected or on December 31, 2002, whichever occurs first.
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
PREPAID ITEMS
Payments made to vendors for services that will benefit periods subsequent to June 30, 1998, are recorded as prepaid items.
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. General obligation bonds are direct obligations and pledge the full faith and credit ofthe 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 initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
-12 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS
Total colwnns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these colwnns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by
surety bond, by guarantee of insurance,or by collateral. The aggregate 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 ofdeposit 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 ofor any combination ofthe following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the 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 ofGeorgia, 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

- 13 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

ruNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS

Loan Bank, the Federal Intennediate Credit Bank, the Central Bank for Cooperatives, the Fann 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 $7,302,382.57. The amounts of the total bank balances are classified into three categories ofcredit risk:

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

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

Risk CategOly

Bank Balance

1

$ . 512,930.90

2

6,406,210.44

3

383.241.23

Total

$ 7.302.382.57

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $7,690,509.12 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State 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 of the Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Ru1e 2a-7 ofthe Investment Company Act of 1940 and is considered to

- 14-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS AND INVESTMENTS
be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety 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 ofmanagement 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 of funds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U, S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration of approximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was ,96 years.
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 of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees, The Board has neither significantly reduced 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 this risk in the past three years.
The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.
- 15 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHlBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

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 $

3,863,00 $

$

0,00 $

3,280.00 $

Claims Paid

End ofYear Liability

3,863.00 $ 1,665.00 $

0.00 1.615.00

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

Position Covered

Amount

Superintendent All Employees (per Loss)

$ 20,000,00 $ 5,000.00

Note 5: OPERATING LEASES

Berrien County Board ofEducation has entered into various leases as lessee for building space and copiers, These leases are considered for accounting purposes to be operating leases, Lease expenditures for the year ended June 30, 1998, amounted to $15,164,32, Future minimum lease payments for these leases are as follows:

Year Ending

Amount

1999 2000

$ 13,566,00 13,566,00

Total

$ 27,132,00

Note 6: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Berrien County Board ofEducation has entered into various lease agreements as lessee for copy m~hines and air conditioners. These lease agreements. qualify as capital leases for accounting purposes and, therefore,
have been recorded at the present value of the future minimum lease payments as of the date of their
inception,

- 16-

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 6: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 1997 General Government - Series 1998

3.90% -4.0% 4.00% - 4.40%

$ 1,700,000.00 9.645,000,00

$11.345,000.00

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

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 1997

$ 384,517.01 $

0.00 $ 384,517.01

Additions

11,345,000.00 11,345,000.00

Deductions Payments

116,737,21

116,737.21

Balance June 30, 1998

$ 267,779.80 $11.345,000.00 $11 26J2,779.80

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

Fiscal Year Ended June 30
1999 2000 2001 2002 2003 2004 - 2008
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value ofFuture Minimum Lease Payments

Capital Leases

General Obligation
Bonds

Total Debt

$ 143,691.24 . $ 1,250,730.84 $ 1,394,422.08 143,691.24 1,417,030.00 1,560,721.24 1,986.55 1,423,230,00 1,431,216,55 1,427,630.00 1,427,630.00 1,434,170.00 1,434,170.00 7328,735.00 7.3282735.00
$ 295,369,03 $14,281.525.84 $14,576,894.87

27,589.23

$ 267,779.80 - 17 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 7: ON-BEHALF PAYMENTS
The Board has recognized revenues and expenditures in the amount of$262,809.12 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.
Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $21 0,104.64
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $6,177.48
Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $46,527.00
Note 8: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position.
The Board is a defendant in various legal proceedings pertaining to matters incidental to the perfonnance of routine Board operations. The ultimate disposition of these proceedings is not presently detenninable, but is not believed to be material to the general purpose financial statements.
Note 9: 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.

- 18 -

BERRIEN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Note 9: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required -by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board 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%

$ 1,115,688.99 $ 1,051,915.95 $ 976,287.28

- 19-

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

EXHIBIT "E"

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

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30,1998 JUNE 30,1997

$ 198,m.79 $ 34,097.04 $ 447,063.13 $ 679,937.96 $ 343,292.40

22,917.84

75,739.76

98,657.60

88,548.75

20,798.00 13,215.37

20,798.00 13,215.37

18,839.05 13,196.52

$ 255,709.00 $

34,097.04 $ 522,802.89 $

812,608.93 $

463,876.72

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances
~eserved
For Continuation of Federal Programs For Inventories
Food Donated Commodities Purchased Food
Unreserved Undesignated
Total Fund Equity

$ 20,649.13 $

6,076.72 $ 10,817.56 $

37,527.26

28,020.32

51,169.60

16,870,46

$

58,176,39 $

34,097.04 $ 78,857.62 $

$

20,798.00

13,215.37

163,519.24 $

$ 197,532.61 $

$ 443,945.27 $

0.00 0.00 $

0.00 443,94527 $

37,543.41 $ 116,717.18 16,870,46 171,131.05 $
443,945.27 $
20,798.00 13,215.37 163,519.24 641,4n.88 $

41,756.18 132,847.87 54,787.50 229,391.55
86,561.78
18,839.05 13,196.52 115,887.82 234,485,17

Total liabilities and Fund Equity

$ 255,709.00 $ 34,097.04 $ 522,802.89 $ 812,608.93 $ 463,876.72

See notes to the general purpose financial statements.

-20-

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

EXHIBIT wp'

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
capital Outlay
Total expenditures
Excess of Revenues over (under) expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Finandng Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30.1998 JUNE 30.1997

$ 71,116.00 $ 351,739.69

$ 422,855.69 $ 411,347.23

690,397.78

$ 2,385,827.27

3,076,225.05

1,851,613.93

307,884.46

3,512.63

311,397.09

307,423.82

$ 1,069.398.24 $ 351,739.69 $ 2,389,339.90 $ 3.810,477.83 $ 2,570,384.98

$ 293,438.17 $ 521,222.13 $ 814,660.30 $ 843,825.12

$ 1,021,805.57

21,024.33 465.49
7,039.68 515.39
5,191.00
24.065.63

227,928.18 183,484.88
173,913.03 22,609.40
902.236.31 562.48

248,952.51 183,950.37
180,952.71 23,124.79
5,191.00 902,236.31 1,022,368.05
24,065.63

234,141.41 171,249.94
4,692.96 153,6n.20 20,670.77
745,090.66 1,055,765.24

$ 1,021,805.57 $ 351,739.69 $ 2,031,956.41 $ 3,405,501.67 $ 3,229,113.30

$ 47,592.67 $

0.00 $ 357,383.49 $ 404,976.16 $ -658.728.32

38.75
$ 47,631.42 $ 147,923.39
1,958.95 18.85

0.00

0.00

38.75

8,958.43

0.00 $ 357,383.49 $

0.00

86,561.78

405,014.91 $ 234,485.17

-649,769.89 876,379.41

1,958.95 18.85

6,339.12 1,536.53

FUND BALANCE JUNE 30

$ 197,532.61 $

0..0..0.. $ 443,945.27 $ 641,477.88 $ 234,485.17

See notes to the general purpose finandal statements.

-21 -

BERRIEN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1998

EXHIBIT-G-

ASSETS Cash and Cash EqUivalents Investments Accounts Receivable
Total Assets

BOND PROCEEDS

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS JUNE 30,1998 JUNE 30, 1997

$

112,103.95 $

2,051.38 $

114,155.33 $

0.00

10,569,849.15

237,766.97

10,807,616.12

2n,552.14

2n,552,14

$ 10,681,953.10 $

517,370.49 $ 11,199,323.59 $

.....O..iio00=

FUND EQUITY

Fund Balances

Reserved

For Purposes of Bond Issue

$ 10,681,953,10

$ 10,681,953.10 $

0.00

For Special Local Option Sales Tax Purposes

-----$

517,370.49

517,370,49

Total Fund Equity

$ 10,681,953.10 $

517,370.49 $ 11,199,323.59 $-...=_ _.......=.0..0..0=

See notes to the general purpose financial statements.

-22-

BERRIEN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30,1998

EXHIBIT "H"

BOND PROCEEDS

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30,1998 JUNE 30,1997

REVENUES

Taxes Other Funds

$

515,603,52 $

515,603,52 $

0,00

$ 205,481.36

1,766,97

207,248,33

Total Revenues

$ 205,481.36 $

517,370.49 $

722,851,85 $

0.00

EXPENDITURES

Current Support Services Business Administration Bond Issuance Cost
Capital Outlay Land and Land Improvements

$ 230,407.14 $

0,00 $

230,407,14 $

0,00

638,121,12

638,121,12

Total Expenditures

$ 868,528.26 $

0,00 $

868,528,26 $

0.00

Excess of Revenues over (under) Expenditures

$ -663,046.90 $

517,370,49 $

-145,676.41 $

0.00

OTHER FINANCING SOURCES

Proceeds from General Obligation Bonds

Par Value

$ 11 ,345,000,00 $

0.00 $ 11 ,345,000.00 $

0.00

Total Other Financing Sources

$ 11 ,345,000,00 $

0,00 $ 11 ,345,000.00 $

0.00

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$ 10,681,953,10 $

517,370,49 $ 11,199,323,59 $

0.00

FUND BALANCE JULY 1

0.00

0,00

0,00

0.00

FUND BALANCE JUNE 30

$ 10,681,953.10 $

517,370.49 $ 11,199,323.59 $

....0...0..0.

See notes to the general purpose financial statements.

-23-

BERRIEN COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REQUIRED SupPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30.1998

At June 30, 1998, the Berrien County Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result ofshortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting system. 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 ofidentifying all ofits 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 ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS siles 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 ofeducation currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. - 24-

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

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

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}

* 10.553
* 10.555 10.550

N/A $
N/A N/A

174,844.62
447,730.65 $ 67,822,51

{2}
953,983.06 {3} 67,822.51

Total U. S. Department of Agriculture

$

690,397.78 $ 1,021,805.57

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 Migrant Education
1997 Grant 1998 Grant Title II Eisenhower Professional Development 1997 Grant 1998 Grant TrtleVI Innovative Education Program Strategies 1998 Grant Safe and Drug-Free Schools 1998 Grant Stewart B. McKinney Homeless Assistance Act Education for Homeless Children and Youth 1998 Grant
Vocational Education - Basic Grants to States
High School Program Basic Grant 1997 Grant 1998 Grant
Tech-Prep Education 1997 Grant 1998 Grant

84.010 84.011 84.011
84.281 84.281
84.298 84.186
84.196
84.048 84.048 84.243 84.243

N/A $

438,903.74 $

N/A

520,166.12

N/A

1,324,000.00

438,903.74
604,761.00 {4} 881,458.81 {4}

N/A

4,267.80

N/A

17,500.00

17,307.65

N/A

16,246.00

16,246.00

N/A

28,675.00

28,675.00

N/A

4,300.13

4,300.13

N/A

499.92

499.92

N/A

28,448,87

28,448.87

N/A

2,087.49

2,087.49

N/A

5,000.00

5,000.00

Total U. S. Department of Education

$ 2,385,827.27 $ 2,031,956.41

Total Federal Financial Assistance
= N/A Not Available

-25-

$ 3.076,225.05 $ 3.053,761.98.

BERRIEN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 3D. 1998

SCHEDULE -2-

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State and/or Other Funds. Expenditures are not maintained by fund source.
(4) Includes Federal Assistance of $887,342.42 provided to subrecipients.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Berrien County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements.

-26-

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

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Middle School Incentive Program Special Instructional Assistance In-School Suspension . Mid-term Adjustment Migrant 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 Altemative Program At-Risk Summer School Program Environmental Science Program Health Insurance Innovative Programs Mentor Teacher Program Remedial Summer School Program Severely Emotionally Disturbed Teachers' Retirement Lottery Programs A1temative School Program Instructional Technology Assistive Technology Classroom Technology
Human Resources, Georgia Department of Family Connection
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 5,866,771.00 966,840.00 407,894.00 253,399.00 77,467.00
1,692,851.00
385,319.00 104,263.00 234,836.00 359,674.00 82,147.00 231,000.00
1,663.00 23,835.00 28,842.00 -919,086.00 700,209.00
$ 61,142.13
74,669,00 110,400.00
10,395,37 496.16
210,104.64 5,000.00 188.00 4,872.93 5,262.00 6,177.48
15,000.00
46,527.00

$
71,116.00
4,132.00 6,592.00 79,487.00

5,866,771.00 966,840.00 407,894.00 253,399.00 77,467,00
1,692,851.00
385,319.00 104,263.00 234,836.00 359,674.00 82,147.00 231,000.00
1,663.00 23,835.00 28,842.00 -919,086.00 700,209.00 71,116.00 61,142.13
74,669.00 110,400.00
10,395.37 496.16
210,104.64 5,000.00 188.00 4,872.93 5,262.00 6,177.48
4,132.00
6,592.00 79,487.00

15,000.00

261,528.69

261,528.69

46,527.00

See notes to the general purpose financial statements.

$ 11,048,158.71 $

422,855.69 $ 11,471,014.40

-27 -

BERRIEN COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 3D, 1998

SCHEDULE "4"

PROJECT
Acquiring, constructing and equipping one new high school facility; adding to, renovating repairing, improving and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; acquiring any necessary property therefor, both real and personal; and to pay expenses incidental to accomplish the foregoing

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR
YEARS

$ 11,345,000.00 $ 11,345,000.00 $

638,121.12 $

0.00

(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 Berrien 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 project.

See notes to the general purpose financial statements.

-28-

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

,SCHEDULE "5"

EXPENDITURES

ALTERNATNE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTNE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

CUlT9nt

Instruction

$

Support Services

Pupil Services

Improvement of Instructional Services

General Administration

Maintenance and Operation of Plant

Student Transportation Services

capital Outlay

4,132.00 $

6.592.00 $

79,487.00 $

203.227.17 $ 293,438.17

21,024.33 465.49
7.039.68 515.39
5,191.00 24.065.63

21.024.33 465.49
7,039.68 515.39
5.191.00 24,065.63

Total Expenditures

$

4.132.00 $

6.592.00 $

79,487.00 $

261,528.69 $ 351,739.69

RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures A1temative School Program Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program

$ 212,295.76
4,132.00
6,592.00 79,487.00 49.232.93

$ 351,739.69

See notes to the general purpose financial statements.

29

BERRIEN COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 3D. 1998

SCHEDULE "6"

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

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

7,676,442.00 $ _ _-.;:2:.::;3.;;.l3,..;,.;75;.;;6=.0~0

$

7,693,235.78

327,411.13 $ _ _...;2;;;.;8=2=,6;.;..7...;.;1.=21~

$

8,020,646.91

-29,135.54 $ _ _..;.7.:.,:,9.;;.91,;"l,,5;;;.;1;..:,1.:.;;.3.;...7

$

0.00 $=====0:::::.0:=0

See notes to the general purpose financial statements. - 31 -

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

STAFFDEYELOPMENTPROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs C*) Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements.

$

22,477.00

$

. 22,477.00 $

0.00

54,990.00

54,990.00

0.00

$

77,467.00 100 $

77,467.00 $====,"0:=,0..0..

- 32 -

SCHEDULE "7"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

580,653.00 $

664,360.27 $

23,566.72 $

687,926.99

1,543,296.60

1,426,875.25

29,691.87

1,456,567.12

$ 2,123,949.60 $ 2,091,235.52 $

53,258.59 $ 2,144,494.11 $

0.00

667,525.50

800,145.65

38,252.76

838,398.41

0.00

1,335,726.70

1,361,119.96

53,987.10

1,415,107.06

0.00

602,861.40

747,293.98

29,523.73

n6,817.71

0.00

261,162.00

419,476.99

15,437.22

434,914.21

0.00

470,406.70

483,483.44

55,187.57

538,671.01

0.00

$ 5,461,631.90 $ 5,902,755.54 $

245,646.97 $ 6,148,402.51

$

747,348.30

$

432,365.59 $ 475,728.99
33,560.09 99,218.79

8,699.74 $ 14,840.26
71.67 4,820.98

441,065.33 490,569.25
33,631.76 104,039.n

$

747,348.30 $ 1,040,873.46 $

28,432.65 $ 1,069,306.11

0.00

122,807.70

146,144.69

3,171.70

149,316.39

0.00

$

870,156.00 $ 1,187,018.15 $

31,604.35 $ 1,218,622.50

$

367,104.60 $

365,667.47 $

5,419.89 $

371,087.36

0.00

$ 6,698,892.50 $ 7,455,441.16 $

282,671.21 $ 7,738,112.37

$

185,685.30 $

237,794.62

$

237,794.62

0.00

42,373.80

$

44,739.92

44,739.92

0.00

$

228,059.10 $

237,794.62 $

44,739.92 $

282,534.54

$ 6,926,951.60 $ 7,693,235.78 $

327,411.13 $ 8,020,646.91 $

0.00

$

22,4n.00

54,990.00

$-===.n.i.::!:,4,;,;;6",,7='00li::

$

58,846.49 $

58,846.49

18,648.03

18,648.03

$

77,494.52 $

n,494.52 $ .........-==-""""='"0.=00=

- 33

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

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

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Berrien County Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FlNANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GO\TERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofBerrien County Board ofEducation as of and for the year ended June 30, 1998, and have issued our report thereon dated July 19, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. 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.
Compliance
As part of obtaining reasonable assurance about whether Berrien County Board of Education's financial statements are :free ofmaterial misstatement, we perfonned tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Rtmorting
In planning and perfonning our audit, we considered Berrien County Board ofEducation's internal control over financial reporting in order to detennine 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 certain matters involving the internal control over financial reporting and its
98YB-40

operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in ourjudgement, could adversely affect Berrien County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6101-98-01 and FS-6101-98-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions described above are also considered to be material weaknesses.
This report is intended solely for the information and use of management, members of the Berrien County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~. 4?t.J. ~ Russell W. Hinton State Auditor
RWH:jb 98YB-40

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

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

Honorable Roy E. Barnes~ Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Berrien County Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRClJLARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Berrien County Board of Education with the types of compliance
u.s. requirements described in the Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Berrien 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 Berrien County Board of Education's management. Our responsibility is to express an opinion on Berrien 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 Auditin~ 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 lncludes examining, on a test basis, evidence about the Berrien 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 Berrien County Board ?fEducation's compliance with those requirements.

98SA-1O

In our opinion, the Berrien County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management of Berrien 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 Berrien County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration ofthe internal control over compliance 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 nonnal 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 solely for the infonnation and use ofmanagement, members ofthe Berrien County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~.4JJ2 W.~ Russell W. Hinton State Auditor
RWH:jb 98SA-10

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

BERRIEN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6101-93-03 6101-96-01 FS-61Q1.,97-01 FS-6101-97-02

Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Finding Control Number: FS-6101-97-02

The Berrien County Board ofEducation has chosen not to implement General Fixed Assets Account Group because of lack ofpersonnel or until Department ofEducation mandates.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6101-94-03 6101-96-03

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

SECTIONN FINDINGS AND QUESTIONED COSTS

BERRIEN COUNTY BOARD OF EDUCATION
SCHEDULE OF FlNDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

I SUMMARy OF AUDITOR'S RESULTS

1. Txpe ofR<a>ort Issued on the Financial Statements The auditor's opinion on the Berrien County Board ofEducation's financial statements was qualified for various departures from generally accepted accounting principles.

2. Re.portable Conditions in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Berrien County Board of Education disclosed financial statement reportable conditions related to the following control categories.

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

Expenditures/LiabilitieslDisbursements General Ledger

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

3. NOncompliance Material to the Financial Statements The audit of the Berrien 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 Mi!ior Programs The audit report for the Berrien County Board ofEducation did not disclose any reportable conditions in internal control over major programs.

5. !}!pe ofRe.port Issued on Compliance for Mi!ior Programs The auditor's opinion on the Berrien County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(3) ofOMB Circular A-133 The Berrien County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.

7. Mcijor 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. Txpe "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

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

- 1-

BERRIEN COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURESILIABILITIESIDISBURSEMENTS GENERAL LEDGER Inadequate Separation ofDuties Reportable Condition - Material Weakness Finding Control Number: FS-6l0l-98-01
The Berrien County Board of Education did not provide for adequate separation of employee duties in the perfonnance ofthe following accounting functions and related procedures:
The bookkeeper receives all revenues or notifications ofwire transfers, manually logs the receipt of all revenue received (except school food), stamps all incoming checks with a restricted stamp, prepares deposits, records all receipts on the accounting records, performs the bank reconciliations (except payroll) and prepares adjusting journal entries as needed with no one reviewing or approving the journal entries prior to posting.
The accounts payable clerk sets up all vendor records, enters all payables into the system, prints checks, runs the checks through the check signer, and prepares checks for mailing with no one reviewing or approving the checks prior to mailing.
. The Board's employees do not use passwords to restrict access to the financial accounting and payroll system by unauthorized individuals.
Control procedures are established for the purpose ofproviding management with reasonable assurance that the objectives of the entity are achieved. Lack of these control procedures leaves the integrity of the accounting system in question. Management should periodically review employee duties in an attempt to improve internal control through the distribution ofresponsibilities among the various employees.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6l01-98-02
The Berrien CountyBoard 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 of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board
-2-

BERRIEN COUNTY BOARD OF EDUCATION
SCHEPULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Wealmess Repeated From Prior Year Finding Control Number: FS-6101-98-02 and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
-3-