Brantley County Board of Education, Nahunta, Georgia, report on audit of financial statements of the fiscal year ended June 30, 2006

BRANTLEY COUNTY BOARD OF EDUCATION
NAHUNTA, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

BRANTLEY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

26

BRANTLEY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

27

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

BRANTLEY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Brantley County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Brantley County Board of Education, as of and for the year ended June 30, 2006, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Brantley County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 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 opm1ons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Brantley County Board ofEducation, as ofJune 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2006ARL-11

The Brantley County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2007, on our consideration of the Brantley County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Brantley County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic 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,
~ ~-cB-~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2006ARL-11

BRANTLEY COUNTY BOARD OF EDUCATION

BRANTLEY COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories Capital Assets Land Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

3,030,499

30,000

469,041 1,939,116
550,290 77,298

278,449 1,476,893 27,139,887 3,753,291 -11038777

$ ===2=7=,7=0=5'=9=87=

$

52,250

2,950,746

966,782 3 737 646

$

7 707 424

$

16,957,515

113,387 105,145 2,460,315
5,302 356 899

$

19,998,563

$ ===2=7=7'=0=5'=98=7=

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

BRANTLEY COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues and Special Items Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Special Items Donation of Land
Total General Revenues and Special Items
Change in Net Assets
Net Assets - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

$

17,565,762 $

718,840 431,837 480,479 671,028 1,345,533 170,536 1,752,494 1,410,395
30,702 22,612

1,620,348 181 496

26,402,062 $

426,888
407,527 834 415

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

11,957,536 $

200,229 166,990 315,342 488,821 740,287
2,218 932,440 603,605

551

1,147,182

$

16,555,201 $

742,754 $
6,670 14,027 37,062
38,840 86,577 20,838 41,324
988 092 $

-4,438,584
-518,611 -258,177 -151,110 -145, 145 -605,246 -168,318 -781,214 -720,213
-30,702 -1,223
-24,315 -181 496
-8,024,354

$

3,263,885

197,309

1,406,313 30,210
4,454,437 79,826
317,298

96 370

$

9 845 648

$

1,821,294

18 177 269

$ ======19:!,9=9=8-=5=63=

-3-

BRANTLEY COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES Cash Overdraft Accounts Payable Salaries Payable
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

846,131

30,000

190,259
1,875,480 $
550,290 77 298

$
63,636

2,190,502 $
265,966

3,036,633 30,000
456,225 1,939,116
550,290 77 298

$ 3,569,458 $

63,636 $ 2,456,468 $ 6,089,562

$

$

52,250

2,950,746

$ 3,002,996 $

6,134 6 134

$

6,134

52,250

2,950,746

$ 3,009,130

$

113,387

27,847

77,298
$

20,000

327,930

$

566,462 $

$
57,502
57 502 $

$
2,456,468
2,456,468 $

113,387 27,847
2,456,468 77,298 57,502
20,000
327,930
3,080,432

$ 3,569,458 $

63,636 $ 2,456,468 $ 6,089,562

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

BRANTLEY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases
Total Long-Term Liabilities

$

3,080,432

$

278,449

1,476,893

27,139,887

3,753,291

-11,038,777

21,609,743

12,816

$ -4,042,000 -662,428

-4,704,428

Net Assets of Governmental Activities (Exhibit "A")

$ 19,998,563

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

BRANTLEY COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Capital Leases
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,348,320 30,210
17,690,861 $ 3,405,354 834,415 35,635 237,162
$ 25,581,957 $

$ 901,515

202,565 $ 1,406,313

5,302

38,889

906,817 $ 1647767 $

3,550,885 1,436,523 18,592,376 3,405,354
834,415 79,826
237,162
28,136,541

$ 16,968,903
718,840 424,776 465,629 637,937 1,345,533 169,928 1,711,374 1,589,713
30,702 551
1,592,434 15,000 $
11:255 17 330
$ 25,759,905 $
$ -177,948 $

$ 16,968,903

$ 987,749

718,840

424,776

465,629

637,937

1,345,533

608

170,536

1,711,374

1,589,713

30,702

551

1,592,434

1,002,749

933,000 164 166

1,004,255 181 496

987 749 $ 1097774 $ 27,845,428

-80,932 $ 549,993 $

291,113

368,799

368 799

$

190,851 $ -80,932 $ 549,993 $

659,912

375 611

138 434

1,906,475

2,420,520

$

566,462 $

57,502 $ 2,456,468 $ ==3=,0=80='=43=2=

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

BRANTLEY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Donated capital assets are not reported in Governmental Funds. However, in the Statement of Activities, the donated value is shown as Special Items.
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the loss on the sale of the building and equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building and equipment sold.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$

659,912

$

1,420,534

-981,423

439,111 96,370 -89,691

80,136

-368,799

$

933,000

71 255

1,004,255

Change in Net Assets of Governmental Activities (Exhibit "B")

$ =====1'=82=1=,2=9=4

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

BRANTLEY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2006

EXHIBIT"G"

ASSETS Cash and Cash Equivalents Investments
Certificate of Deposit
Total Assets
LIABILITIES Funds Held for Others
NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

26,473

$

10,000 $===26='=47=3=

$

26,473

$ _ _ _1~0,~00_0_

$

10,000 $ =====2=6=,4=73....

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

BRANTLEY COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"H"

ADDITIONS Investment Earnings Interest
DEDUCTIONS Scholarships Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

121

$

330

$

-209

101209

$ ===1=0=,0=00===

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

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Brantley County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Brantley County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

- 10 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private Purpose Trust fund reports trust arrangements under which income may be expended to provide scholarships to a graduating senior of the Brantley County School District.
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be
- 11 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) 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 ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate 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 of the United States government,

- 12 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The Brantley County Board of Commissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on July 28, 2005 (levy date). Taxes were due on November 15, 2005 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The Brantley County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2006, for maintenance and operations amounted to $3,348,320 and for school bonds amounted to $202,565.

Tax millage rates levied for the 2005 tax year (calendar year) for the Brantley County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

16.25 mills ~mills

17.20 mills

- 13 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,406,313 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings Building Improvements Equipment

$

5,000

NIA

$

5,000 20 to 80 years

$

5,000 20 to 80 years

$

5,000 up to 80 years

$

5,000 3 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

- 14 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

- 15 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 3: DEPOSITS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 2006, the bank balances were $4,517,261. The amounts of the total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 2,330,503

2

2,186,758

3

0

4

0

Total

$ 4,517,261

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

- 16 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 5: CAPITAL ASSETS

Balances July l, 2005

Increases

Balances Decreases June 30, 2006

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

$ 182,079 $ 3,074,344

96,370

$

153,295 $ 3,227,639

278,449 0

Total Capital Assets Not Being Depreciated $ 3,256,423 $ 249,665 $ 3,227,639 $ 278,449

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 23,125,819 $ 3,382,663 1,476,893

4,104,095 $ 390,783

90,027 $ 27,139,887

20,155

3,753,291

1,476,893

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

7,015,480 2,305,321
926,871

673,640 240,161
67,622

64,940 125,378

7,624,180 2,420,104
994 493

Total Capital Assets, Being Depreciated, Net $ 17,737,703 $ 3,513,455 $

-80 136 $ 21,331,294

Governmental Activity Capital Assets - Net $ 20,994,126 $ 3/Z631120 $ 3,147,503 $ 21,602,143

Capital assets being acquired under capital leases as of June 30, 2006, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 741,733 93,975

Current year depreciation expense by function is as follows:

$====6='=47-,7="5""'=8

Instruction Support Services
Improvements of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

$ 613,745

$

7,261

15,270

40,347

42,283

194,845

22,685

322,691 44 987

$ 981,423

- 17 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable statutory provisions. Restricted assets at June 30, 2006, were as follows:

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services

$ 2,190,502

Note 7: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk ofloss associated with torts, assets and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

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

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2005 2006

$

0 $

5 807 $

5 807 $

0

$

0 $

0 $

0 $

0

- 18 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 7: RISK MANAGEMENT

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent All Other Employees

$ 100,000 $ 100,000

Note 8: LONG-TERM DEBT

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

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

Purpose

Interest Rates

Amount

General Government - Series 2002 General Government - Series 2004

3.52% 3.61%

$ 1,542,000 2,500,000

$ 4,042,000

Voters have authorized $5,245,000 in general obligation debt for Special Purpose Local Option Sales Tax Projects and the payment of capitalized interest, which was not issued as of June 30, 2006.

The changes in Long-Term Debt during the fiscal year ended June 30, 2006, were as follows:

- 19 -

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 8: LONG-TERM DEBT

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2005
Additions Capital Leases
Deductions Debt Retired
Balance June 30, 2006
Portion of Long-Term Debt Due within One Year

$ 364,884 $ 4,975,000 $ 5,339,884

368,799

368,799

71,255

933,000

1,004,255

$ 662,428 $ 4,042,000 $ 4,704,428

$ 139,782 $ 827,000 $ 966,782

At June 30, 2006, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
2007 2008 2009 2010 2011
Total Principal and Interest

Cagital Leases

Princigal

Interest

$ 139,782 $ 140,854 147,290 154,022 80,480

30,286 23,877 17,439 10,709
3 670

$ 662.428 $

85,981

Fiscal Year Ended June 30
2007 2008 2009 2010 2011 2012 - 2016 2017 - 2021 2022 - 2026
Total Principal and Interest

General Obligation

Debt

Princigal

Interest

$ 827,000 $ 130,168

870,000

100,003

85,000

83,120

90,000

79,962

90,000

76,712

530,000

329,772

685,000

220,301

865,000

81,135

$ 4,042,000 $ 1,101.173

-20-

BRANTLEY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 9: SIGNIFICANT CONTINGENT LIABILITIES

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

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 School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$ 1,335,608 $ 1,270,587 $ 1,227,804

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BRANTLEY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Fu_nds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Capital Leases
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

3,340,910 $

3,340,910 $

3,348,320

30,210

16,911,582

16,911,582

17,690,861

2,861,786

2,861,786

3,405,354

409,593

409,593

834,415

1,700

1,700

35,635

325 000

325 000

237 162

$

23,850,571 $

23,850,571 $

25,581,957

$

15,423,186 $

15,423,186 $

16,968,903

768,589 501,134 482,609 554,296 1,472,392 187,296 1,909,421 1,345,525
48,702 20,890 1,548,650 160,000

768,589 501,134 482,609 554,296 1,472,392 187,296 1,909,421 1,345,525
48,702 20,890 1,548,650 160,000

718,840 424,776 465,629 637,937 1,345,533 169,928 1,711,374 1,589,713
30,702 551
1,592,434 15,000 88 585

$

24,422,690 $

24,422,690 $

25,759,905

$

-572, 119 $

-572,119 $

-177,948

368 799

$

-572, 119 $

-572, 119 $

190,851

651,751

651,751

375,611

-3 475

-3 475

Fund Balances - Ending

$

76157 $

76 157 $ ======5=6,.,6.,.4..,62=

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 23-

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Bright from the Start: Georgia Department of Early Care and Learning Child and Adult Care Food Program
Total U.S. Department of Agriculture
Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Enhancing Education Through Technology Program Improving Teacher Quality State Grants Migrant Education Rural Education State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Pass-Through From Okefenokee Regional Educational Service Agency Safe and Drug-Free Schools and Communities - State Programs
Total U.S. Department of Education
Labor, U.S. Department of Pass-Through Georgia Department of Education Workforce Investment Act - Adult Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553
10.555

NIA

N/A

$

$

(2) 1414134
1,414,134

10.550 10.558

N/A N/A
$

70,992
(2) 1,485,126

94.004

N/A $

40 000

84.027 84.173

N/A $ N/A
$

716,995 38402
755,397

84.332 84.318 84.367 84.011 84.358
. 84.298 84.010 84.048
84.186

N/A
N/A
N/A
N/A N/A NIA
N/A
N/A
N/A
$

58,000 91,563 164,812
475 103,001
11,189 1,046,429
49,050
21 260
2 301176

17.258

N/A

$

5 000

Total Federal Financial Assistance
N/A = Not Available

- 24-

$ ===3='=83=1=,3=0=2

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on Child and Adult Care Food Program ($5,109) and the School Breakfast Program ($270,371) were not maintained separately and are included in the 2006 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Brantley County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25-

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright from the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs K-8 Statewide Reading and Mathematics Program National Teacher Certification Preschool Handicapped Program
Georgia State Financing and Investment Commission Reimbursement on Construction Projects

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

840,730

$

840,730

1,041,452 84,213
2,290,100 175,957
1,097,475 86,705
573,744 1,417,181 1,390,932
647,651
55,718 338,150 904,569 302,251
27,486 467,260
81,852 147,949 315,342 100,256
64,384
464,048 729,132 913,731
578,906 86,577 20,000 75,675 11,110 9,092
2,832,261 88,004 20,120
-683,077
55,282 23,071 15,572

1,041,452 84,213
2,290,100 175,957
1,097,475 86,705
573,744 1,417,181 1,390,932
647,651
55,718 338,150 904,569 302,251
27,486 467,260
81,852 147,949 315,342 100,256
64,384
464,048 729,132 913,731
578,906 86,577 20,000 75,675 11,110 9,092
2,832,261 88,004 20,120
-683,077
55,282 23,071 15,572

$

901 515

901 515

$ 17 690 861 $

901 515 $ 18,592,376

See notes to the basic financial statements.

- 26 -

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

PROJECT
Capital outlay projects at schools and educational facilities throughout Brantley County, consisting of renovations, additions and improvements at Waynesville Elementary School and Brantley County Middle School, renovations, additions and improvements to the gymnasiums and lunchrooms at Hoboken and Nahunta Elementary Schools, renovations, additions and improvements to the athletic facilities and construction of a Future Farmers of America Agricultural Show Barn and parking lot; construction of an office for the Board of Education, system-wide site and security upgrades; and construction of a transportation garage.
Acquiring, constructing and equipping the following capital outlay projects at schools and educational facilities throughout Brantley County: (a) an additional Waynesville Elementary School; (b) renovations, additions and improvements to Brantley County High School; (c) system-wide technology upgrades; (d) system-wide site and security upgrades; (e) construction of a transportation parking lot; (f) purchase of school buses; and (g) renovations, additions and improvements at Brantley County Middle School, Hoboken Elementary School, Nahunta Elementary School, Nahunta Primary School and Waynesville Elementary School.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$

3,685,000 $

5,662,324 $

67,672 $ 4,362,324 Ongoing

7,295,000

7,295,000

Ongoing

$ 10 980 000 $ 12,957,324 $

67 672 $ 4,362,324

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Brantley County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

- 27 -

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BRANTLEY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

1,104,821 $ 1,102,560 $

26,479 $

1,129,039

92,180

203,942

203,942

2,434,843

2,443,948

88,613

2,532,561

187,871

391,090

34

391,124

1,174,920

1,412,318

35,050

1,447,368

98,862 623,390 1,502,662 1,499,248 677,373 1,725,710
483,620 87,197
158 671

176,016 827,748 1,512,658 1,963,737 600,769
255,819 856,657
26,292 269,451
74,525 216 841

591 25,359 33,646 88,800 47,809
9,842
6,220 526
7 902

176,607 853,107 1,546,304 2,052,537 648,578
255,819 866,499
26,292 275,671
75,051 224 743

$

11,851,368 $ 12,334,371 $

370,871 $

12,705,242

336,446 69 461

429,228 20 340

36,401 58 997

465,629 79 337

TOTAL QBE FORMULA FUNDS

$

12 257 275 $ 12/83,939 $

466269 $==1=3,=25=0=,2=0=8

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 29 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Brantley County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofBrantley County Board ofEducation as ofand for the year ended June 30, 2006, which collectively comprise Brantley County Board of Education's basic financial statements and have issued our report thereon dated March 14, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Brantley County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect Brantley County Board of Education'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-6131-06-01, FS-6131-06-02, FS-6131-06-03 and FS-6131-06-04.
2006YB-30

A material weakness is a reportable 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 caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above are material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Brantley County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of the management and members of the Brantley County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,

,

w~

Russell W. Hinton, CPA, CGFM State Auditor

RWH:gp 2006YB-30

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 14, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Brantley County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Brantley County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2006. Brantley County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of 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 Brantley County Board of Education's management. Our responsibility is to express an opinion on Brantley County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB 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 Brantley 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 Brantley County Board of Education's compliance with those requirements.
2006SA-40

In our opinion, the Brantley 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, 2006. The results of our auditing procedures disclosed instances of nonmaterial noncompliance with those requirements which are described in the accompanying Schedule of Findings and Questioned Costs as items FA-6131-06-02 and FA-6131-06-03.
Internal Control Over Compliance
The management of Brantley 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 Brantley County Board of Education'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 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Brantley County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6131-06-01.
A material weakness is a reportable condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use of the management, members of the Brantley 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,
i>.)_4J~
ell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2006SA-40

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

BRANTLEY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6131-04-01 FS-6131-04-03 FS-6131-05-01 FS-6131-05-02 FS-6131-05-03 FS-6131-05-04 FS-6131-05-05 FS-6131-05-06

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

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-6131-05-01

The School District will implement appropriate procedures and controls to ensure that bank statements are properly reconciled to the general ledger timely, variances are identified promptly, required adjustments are recorded in a timely manner, all bank reconciliation documentation is maintained and all ofthe School District's bank accounts are properly reported.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6131-05-02

We will review the accounting procedures in place and design procedures which will enhance the segregation of duties relative to the above categories and implement procedures to strengthen the internal controls over these accounting functions.

CAPITAL ASSETS Failure to Accurately Maintain Capital Assets Finding Control Number: FS-6131-05-06

We will establish appropriate policies and procedures to ensure that Capital Assets records are updated timely, all additions are accurately included, deletions are properly removed, Construction in Progress is reclassified and depreciated properly upon completion and

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BRANTLEY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Failure to Accurately Maintain Capital Assets Finding Control Number: FS-6131-05-06 Capital Assets are reported accurately within the basic financial statements. A review of the Capital Assets records will be performed annually to ensure accuracy.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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SECTION IV FINDINGS AND QUESTIONED COSTS

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Brantley County Board ofEducation's financial statements was unqualified.

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

Cash and Cash Equivalents Revenues/Receivables/Receipts Accounting Controls (Overall) Capital Assets

Expenditures/Liabilities/Disbursements Employee Compensation General Ledger

None ofthe reportable conditions described above are considered to be material weaknesses.

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

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

Program Income

The reportable condition described above is not considered to be a material weakness.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Brantley 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 .51 0(a) of 0MB Circular A-133 The Brantley County Board of Education's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section IV of this report. We also noted certain instances of nonmaterial noncompliance which are included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.010 Title I Grants to Local Educational Agencies

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.

9. Low Risk Auditee The Brantley County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6131-06-01

Condition:

This is a repeat finding (FS-6131-05-02 and FS-6131-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions. The bank reconciliations did not include evidence of approval by an administrator not directly connected with cash operations.

Revenues/Receivables/Receipts The cash receipts and deposit preparation functions were not separated from the record keeping and cash custody functions. Based on a review of twenty-five items, the following deficiencies were noted: 1) Two receipts did not contain the proper verification signatures on the money collection form submitted to the bookkeeper. 2) The deposited amount of one receipt was less than the actual amount collected as listed on the receipt.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6131-06-01

Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping function. Based on a review of twenty-five vouchers, the following deficiencies were noted: 1) Three vouchers did not include purchase orders. 2) Six vouchers lacked proper approval for payment. 3) Two vouchers did not contain adequate supporting documentation. 4) Six vouchers were written to "Cash" rather than to specific payees. 5) Three vouchers included charges for sales tax.

Cause:

These deficiencies were a result of management's decision to limit the number ofadministrative staffmade responsible for accounting functions and management's failure to ensure that internal controls were established, implemented and functioning at the school level.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight for these incompatible activities. In addition, management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls at the Central Office Reportable Condition Finding Control Number: FS-6131-06-02

Condition:

This is a repeat finding (FS-6131-05-01 and FS-6131-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls at the Central Office.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents In June 2006, the School District made an adjustment to cash on the financial statements for an unidentified variance on the bank reconciliation of $28,545 for the operating account. The School Food Services bank reconciliation did not include evidence ofapproval by an administrator not directly connected with cash operations.

Employee Compensation The School District failed to maintain Form 1-9 forms for employees.

General Ledger The School District failed to record the current year activity of the Private Purpose Trust Fund on the general ledger.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the Central Office.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls at the Central Office Reportable Condition Finding Control Number: FS-6131-06-02

Recommendation:

Management should review the accounting procedures in place, design procedures which would enhance internal controls relative to the above control categories and implement those procedures to strengthen the internal control over accounting functions.

ACCOUNTING CONTROLS (OVERALL) Inadequate Access Controls Reportable Condition Finding Control Number: FS-6131-06-03

Condition:

The accounting procedures ofthe School District did not maintain adequate separation of duties in the Financial Accounting System.

Criteria:

Separation of duties involving key accounting functions, both manual and automated, is the basis for achieving an adequate system of internal control.

Questioned Cost: NIA

Information:

Access controls in the Financial Accounting System do not prevent users from accessing accounting functions that are outside of their area of responsibility.

Cause:

The School District's management is responsible for designing and maintaining internal controls that restrict access to programs or data. Management has not limited the access rights of users of the Financial Accounting System.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should ensure that the access controls in the accounting information system should complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of the employee's duties.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition Finding Control Number: FS-6131-06-04

Condition:

The School District failed to adequately maintain capital assets records.

Criteria:

Chapter 37 Fixed Assets of the Financial Management for Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

Questioned Cost: NIA

Information:

A review of the School District's capital assets policies and procedures and the related capital asset records noted the following deficiencies:
The capital assets listing and the School District's financial statements presented for audit failed to include current year additions for Buildings of $15,000.
All fiscal year 2006 capital assets additions erroneously had a whole year's worth of depreciation recorded rather than a half year as required by the School District's capital asset policy.
The School District failed to adhere to the capital assets policy for depreciating Land Improvements. This resulted in an overstatement ofcurrent year depreciation expense and accumulated depreciation in the amount of $8,701 and $60,953, respectively.
The amount reported in the financial statements for accumulated depreciation was $113,001 less than the capital assets listing.

Cause:

The School District failed to properly maintain its capital assets records in accordance with the School District's approved capital assets policy.

Effect:

The failure ofthe School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should review its capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital assets policy and generally accepted accounting principles.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROGRAM INCOME Inadequate Controls over Meal Sales and Miscellaneous Income Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6131-06-01

Condition:

A review of the School District's internal control policies and procedures noted deficiencies related to the collection of cash from meal sales and miscellaneous income for the Child Nutrition Cluster (CFDA 10.553 and 10.555) programs.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Based on a review of two weeks of cash collections for all schools and a number of miscellaneous receipts for the Child Nutrition Cluster programs the following deficiencies were noted:
There were insufficient procedures in place for the reconciliation of cash collected and deposited to the actual number of paid meals served.
Shortages and overages were not adequately explained. Miscellaneous receipts for rebates and credits received were not
deposited or recorded in a timely manner.

Cause:

Management failed to implement internal controls for monitoring cash collections for meal sales and miscellaneous income for the Child Nutrition Cluster programs.

Effect:

Failure to perform timely reconciliations of cash collected and deposited to the actual number of paid meals served could result in errors in financial reporting which increases the risk of material misstatement in the financial statements including misstatements due to fraud.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROGRAM INCOME Inadequate Controls over Meal Sales and Miscellaneous Income Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6131-06-01

Recommendation:

Cash collection procedures should be implemented and/or enhanced to ensure that all cash is properly accounted for and reconciled to the number ofmeals served. All cash collected should be deposited and recorded in the general ledger in a timely manner.

SPECIAL TESTS AND PROVISIONS Fiscal Requirement of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Finding Control Number: FA-6131-06-02

Condition:

The School District did not properly implement the administrative schoolwide program requirements at five schools. Although prescribed, the School District did not consolidate the different Federal funds for each of those schools that participated in a schoolwide program.

Criteria:

In accordance with provisions ofU. S. Department ofEducation Instructions and 0MB Circular A-133, Compliance Supplement provisions, eligible schools are able to use their Title I, Part A funds, in combination with other Federal, State and local funds, in order to upgrade the entire educational program of the school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department of Education funded programs in support of a schoolwide program, U. S. Department of Education Instructions provide that specific schoolwide program costs lose their identity but only in those circumstances when funds are combined in a schoolwide program.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirement of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Finding Control Number: FA-6131-06-02

In line with 0MB Circular A-87 requirements, schoolwide expenditures should be charged to those Federal funding sources supporting the schoolwide program in a reasonable manner. When more than one Federal program supports a schoolwide program, then schoolwide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support of the schoolwide program. To distribute such costs, provisions ofOMB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented and maintained for audit.

In July 2004, Georgia Department ofEducation issued accounting guidelines to the School Districts so the Districts would be able to properly consolidate funds from the different Federal programs and allocate schoolwide costs to the participating Federal programs in line with Federal requirements.

Questioned Cost: NIA

Information:

The School District failed to combine a reasonable amount of Title V, Innovative Program Federal funds in support of the schoolwide program. The School District only combined a total of $2,093 ofthe different Federal funds that were expended for all schools that participated in the schoolwide program.

Funds were not allocated in accordance with Federal and State guidelines.

Cause:

School District personnel were not fully aware of the requirements and the School District believed that a small amount of funds from another Federal program could be fiscally consolidated in one account for each school that participated in the schoolwide program and did not include in the schoolwide program budget those Federal funds that support the schoolwide program at each school.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirement of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Finding Control Number: FA-6131-06-02

Effect:

Failure to appropriately budget those Federal funds that support each school's schoolwide program can result in noncompliance with Federal requirements.

Recommendation:

The School District should follow the Georgia Department of Education's July 2004 accounting guidelines and implement procedures to combine Federal program funds and allocated schoolwide program expenditures in line with U.S. Department ofEducation and 0MB Circular A-87 provisions. The School District should seek additional guidance from the Georgia Department ofEducation to implement procedures for combining schoolwide program expenditures.

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Finding Control Number: FA-6131-06-03

Condition:

The School District failed to ensure that teachers met the requirements of "Highly Qualified" personnel for those individuals paid from Title I Grants to Local Education Agencies program.

Criteria:

"Highly Qualified" requirements are set forth in 34 CFR section 200.55 and 200.56, which states, in part as follows: "An LEA must ensure that all Title I teachers hired after the first day of2002 who teach a core academic subject be highly qualified". Additionally, all teachers of core academic subjects must be highly qualified by the end of the 2005-2006 school year. To be a highly qualified teacher, the individual must: (1) hold at least a bachelor's degree, (2) be certified by the State, including alternative routes to certification and (3) pass a rigorous State test on subject knowledge that the teacher teaches and on teaching skills.

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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Finding Control Number: FA-6131-06-03

Questioned Cost: NIA

Information:

The School District continued to employ two teachers after identifying that the employees were not "highly qualified" and continued to allow the employees to be paid from Title I funds.

Cause:

The School District did not have adequate procedures in place to ensure that employees not meeting "highly qualified" status were not hired or placed in positions requiring this status.

Effect:

The School District is not ensuring that students are receiving instruction from "highly qualified" teachers as required.

Recommendation:

The School District should implement procedures to ensure that only "highly qualified" employees are hired for positions requiring "Highly Qualified" status. The Georgia Department of Education should further review this matter to determine if a reclaim of funds is necessary.

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SECTIONV MANAGEMENT'S RESPONSES

BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6131-06-01
We concur with this finding and will address as follows:
Cash and Cash Equivalents The bank reconciliation function will be separated from the record keeping and voucher payment functions. The bank reconciliation function will be performed by the school secretary. The assistant principal will review the reconciliation and assure that reconciling items are resolved in a timely manner. The principal will review and approve the reconciliation. Immediate Implementation
Revenues/Receivables/Receipts Deposit preparation will be separated from the record keeping and cash custody functions. The secretary will receipt funds, assure that receipts are signed and prepare deposit slips. The assistant principal will make deposits. Deposits will be made on the same or the next business day. The principal will review and approve all receipts and deposits. Immediate Implementation
Expenditures/Liabilities/Disbursement The check writing function will be separated from record keeping. The school secretary will write checks. The principal will sign checks and the school secretary will disperse them. Supporting documentation will be attached to all vouchers. The principal will implement procedures to assure that the referenced deficiencies do not occur. Immediate Implementation
Finding Control Number: FS-6131-06-02
We concur with this finding and will address as follows:
Cash and Cash Equivalents The Assistant Superintendent for Finance and the Bookkeeper will review the reconciliation report monthly to assure that reconciling items are resolved and that variances are identified. Immediate Implementation
The School Food Service Director will review and approve the School Food Service bank reconciliation report monthly to assure that reconciling items are resolved and that variances are identified. Immediate Implementation
The School District will maintain Form I-9 forms for employees. Immediate Implementation
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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6131-06-02
The School District will report current year activity ofthe Private Purpose Trust Fund on the general ledger. Immediate Implementation
Finding Control Number: FS-6131-06-03
We concur with this finding.
Management will implement procedures to assure that an employee's access to accounting functions in the information system is limited to only those accounting functions necessary for the performance of the employee's duties. Immediate Implementation
Finding Control Number: FS-6131-06-04
We concur with this finding.
We will implement procedures to assure that capital assets records are reviewed and that appropriate adjustments are made so that records conform to the School District's Fixed Assets Policy.
All additions will be included in the current year's capital asset report.
All additions will be depreciated as dictated by policy.
Adjustments will be made to correct depreciation expense and accumulated depreciation in the current year.
Reports will be verified to assure that accumulated depreciation balances to the capital asset listing. Immediate Implementation
Finding Control Number: FA-6131-06-01
We concur with this finding.
The Food Service Director will implement and monitor procedures related to the collection of cash from meal sales and miscellaneous income to assure that transactions are processed according to established procedures. These procedures will ascertain that all cash is properly accounted for and reconciled to the number of meals served and that cash collected is deposited and recorded in the general ledger in a timely manner. Immediate Implementation
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BRANTLEY COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6131-06-02 We concur with this finding.
The School District, with guidance from the Georgia Department of Education, will implement procedures to assure that Federal program funds and allocated schoolwide program expenditures are combined in accordance with U.S. Department of Education and 0MB Circular A-87 provisions. Immediate Implementation Finding Control Number: FA-6131-06-03 We concur with this finding with the following correction: The two teachers referenced were not paid from Title I Funds. The School District will implement procedures to assure that only Highly Qualified Employees will be placed in positions requiring this status. Immediate Implementation Contact Person: Read Carter, Assistant Superintendent Phone: (912) 462-6176 Fax Number: (912) 462-6731 E-mail Address: read.carter@brantley.k12.ga.us
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