Bryan County Board of Education, Pembroke, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

BRYAN COUNTY BOARD OF EDUCATION
PEMBROKE# 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

BRYAN 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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERALFUND

25

BRYAN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

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

BRYAN 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) 856-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 9, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Bryan 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 H) of the Bryan 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 ofcontents. These financial statements are the responsibility ofthe Bryan County Board of Education'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 opinions.
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 Bryan County Board of Education, as of June 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

In accordance with Government Auditing Standards, we have also issued our report dated March 9, 2007, on our consideration ofthe Bryan County Board ofEducation's internal control over financial reporting and our tests ofits compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope ofour testing of internal control over financial reporting and compliance and the results ofthat 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.

Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States ofAmerica. 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 Bryan 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,

..

w~
Ru ell W. Hinton, CPA, CGFM
State Auditor

RWH:gp 2006ARL-11

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
The discussion and analysis of the Bryan County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2006. The intent of this discussion and analysis is to look at the Board's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the Board's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2006 are as follows:
In total, net assets increased $6.57 million, which represents a 13 .6 percent increase from fiscal year 2005. This total increase was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $22.65 million in revenue or 44.4 percent of all revenues. Program specific revenues in the form of charges for services, operating and capital grants and contributions accounted for $28.32 million or 55.6 percent of total revenues. Total revenues were $50.97 million.
The Board had $44.95 million in expenses related to governmental activities; only $28.32 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues, primarily taxes, of $22.65 million were adequate to provide for these programs.
Among major funds, the general fund had $46.4 million in revenues, $43.4 million in expenditures, and $2.5 million in other financial uses. Fund balance increased to $11.7 million from $11.2 million.
Using the Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Bryan County Board of Education as a financial whole, or as an entire operating entity. The basic financial statements include two levels of statements that present different views of the Board. These include the District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the whole Board, presenting both short-term and long-term information about the Board's overall financial status.
The fund financial statements focus on individual parts of the Board, reporting the Board's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The fund financial statements reflect the Board's most significant funds. In the case of the Bryan County Board of Education, the General Fund is by far the most significant fund.

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Reporting the Board as a Whole
Statement ofNet Assets and Statement ofActivities
While these documents contain the large number of funds used by the Board to provide programs and activities, the view of the Board as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2006?" The Statement ofNet Assets and the Statement of Activities answer this question. These statements include all assets and all liabilities using the accrual basis ofaccounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the Board's net assets and changes in those assets. The change in net assets is important because it tells the reader whether, for the Board as a whole, the financial position of the Board has improved or diminished. The causes of this change may be the result of many factors, including those not under the Board's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Assets and the Statement of Activities reflect the Board's governmental activities.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial statements provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the general fund, the District-wide capital projects fund, and the debt service fund.
Governmental Funds: Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Board's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmentalfunds is reconciled in the financial statements.
11

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Fiduciary Funds: The School System is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity accounts. The School System is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School System excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.

Financial Analysis of the Board as a Whole

The perspective of the Statement of Net Assets is of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2006 as compared to net assets for fiscal year 2005.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

Assets Current and Other Assets Capital Assets, Net

$ 33,842,413 $ 30,171,583

33,406,837

32,059,665

Total Assets

$ 67,249,250 $ 62,231,248

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 6,039,667 $ 5,661,289

6,175,000

8,110,000

Total Liabilities

$ 12,214,667 $ 13,771,289

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 27,231,837 6,839,163
20,963,583

$ 23,949,665 7,091,202 17,419,092

Total Net Assets

$ 55,034,583 $ 48,459.959

Total net assets increased $6.57 million.

Table 2 shows the changes in net assets for fiscal year 2006 as compared to fiscal year 2005.

iii

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

$ 1,903,902 26,328,757 93,597

$ 1,635,149 25,398,471 184,584

Total Program Revenues

$ 28,326.256 $ 27,218,204

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$

Railroad Cars

Sales Taxes

Special Purpose Local Option Sales Tax

For Capital Projects and Debt Services

Intangible Recording Tax

Grants and Contributions not Restricted to

Specific Programs

Investment Earnings

Miscellaneous

14,337,975
3,823,489 204,698
2,536,584 951,251 800.706

$ 12,823,931 43,877
2,416,188 232,092
2,269,514 422,187 856,547

Total General Revenues

$ 22,654,703 $ 19,064,336

Total Revenues

$ 50,980,959 $ 46,282,540

Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation ofPlant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

$ 29,204,674
1,470,804 1,086,524
999,902 560,395 2,538,319 298,839 3,637,959 1,807,377 90,371 100,557
94,273 569,288 2,264,923 222,990

$ 26,900,959
1,251,507 868,864 941,012 585,329
2,257,970 308,397
3,247,086 1,416,561
73,135 242,907
228,814 521,483 2,130,258 272,440

Total Expenses

$ 44,947,195 $ 41,246,722

Increase in Net Assets

$ 6,033.764 $ 5,035.818

IV

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Governmental Activities

Instruction comprises 65 percent of governmental program expenses.

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and by unrestricted State entitlements.

Table3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2006 Year 2005

Net Cost of Services

Fiscal

Fiscal

Year 2006 Year 2005

Instruction

$ 29,204,674 $ 26,900,959 $

Support Services

Pupil Services

1,470,804 1,251,507

Improvement of Instructional Services

1,086,524

868,864

Educational Media Services

999,902

941,012

General Administration

560,395

585,329

School Administration

2,538,319 2,257,970

Business Administration

298,839

308,397

Maintenance and Operation ofPlant

3,637,959 3,247,086

Student Transportation Services

1,807,377 1,416,561

Central Support Services

90,371

73,135

Other Support Services

100,557

242,907

Operations of Non-Instructional Services

Enterprise Operations

94,273

228,814

Community Services

569,288

521,483

Food Services

2,264,923 2,130,258

Interest on Short-Term and Long-Term Debt

222,990

272,440

9,175,252$
1,177,792 662,393 468,326 179,279
1,373,855 110,808
2,090,934 1,224,128
64,744 81,151
94,273 -239,134 -65,852 222,990

7,582,481
995,322 518,907 437,498 184,971 1,147,207 120,923 1,712,948 765,165
52,418 229,829
-479,775 521,483 -33,299 272,440

Total Expenses

$ 44,947.195 $ 41,246.722 $ 16.620.939 $ 14,028.518

Although program revenues make up 55.6 percent of the revenues, the Board is still dependent upon tax revenues for governmental activities. Over 31 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities, general revenue support is 37 percent.

The Board's Funds

The Board's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $50.7 million and expenditures of $48.2 million. The general fund had an increase of $0.46 million, and the capital projects fund had an increase of $2.6 million due to the accumulation of sales tax proceeds and local transfers during the year for future use.

V

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

General Fund Budgeting Highlights

The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.

The Board uses a school-based budgeting concept based on FTE student allocations. The budgeting systems are designed to tightly control total school budgets but provide flexibility for school level decision making.

For the General Fund, actual revenues and other sources of $46.4 million exceeded the final budget of $43.0 million by $3.4 million. This difference was due primarily to an increase in property tax revenues because of unexpected growth in the digest and due to an increase in state earnings as a result of growth in student counts.

Actual expenditures and other financing uses of $45.9 million were less than the final budget of $46.1 million.

Capital Assets and Debt Administration

Capital Assets

At the end of fiscal year 2006, the Board had $33.4 million invested in capital assets, all in governmental activities. Table 4 shows balances for fiscal year 2006 as compared to balances for fiscal year 2005.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

Land Construction in Progress Buildings and Improvements Equipment Land Improvements

$ 1,050,847 748,994
27,738,689 1,868,784 1,999,523

$ 1,050,847 656,045
27,557,456 2,074,257 721,060

Total

$ 33A06,837 $ 32,052,665

Due to the steady collection of SPLOST revenues and the commitment of local funds to capital outlay projects, the Board has completed numerous construction projects and continues with the capital improvements program.

Vl

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Debt

At June 30, 2006, the Board had $6.2 million in bonds outstanding with $2.0 million due within one year. Table 5 shows balances for fiscal year 2006 as compared to balances for fiscal year 2005.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

General Obligation Bonds

$ 6,175.000 $ 8,110.000

The Board maintains an AA+ bond rating from Standard & Poor's based on the State of Georgia intercept program.

Current Issues

The following issues are expected to have a significant effect on the financial positions or results of operations:

State and Local Economy - The State of Georgia is beginning to show an economic upturn but state funding for education continues to reflect austerity reductions which began in fiscal year 2003. The Bryan County School System has incurred in excess of $4.3 million in state funding cuts during this time period. As a result, more pressure is being placed on the local school board to prioritize its educational programs and provide more local funding. Additional costs to the Board will be incurred with the mandate to reduce class sizes and implement new programs, requiring additional teachers and other staff and additional classrooms. On a positive note, the property tax digest continues to grow and SPLOST collections continue to outperform projections. The Bryan County Board of Education is optimistic about the ability of the School Board to maximize all of the financial resources to provide a quality education to our students.

Capital Improvements - The Bryan County Board of Education has successfully passed two SPLOST referenda and has completed numerous capital projects. Plans are underway for a new elementary school and the continuation of the current capital improvements program in the area of classroom construction, facility renovations, and technology initiatives.

vu

BRYAN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional information, contact Melanie James, CPA and Director of Finance, at the Bryan County Board of Education, 66 South Industrial Boulevard, Pembroke, Georgia 31321. You may also email any questions to mjames@bryan.kl2.ga.us, or visit our website at www.bryan.kl2.ga.us.
viii

BRYAN COUNTY BOARD OF EDUCATION

BRYAN 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 Other Prepaid Items Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts 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
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. - 1-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

3,064,914

26,170,943

976,654 3,135,545
363,414 181
39,340 91,422

1,050,847 748,994
2,551,546 35,827,296
6,157,228 -12,929,074

$ ===6=7=,2=4=9=,2=50=

$

1,094,979

4,841,375

103,313

1,990,000 4,185,000

$

12,214,667

$

27,231,837

1,177,923 2,086,983 3,574,257 20,963,583

$

55,034,583

$ ===6=7=,2=4=9=,2=50...

BRYAN 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 Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Changes in Net Assets
Net Assets - Beginning of Year (Restated)

EXPENSES

CHARGES FOR SERVICES

$

29,204,674

1,470,804 1,086,524
999,902 560,395 2,538,319 298,839 3,637,959 1,807,377
90,371 100,557

94,273 569,288 $ 2,264,923 222,990

808,422 1,095,480

$

44,947,195 $ ===1..,.9=0=3=,9=02=

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

$

20,029,422

293,012 424,131 531,576 381,116 1,164,464 188,031 1,547,025 489,652 $
25,627 19,406

1,235,295

$

26,328,757 $

$ 93,597 93 597 $

-9,175,252
-1, 177,792 -662,393 -468,326 -179,279
-1,373,855 -110,808
-2,090,934 -1,224, 128
-64,744 -81,151
-94,273 239,134
65,852 -222,990
-16,620,939

$

14,337,975

3,823,489 204,698
2,536,584 951,251 800 706

$

22,654,703

$

6,033,764

49,000,819

$ =====55=,0=3=4=,5=83==

-3-

BRYAN 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 Other Prepaid Items Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,019,158 $

45,354 $

10,603,757

15,567,186

377,544 3,135,545
363,414 181
39,340 91.422

732,003

402 $ 3,064,914 26,170,943
1,109,547 3,135,545
363,414 181
39,340 91.422

$ 17,630,361 $ 16,344,543 $

402 $ 33,975,306

$ 1,094,979 4,841,375 $
$ 5,936,354 $

103,313 103 313

$ 1,094,979 4,841,375 103,313
$ 6,039,667

$ 1,086,501 $ 2,086,581 $
91,422 3,574,257

10,516,084

10,580,392

$ 11,694,007 $ 16,241,230 $

$ 402

1,086,501 2,086,983
91,422 3,574,257

10,516,084 10,580,392
402 $ 27,935,639

$ 17,630,361 $ 16,344,543 $====40=2= $ 33,975,306

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

BRYAN 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 Construction in Progress 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.
Bond Payable, which are Long-Term Liabilities, are not due and payable in the current period and therefore are not reported as liabilities in the funds.

$ 27,935,639

$ 1,050,847 748,994
2,551,546 35,827,296 6,157,228 -12,929,074

33,406,837

-132,893 -6,175,000

Net Assets of Governmental Activities (Exhibit "A")

$ 55,034,583

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

BRYAN 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 Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning (Restated)
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 13,450,953 204,698 $
25,751,718 3,894,743 1,903,902 395,801 800,357
$ 46,402,172 $

3,823,489
551,019 $ 349
4,374,857 $

$ 4,431

13,450,953 4,028,187 25,751,718 3,894,743 1,903,902
951,251 800,706

4431 $ 50,781,460

$ 28,403,202 $
1,378,907 1,034,420
971,530 557,430 2,517,331 287,683 3,580,425 1,684,378 90,261 100,557
94,273 569,288 2,141,500
$ 43,411,185 $
$ 2,990,987 $

311,393

$ 28,714,595

$ 110
2,341,839

6,850

1,378,907 1,034,420
971,530 557,430 2,517,331 294,533 3,580,425 1,684,378 90,371 100,557 94,273 569,288 2,141,500 2,341,839

1,935,000 222,990

1,935,000 222,990

2,653,342 $ 2,164,840 $ 48,229,367

1,721,515 $ -2,160,409 $ 2,552,093

$ 2,530,852 $

$ -2,530,852

-1,648,175

$ -2,530,852 $

882,677 $

$

460,135 $ 2,604,192 $

11,233,872

13,637,038

1,648,175 $ 4,179,027 -4,179,027

1,648,175 $

0

-512,234 $ 2,552,093

512,636

25,383,546

$ 11,694,007 $ 16,241,230 $=====4=02.., $ 27,935,639

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

BRYAN 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
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.
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, this amount consist of Bond Principal Retirements.

$ 2,552,093

$ 2,581,181 -1,234,009

1,347,172 199,499

1,935.000

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

$ =.......,6,=03..,3=7'..6..4..

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

(This page left intentionally blank)

BRYAN COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2006
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ ===96='=56=4=
$ ===96='=56=4=

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

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

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Bryan County Board ofEducation (School District) was established under the laws ofthe 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 Bryan 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 -

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

EXHIBIT"H"

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) to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
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 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
- 11 -

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

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities 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.
RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2006, the School District restated the Beginning Fund Balance of the District-wide Capital Projects Fund due to an error made when recording SPLOST revenue. The School District increased Beginning Fund Balance by $540,860. The result is an increase in Net Assets at July 1, 2005, of$540,860. This change is in accordance with generally accepted accounting principles.
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,

- 12 -

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

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

(5) Prime banker's acceptances,

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

(7) Repurchase agreements, and

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

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 Bryan County Board ofCommissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on October 4, 2005 (levy date). Taxes were due on January 10, 2006 (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 Bryan County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes 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 $13,450,953.

The tax millage rate levied for the 2005 tax year (calendar year) for the Bryan County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.696 mills

- 13 -

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

EXHIBIT"H"

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 $3,823,489 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.
PREPAID ITEMS
Payments made to vendors for services that will benefit periods subsequent to June 30, 2006, are recorded as prepaid items.
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:

- 14 -

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

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Computer Applications

Any Amount

$

5,000

$

5,000

$

5,000

$

5,000

NIA 20 to 80 years 10 to 80 years
3 to 20 years 6 years

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

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 AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value 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,

- 15 -

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

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

(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

(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 $3,704,413. 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

$ 241,879

2

3,462,534

3

0

4

0

Total

$ 3,704.413

- 16 -

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

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS
CATEGORIZATION OF INVESTMENTS At June 30, 2006, the carrying value of the School District's total investments was $26,170,943 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio and Extended Term Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U.S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2006, was 28 days.
The Georgia Extended Asset Pool is a variable net asset value investment pool which follows Standard and Poor's criteria for AAA money market rated funds. The pool is not registered with the SEC as an investment company. The pool's primary objective is the prudent management ofpublic funds on behalf of the State of Georgia and local governments seeking income higher than money market rates. Net Asset Value (NAV) is calculated daily to determine current share price. NAV is calculated by taking the closing fair value of securities owned plus other assets and subtracting liabilities. The remainder is then divided by the total number ofshares outstanding to compute NAV per share (current share price). The pool distributes earnings (net of management fees) which are reinvested as shares in the pool on a monthly basis and determines participant's shares sold and redeemed based on the current share price, which at June 30, 2006, was at $1.97 per share. The Office of Treasury and Fiscal Services has hired a third party bank, Investors Bank and Trust, to perform custody and valuation services to include calculation of the NAV on a daily basis. Pooled
- 17 -

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

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

cash and cash equivalents and investments are reported at fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments, operating and trust funds of State agencies, and current operating funds of the State's General Fund.

Investments in the Georgia Extended Asset Pool consist generally ofsecurities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The duration at June 30, 2006, was .97 years.

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:

Balances July 1, 2005

Increases

Decreases

Balances June 30, 2006

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

$ 1,050,847 656,045 $

693,957 $

$ 1,050,847

601,008

748 994

Total Capital Assets Not Being Depreciated $ 1,706,892 $ 693,957 $ 601,008 $ 1,799,841

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 34,907,396 $ 6,190,769 1,206,560

919,900 223,346 $ 1,344,986

$ 35,827,296

256,887

6,157,228

2,551,546

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

7,349,940 4,116,512
485,500

738,667 428,819
66,523

256,887

8,088,607 4,288,444
552,023

Total Capital Assets, Being Depreciated, Net $ 30,352,773 $ 1,254,223 $

0 $ 31,606,996

Governmental Activity Capital Assets - Net $ 32,059.665 $ 1,948.180 $ 601.008 $ 33.406.837

Current year depreciation expense by function is as follows:

- 18 -

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

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Instruction Support Services
Pupil Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 685,538

$

91,897

22,572

1,892

13,394

2,748

64,236

241.804

438,543 109,928

$ 1,234.009

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) is reported as restricted assets in the Statement of Net Assets because its use is limited by applicable statutory provisions. Restricted assets at June 30, 2006, were as follows:

District-wide Capital Projects SPLOST

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Debt Services Capital Acquisitions

$

402

$

35,252

$ 2,086,581 $ 2,910,315

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2006, consisted of the following:

- 19 -

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

EXHIBIT "H"

Note 7: INTERFUND TRANSFERS

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects Debt Service Fund

$ 2,530,852 $ 1,648.175

Total

$ 2,530,852 $ 1,648,175

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as required match or supplemental funding source for capital construction projects, and to move SPLOST tax revenues collected by the District-wide Capital Projects funds to the Debt Service Fund to repay general obligation bond debt.

Note 8: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. 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. 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 ofthat loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2005 2006

$

0 $

6 607 $

6 607 $

0

$

0 $

0 $

0 $

0

- 20-

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

EXHIBIT "H"

Note 8: RISK MANAGEMENT

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

Position Covered

Amount

Superintendent Director of Finance Each Employee

$ 100,000 $ 100,000 $ 100,000

Note 9: LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 2002

2.00% - 3.50% $ 6,175.000

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

General Obligation
Bonds

Balance July 1, 2005

$ 8,110,000

Deductions Debt Retired

1,935,000

Balance June 30, 2006

$ 6,175,000

Portion of Long-Term Debt Due within One Year

$ 1,990,000

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

- 21 -

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

EXHIBIT"H"

Note 9: LONG-TERM DEBT

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2007

$ 1,990,000 $ 166,227

2008

2,055,000

105,915

2009

2,130,000

36,670

Total Principal and Interest

$ 611151000 $ 308,812

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2006:

Project

Unearned Executed Contracts

Lanier Primary School - Canopy Project

$==""=51-,9=3==1

The amount described in this note is not reflected in the basic financial statements.

Note 11: SIGNIFICANT CONTINGENT LIABILITIES

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

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 12: 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 ofGeorgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and

-22 -

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

EXHIBIT "H"

Note 12: RETIREMENT PLANS

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%

$ 2,310,930 $ 2,133,495 $ 1,980,861

- 23 -

(This page left intentionally blank)

BRYAN 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 Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL(1)

ACTUAL AMOUNTS

$

12,968,298 $

12,968,298 $

13,450,953

155,000

155,000

204,698

25,007,654

25,102,037

25,751,718

3,075,503

3,207,549

3,894,743

807,250

807,250

1,903,902

153,000

153,000

395,801

569,000

625,452

800,357

$

42,735,705 $

43,018,586 $

46,402,172

$

28,056,671 $

28,167,298 $

28,403,202

1,139,596 1,004,772
943,839 508,934 2,582,483 339,250 3,771,580 1,675,300
91,700 7,748
537,900 2,393,363
92 700

1,139,596 1,094,816
968,839 509,609 2,582,483 339,250 3,770,770 1,675,300
91,700 8,275
537,900 2,393,363
92 700

1,378,907 1,034,420
971,530 557,430 2,517,331 287,683 3,580,425 1,684,378
90,261 100,557
94,273 569,288 2,141,500

$

43,145,836 $

43,371,899 $

43,411,185

$

-410 131 $

-353,313 $

2,990,987

$

5,000 $

5,000

-2,750,000

-2,750,000 $

-2,530,852

$

-2,745,000 $

-2,745,000 $

-2,530,852

$

-3,155, 131 $

-3,098,313 $

460,135

11,399,053

11,399,053

11,233,872

$

8,243,922 $

8,300,740 $

11,694,007

Notes to the Schedule of Revenues, Exeenditures 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.

- 25 -

BRYAN 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)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Hurricane Education Recovery Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555
10.550

NIA

(2)

N/A $ _ ____.1,_8_3_=6=,6=54_,_

$

1,836,654

N/A

150 166

$ _ _---'-'1,""98:.:6:.1.:,8=2=0

84.027 84.173
. 84.041
84.318 84.938 84.367
. 84.298 84.010 84.048

NIA $ N/A
$

789,505 24089
813,594

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

(3)
14,493 (4)
203,361 14,952
857,694 54 919
1,959,013

$ _ _ _ _64:..:.&.1'-=94-'-

Total Federal Financial Assistance
NIA = Not Available

$======4,=0=10=,0=2=7

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 the School Breakfast Program ($170,989) were not maintained separately and are included in the 2006 National School Lunch Program.
(3) Funds earned on the Impact Aid program, in the amount of $687,523, do not require reporting of expenditures. (4) Funds earned on the Hurricane Education Recovery program in the amount of $95,463 do not require reporting of
expenditures.

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

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Bryan 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.

- 26-

BRYAN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
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 School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program 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 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 Virtual Schools State Grants

See notes to the basic financial statements.

- 27 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

912,526

1,740,737 85,860
4,020,339 261,368
1,851,479 89,176
3,356,944 3,282,617
564,238 1,801,670
727,395 53,091
263,974 531,576 174,176 104,260
711,090 1,145,048 1,545,645
489,652 93,597 20,000
121,133 19,416
2,534,399 138,864 15,011
-1, 141,639
85,318 64,562 88,046
150
$ ====25=!a'=75=1..,.,7.,;,18=

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

SCHEDULE "4"

PROJECT
The cost of adding to, renovating, replacing, repairing, improving and equipping existing school buildings and other buildings and facilities useful and desirable in connection therewith, acquiring instructional and administrative technology improvements for existing schools, acquiring school buses, acquiring, constructing and equipping new athletic and administrative facilities, acquiring land for future schools, if sufficient funds are available, acquiring, constructing and equipping one new elementary school, one new middle school and one new high school and acquiring any necessary property therefore, both real and personal

ORIGINAL ESTIMATED
COST {1}

CURRENT ESTIMATED COSTS {2}

AMOUNT EXPENDED IN CURRENT YEAR{3}

AMOUNT EXPENDED IN PRIOR YEAR{3}

PROJECT STATUS

$ 18,000,000 $ 19,000,000 $ 2,875,117 $ 10,855,697 Ongoing

(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 project. Includes all cost from project inception to completion.
(3) The voters of Bryan County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

-28-

BRYAN 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 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
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

$

2,004,111 $ 1,914,849 $

97,247 $

2,012,096

98,879

84,295

2,765

87,060

4,581,295

4,673,554

257,196

4,930,750

305,972

389,238

12,599

401,837

2,142,004

2,480,391

152,720

2,633,111

105,198 3,856,378 3,757,729
652,274 2,098,982
830,115 58,764
303 907

108,654 4,172,031 5,076,573
649,358
85,821 246,445 1,695,597 366,033
849,287 41,452
220,155

2,411 395,443 395,247 106,774
14,459 4,925 33,469 1,695 2,744 18,379
362 5 056

111,065 4,567,474 5,471,820
756,132
100,280 251,370 1,729,066 367,728
2,744 867,666
41,814 225,211

$

20,795,608 $ 23,053,733 $

1,503,491 $

24,557,224

610,725 120 789

751,770 35,544

213,024 76,639

964,794 112 183

TOTAL QBE FORMULA FUNDS

$

21,527,122 $ 23,841,047 $

1,793,154 $ =-=2=5,..,634===,2=0=1

(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 9, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bryan 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 of Bryan County Board of Education as of and for the year ended June 30, 2006, which collectively comprise Bryan County Board of Education's basic financial statements and have issued our report thereon dated March 9, 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 Bryan 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 Bryan County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6151-06-01 and FS-6151-06-02.
2006YB-30

A material weakness is a reportable condition in which the design or operation ofone 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 Bryan 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 Bryan County Board ofEducation and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,

....

RWH:gp 2006YB-30

Russ 11 W. Hinton, CPA, CGFM State Auditor

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 9, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bryan 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 ofBryan County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management 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. Bryan County Board of Education's major Federal programs are identified in the Summary ofAuditor'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 Bryan County Board of Education's management. Our responsibility is to express an opinion on Bryan 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 Bryan County Board ofEducation'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 Bryan County Board ofEducation's compliance with those requirements.
2006SA-15

In our opinion, the Bryan County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2006. However, the results of our auditing procedures disclosed nonmaterial instances of noncompliance with those requirements which are described in the accompanying Schedule of Findings and Questioned Costs as items FA-6151-06-01 and FA-6151-06-02.

Internal Control Over Compliance

The management of Bryan 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 Bryan County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.

Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, 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. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.

This report is intended solely for the information and use ofthe management, members ofthe Bryan 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,

.

=&~~nro~~~

State Auditor

RWH:gp
2006SA-15

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

BRYAN 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-6151-04-01 FS-6151-04-02 FS-6151-05-01 FS-6151-05-02

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

CORRECTIVE ACTION/RESPONSES

EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6151-04-02

The Legal issues have not been resolved at this time.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6151-05-01

Effective January 2006, the Bryan County Board of Education implemented the Accounting Handbook for the Bryan County Schools Activity Accounts. The handbook provides guidance and consistency for the accounting and reporting of schools internal accounts and provides guidance for the implementation of internal controls at the school level. Because of the limited staff at each school, a complete separation of duties is difficult to achieve. But, compensating controls have been established to further strengthen the system of internal controls at the school level. This process is on-going and much progress has been made. The system will continue to monitor the school activities and strive for improvement in this area.

- 1-

BRYAN 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 CORRECTIVE ACTION/RESPONSES EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies Finding Control Number: FS-6151-05-02 In January 2006, the Board employed one additional staffmember to assume some ofthe personnel functions. In addition, an overall review and assessment of all duties and responsibilities involving finance, payroll, and personnel staffwas performed and changes implemented toward the later part of fiscal year 2006 for the purpose of strengthening internal controls and of distributing the workload among all staff. Additional compensating controls will be implemented as the result of this audit.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

BRYAN 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 Bryan County Board of Education's financial statements was unqualified.

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

Cash and Cash Equivalents Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements Employee Compensation

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

3. Noncompliance Material to the Financial Statements The audit ofthe Bryan County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Bryan County Board of Education did not disclose any reportable conditions in internal control over major programs.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Bryan County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Bryan County Board ofEducation's audit did not disclose an audit finding required to be reported by section .5 lO(a) ofOMB Circular A-133; however, we noted certain instances ofnonmaterial noncompliance which are included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies 84.041 Impact Aid

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

9. Low Risk Auditee The Bryan County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

- 1-

BRYAN 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-6151-06-01

Condition:

This is a repeat finding (FS-6151-05-01 and FS-6151-04-01) from the years ended June 30, 2005 and 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 proper separation of duties and reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents One bank statement was not properly reconciled to the general ledger.

Revenues/Receivables/Receipts The cash receipting and deposit preparation functions were not separated from the record keeping and cash custody functions. Based on a review oftwenty items, four receipts were not deposited in a timely manner and ten receipts failed to include adequate supporting documentation.

Expenditures/Liabilities/Disbursements Based on a review of twenty items, the following deficiencies were noted: (1) Four vouchers failed to include adequate supporting documentation. (2) Fourteen vouchers were not supported with purchase orders. (3) One voucher was not supported with an approved payment request form. (4) Three vouchers were posted to incorrect general ledger accounts.

-2-

BRYAN 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-6151-06-01

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 compensating controls for these incompatible activities. In addition, management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures.

EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies Reportable Condition Finding Control Number: FS-6151-06-02

Condition:

This is a repeat finding (FS-6151-05-02) from the year ended June 30, 2005. The School District failed to verify employees' compensation disbursements were based on approved salary amounts. In addition, the School District failed to deduct excess or disallowed leave from employees' compensation based on the leave records.

Criteria:

The School District's management is responsible for designing and maintaining internal controls to provide reasonable assurance that employees' salaries are paid according to approved salary schedules. The School District must ensure any excess or disallowed leave is deducted from an employee's salary in agreement with the employee's leave records and approved pay rate.

Questioned Cost: NIA

-3-

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies Reportable Condition Finding Control Number: FS-6151-06-02

Information:

Based on a review of forty employees' payroll records, the following deficiencies were noted:

Five employees were overpaid due to the use ofan incorrect pay rate and/or number ofdays when calculating excess or disallowed leave.
One employee received compensation based on an incorrect experience level which resulted in an overpayment to the employee.
One employee received compensation for two days not worked which resulted in an overpayment to the employee.
One employee's leave records did not reflect leave earned by the employee for one month.

Cause:

These deficiencies were the result of management's failure to implement proper internal control procedures over the employee compensation functions.

Effect:

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

Recommendation:

Management should develop and implement policies and procedures to ensure that employees are accurately compensated for work performed. In addition, management should implement procedures to ensure that employee leave records are accurate and deductions are properly calculated and are supported by the leave records.

GENERAL LEDGER Excessive Fund Balance Nonmaterial Noncompliance Finding Control Number: FS-6151-06-03

Condition:

The School District did not comply with provisions ofO.C.G.A. 20-2-167 as defined by Chapter 32 of the Financial Management for Georgia Local Units of Administration (FMGLUA). "The purpose of this paragraph is to prohibit local school systems from accumulating surplus funds through taxation without accounting to the taxpayers for how such funds will be expended, and this paragraph shall be liberally construed to accomplish this purpose". The School District's General Fund had an excessive unreserved, undesignated fund balance at fiscal year end.

-4-

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

II FINANCIAL STATEMpNT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Excessive Fund Balance Nonmaterial Noncompliance Finding Control Number: FS-6151-06-03

Criteria:

O.C.G.A. 20-2-167 states in part: "The budget ofeach local school system shall designate all of such anticipated revenues among the several funds or accounts of the system and shall not leave any anticipated revenues undesignated. Except as otherwise provided in this paragraph, all amounts allocated to each fund or account and any existing balance in each fund or account shall be intended for expenditure within the budget year for the purposes of that fund or account. There shall be no fund or account in the nature of a 'surplus' or 'unobligated surplus' fund or account. Each local school system may, however, establish a single reserve fund or reserve account intended to cover unanticipated deficiencies in revenue or unanticipated expenditures, provided that the budget for any year shall not allocate to such reserve fund or reserve account any amounts which, when combined with the existing balance in such fund or account, exceed 15 percent of that years total budget".

Chapter 32 Preparing Operating Budgets of the Financial Management for Georgia Local Units of Administration (FMGLUA) states in part: "The O.C.G.A. 20-2-167 limits this part of fund balance to 15% of the total budget. What this statute really means is that the general fund balance, after deducting all other reserves, may not exceed 15% ofthe next year's budgeted general fund expenditures".

Questioned Cost: NIA

Information:

The School District's General Fund reported an unreserved, undesignated fund balance at fiscal year end that exceeded 15 percent of the 2007 fiscal year budgeted general fund expenditures.

Cause:

The School District neglected the specific limitations imposed upon the School District by the Georgia Department of Education.

Effect:

Nonmaterial noncompliance with respect to Chapter 32 of the FMGLUA.

Recommendation:

The School District should establish policies and procedures designed to ensure that in future periods the School District complies with the provisions ofO.C.G.A. 20-2-167 as defined by Chapter 32 of the FMGLUA.

-5-

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

Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6151-06-01

Condition:

The School District did not properly implement the administrative requirements at four 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.

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 schoolwide program accounting guidelines to the School Districts so as to assist them in consolidating Federal funds from the various Federal programs in a proper manner and allocating schoolwide program costs to the participating Federal programs in accordance with Federal provisions.

Questioned Cost: NIA

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BRYAN 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 Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6151-06-01

Information:

The School District identified four schools that participated in a schoolwide program. Federal and State provisions prescribe that multiple Federal funding sources supporting a schoolwide program be consolidated and schoolwide program costs then be charged to each ofthe respective participating Federal programs through a cost allocation plan. We found that the Board only consolidated each school's Title I allocation of Title I funds with a $1,000 from the Improving Teacher Quality State Grants program (CFDA 84.367). We noted that while a substantial amount oflmproving Teacher Quality State Grants program funds as well as other Federal funds were expended in support of the schools, the District had not considered consolidating these funds as prescribed by Federal and State guidelines. For those Federal funds that were consolidated, the District did use an appropriate allocation plan to distribute schoolwide costs to the Title I and Improving Teacher Quality State Grants programs. For those Federal program funds that were expended in support of the schools but not consolidate, the District charged each Federal fund with individual schoolwide program expenditures.

Cause:

School District personnel were not fully aware of Federal and State requirements for administering a schoolwide program. The School District believed that schoolwide program expenditures lost their identity and therefore any schoolwide program cost could be charged to Title I and other Federally funded programs.

Effect:

Failure to appropriately consolidate Federal funds in support ofa schoolwide program and allocate schoolwide program costs properly can result in noncompliance with Federal and State requirements.

Recommendation:

The School District should implement procedures to (1) combine Federal funds as prescribed by U. S. Department of Education and Georgia Department ofEducation and (2), allocate such schoolwide program costs to the respective Federal funds in line with 0MB Circular A-87 provisions. The School District should seek additional guidance from the Georgia Department of Education to implement procedures for combining and allocating schoolwide program expenditures.

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BRYAN 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 Educational Agencies (CFDA 84.010) Finding Control Number: FA-6151-06-02

Condition:

The School District failed to ensure that teachers meet the requirements of "Highly Qualified" personnel for those individuals paid from Title I Grants to Local Educational Agencies (CFDA 84.010) 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 of the 2002 who teach a core academic subject be highly qualified. Additionally, all teachers of core academic subjects must be highly qualified by the end of2005-2006 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".

Regulations included in 34 CFR 200.28 state that a schoolwide program include instruction by highly qualified teachers.

Questioned Cost: NIA

Information:

The School District made offers ofemployment for teaching positions before verifying "highly qualified" status and, after identifying that the employees were not "highly qualified", continued to allow the employees to teach at a schoolwide school.

Cause:

The School District failed to ensure that employees not meeting "highly qualified" status were not hired or offered positions requiring this status.

Effect:

The School District is not ensuring that students' needs of instruction from "highly qualified" teachers are being met in the classrooms.

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

BRYAN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6151-06-01
We concur with this finding. In January 2006, the Board implemented the Accounting Handbook for the Bryan County Schools Activity Accounts which provides guidance and consistency for the accounting and reporting ofschools internal accounts and provides guidance for the implementation ofinternal controls at the school level. We will continue to work with the schools to ensure that the procedures are being followed according to the handbook and that internal controls are established. This is an ongoing process, but this finding should show resolution in the fiscal year 2007 audit.
Contact Person: Melanie James, Director of Finance Phone: (912) 626-5018 Fax Number: (912) 653-4386 E-mail Address: mjames@bryan.kl2.ga.us
Finding Control Number: FS-6151-06-02
We concur with this finding. In January 2006, the Board employed one additional staffmember to assume some ofthe personnel functions. Also, several compensating controls were established to strengthen internal controls. Other procedural changes and further training will be implemented immediately to resolve this issue. In addition, a review of all docked pay calculations and employees' leave records will be performed before June 2007. This finding should show resolution in the fiscal year 2007 audit.
Contact Person: Melanie James, Director of Finance Phone: (912) 626-5018 Fax Number: (912) 653-4386 E-mail Address: mjames@bryan.kl2.ga.us
Finding Control Number: FS-6151-06-03
We concur that the Board's unreserved fund balance at fiscal year end exceed 15 percent ofthe 2007 fiscal year budgeted general fund expenditures. We also understand that the referenced legislation contains no provisions for penalties or other consequences when the 15 percent limit is exceeded. Because ofseveral prevailing situations, we cannot commit to reduce our unreserved fund balance to a level that may be inadequate for our needs. First, the Board has rolled back the millage rate for the last three years. In setting the millage rate, the Board's objective is to establish a rate that will provide current year tax revenues sufficient to meet our budgeted needs. Second, even though the tax digest of each municipality is due by August 1st of any given year, the Bryan County Government did not submit the current digest until December. The Board did not realize tax revenues until March. Ifwe had not had sufficient reserves, we would have experienced a cash flow situation and more than likely would have been forced to issue a Tax Anticipation Note. Third, because school systems continue to be subjected to austerity reductions/formula adjustments at the state level, adequate reserves are necessary to offset the loss of state revenues. Finally, the Bryan
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BRYAN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6151-06-03 County School System has experienced and will continue to experience significant growth rates. Ample reserves are necessary to employ additional staff and provide capital outlay needs on an annual basis. Contact Person: Sallie Brewer, Superintendent of Schools Phone: (912) 626-5000 Fax Number: (912) 653-4386 E-mail Address: sbrewer@bryan.k12.ga.us Finding Control Number: FA-6151-06-01 We concur with this finding. After further clarification ofthe requirements ofa schoolwide program by the Georgia Department ofEducation, all Federal funds were allocated to schools and combined for the schoolwide programs in fiscal year 2007. This finding should show resolution in the fiscal year 2007 audit. Contact Person: Melanie James, Director of Finance Phone: (912) 626-5018 Fax Number: (912) 653-4386 E-mail Address: mjames@bryan.kl2.ga.us Finding Control Number: FA-6151-06-02 We concur with this finding. Because of the unique conditions and qualifications necessary for special education teachers to meet the "highly qualified" requirements as outlined in No Child Left Behind legislation, we had two special education teachers who did not meet this requirement. Subsequent to June 2006, one of those teachers has resigned and the other teacher has met the "highly qualified" status. This finding should show resolution in the fiscal year 2007 audit. Contact Person: John Oliver, Associate Superintendent Phone: (912) 626-5005 Fax Number: (912) 653-4386 E-mail Address: joliver@bryan.kl2.ga.us
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