Burke County Board of Education, Waynesboro, Georgia, report on audit of financial statements for the fiscal year ended June 30, 2001

,:,. .;

I

:- I

:.. - ' ;,. :~.~ r I'

' ..... c.
, ,',

~. '.
-'>
,-

'.: .;. :.~ , ,'

",
;.:.,.1 .:J..:'.:: ...

..,';"
'~>'

BURKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

2 SCHEDULE OF STATE REVENUE

25

EARNINGS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

3

BY PROGRAM

26

4

BY SITE

27

BURKE COUNTY BOARD OF EDUCAnON - TABLE OF CONTENTS -
SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITII GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITII REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITII OMB CIRCULAR A-133
SEcnONill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTIONiv FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR (404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta. Georgia 30334-R400
January 25,2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Burke County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements ofthe Burke County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Burke County Board ofEducation's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with 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 examinmg, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2001ARL-13

* The general-purpose financial statements of the Board of Education did not contain a
General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.

* School activity accounts'maintained at the individual schools are not included in the
general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.

* The Board of Education did not recognize as expenditures, in the year ended

June 30, 2001, a portion of salaries and the corresponding employer's cost of related

benefits earned for contractual services completed prior to June 30, 2001. Also funds

received, subsequent to June 30, 2001, from the Georgia Department of Education for

the State's share of these unrecorded salaries and related benefits were not recorded as

revenue in the year under review. Conversely, the similar expenditures and related

revenues for contractual services completed prior to June 30, 2000, were improperly

recorded in the year ended June 30, 2001. To conform to generally accepted accounting

principles, revenues should be recorded when available and measurable and

expenditures should be recorded when incurred, rather than when funds are received or

disbursed.

.

The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.

In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Burke County Board ofEducation as of June 30, 2001, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated January 25,2002, on our consideration of the Burke County Board of Education's internal control over financial reporting and our tests ofits compliance with certain provisions oflaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.

Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Burke County Board ofEducation taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 1 through 4), 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 general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the

2001ARL-13

audit of the general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects,in relation to the general-purpose financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
Respectfully submitted,

RWH:gp 200lARL-13

R ell W. Hinton State Auditor

BURKE COUNTY BOARD OF EDUCATION

BURKE COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30, 2001

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

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$ 7,207,614.49 $

312,843.47

22,944,319.05

308,227.40

236,557.39

782,703.17

20,651.32 17,363.62

$ 30,388,490.93 $ 1,441,788.98

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable
Total Liabilities
FUND EqUITY
Fund Balances Reserved For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

2,067.15 $

83,524.39

328,596.71

458.16

$

2,067.15 $ 412,579.26

$

20,651.32

17,363.62

$ 30,386,423.78

991,194.78

$ 30,386,423.78 $ 1,029,209,72

Total Liabilities and Fund Equity

$ 30,388,490.93 $ 1,441,788.98

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

EXHIBIT "A"

TYPES CAPITAL
PROJECTS FUND

TOTALS

(Memorandum Only)

JUNE 30, 2001

JUNE 30, 2000

$ 1,447,665.60 $ 8,968,123.56 $ 14,048,055.88

6,089,792.41

29,342,338.86

20,041,950.68

1,019,260.56

682,958.51

20,651.32 17,363.62

21,850.57 15,206.97

$ 7,537,458.01 $ 39,367,737.92 $ 34,810,022.61

$

85,591.54 . $

86,245.77

328,596.71

327,383.03

458.16

15,543.49

$

75,393.93

75,393.93

6,382.66

6,382.66

$

81,776.59 $

496,423.00 $

429,172.29

$

67,186.57

$

20,651.32

17,363.62

21,850.57 15,206.97

$ 7,455,681.42

38,833,299.98

34,276,606.21

$ 7,455,681.42 $ 38,871,314.92 $ 34,380,850.32

$ 7,537,458.01 $ 39,367,737.92 $ 34,810,022.61 -3-

BURKE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Services Operations
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities . Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 11,820,159.12 $
19,604,204.32 1,919,194.73
$ 33,343,558.17 $

713,989.31 4,171,393.03 .
160,176.76
5,045,559.10

$ 17,674,438.58 $
868,226.29 528,260.98 588,744.27 1,130,239.45 1,913,554.27 134,937.50 2,635,834.78 2,141,953.58
67,950.51
146.61 41,958.50

2,524,852.57
210,656.61 85,030.27
243,695.31 9,724.26 3,202.23 675.00
16,007.80 1,279.30
55,398.33 1,811,750.51

$ 27,726,245.32 $ $ 5,617,312.85 $

4,962,272.19 83,286.91

$

$

-575,248.62

$

-575,248.62 $

6,060.00 6,060.00

$ 5,042,064.23 $ 25,344,359.55

89,346.91 938,905.41

-1,199.25 2,156.65

FUND BALANCE JUNE 30

$ 30,386,423.78 $

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

1,029,209.72

EXHIBIT"B"

CAPITAL PROJECTS
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$ 12,534,148.43 $ 10,662,571.58

4,171,393.03

3,725,689.09

19,604,204.32

19,227,651.06

$

142,146.51

2,221,518.00

2,107,322.89

$

142,146.51 $ 38,531,263.78 $ 35,723,234.62

$ 20,199,291.15 $ 18,852,692.88

$ 1,353;239.07

1,078,882.90 613,291.25 588,744.27
1,373,934.76 1,923,278.53
138,139.73 2,636,509.78 2,157,961.38
69,229.81 55,398.33. 1,811,897.12 41,958.50 1,353,239.07

1,570,798.65 1,138,733.52
574,501.30 1,061,195.42 1,739,497.23
123,732.95 2,543,374.98 2,354,562.18
75,345.01 73,524.42 1,772,152.26 43,508.16 326,110.38

$ 1,353,239.07 $ 34,041,756.58 $ 32,249,729.34

$ -1,211,092.56 $ 4,489,507.20 $ 3,473,505.28

$

569,188.62 $

575,248.62 $

572,787.45

-575,248.62

-572,787.45

$

569,188.62 $

0.00 $

0.00

$ -641,903.94 $ 4,489,507.20 $ 3,473,505.28

8,097,585.36

34,380,850.32

30,908,576.93

-1,199.25 2,156.65

2,259.66 -3,491.55

$ 7,455,681.42 $ 38,871,314.92 $ 34,380,850.32 -5-

BURKE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - INON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 2001

EXHIBIT "COO

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

BURKE COUNTY BOARD OF EDUCAnON

EXHIDIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

The Burke 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 School District 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.

FUND ACCOUNTING

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.

General Fixed Assets are recorded as expenditures in the various funds at the time of pur~hase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.

Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these fmancial statements. To confonn to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.

The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:

GOVERNMENTAL FUND TYPES - are used to account for all or most of a School District's

educational activities. Governmental Fund Types include:

.

GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that ar~ legally restricted to expenditures for specified purposes. These funds are received. primarily from the Georgia Department of
Education and from the Federal government to accomplish specific educational objectives.

- 8-

BURKE COUNTY BOARD OF EDUCATION

EXHmIT "0"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is detennined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2001, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 3'0, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to
-9-

BURKE COUNTY BOARD OF EDUCAnON

EXHmIT "D"

NOTES TO TIlE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

June 30, 2000, were recorded in the year ended June 30, 2001. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.

BUDGET

The Burke County Board ofEducation's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prollibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.

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

The Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" of this report:

FUND BALANCE JULY 1, 2000
Adjustments Inventories - July 1, 2000 Food Donated Commodities Purchased Foods
Fund Balance July 1, 2000 (Budget Basis)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JUNE 30, 2001 (Budget Basis)

Special Revenue
Fund $ 938,905.41
89,346.91 $ 991.194.78

-to -

BURKE COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO TIlE GENERAL-PURPOSE FINANCIAL STATEMENTS

ruNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-tenn investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe State of Georgia.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables
- 11 -

BURKE COUNTY BOARD OF EDUCAnON

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

are recorded when either the asset or revenue recognition criteria has been met. 'Receivables recorded on the general-pwpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Burke County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendar year) on November 17,2000 (levy date). Taxes were due on January 17,2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Burke 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 during the fiscal year ended June 30,2001 for maintenance and operations amounted to $19,571,701.33.

The tax millage rate levied for the 2000 tax year (calendar year) for the Burke County Board of Education was as follows (a mill equals $1 per thousand dollarS of assessed value):

School Operations

12,75 mills

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out), Donated food commodities are recorded as revenues and expenditures at the time commodity items are received, Purchased foods inventories are recorded as expenditures at the time ofpurchase, The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component ofnet current assets,

INTERFUND TRANSACTIONS

The School District has the following types ofinterfund transactions:

Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

Operating transfers are recorded for all interfund transactions other than reimbursements.

- 12-

BURKE COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO TIlE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general-purpose fmancial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
. Note 2: DEPOSITS
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 ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value ofsuch 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. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and

- 13-

BURKE COUNTY BOARD OF EDUCATION

EXHmIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2001, the bank balances were $40,813,294.81. The amoimts ofthe total bank balances are classified into three categories of credit risk:

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

The School District's deposits are classified by risk category at June 30, 2001, as follows:

Risk <;ategory

Bank Balance

1

$ 600,000.00 .

2

1,041,581.56

3

39,171,713.25

Total

$40.813.294.81

Note 3: 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 1 - Inventories

Note 4: RISK MANAGEMENT

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

- 14-

BURKE COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

ruNE 30, 2001

"Note 4: RISK MANAGEMENT

The School District has obtained commercial insurance for risk ofloss associated with torts, assets 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 natural disaster. In addition, the

School District has elected to self-insure for errors or omissions, which includes, among other risks,

risks for sexual harassment and discrimination. The School District has not experienced any losses

related to these risks 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 expenditure 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:

"

2000 2001

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

"137.00 $

8,351.00 $

6.644.00 $

1.844.00

$

1.844.00 $

4.120.00 $

3,918.00 $

2,046.00

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

Position Covered

Coverage Amount

"Superintendent Principals JTPA Coordinator

$" 20,000.00 $ 5,000.00 - $ 10,000.00
$ 20,000.00

Note 5: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $499,652.19 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$419,212.19

- 15 -

,-------------------------------------------

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 5: ON-BEHALF PAYMENTS

,Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employe~s Retirement (PSERS) Employer's Cost In the amount of $80,440.00

Note 6: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed

by the School District as of June 30, 2001:

.

Project

Unearned Executed Contracts

Burke County Central Office

$850.337.80

The amount described in this note is not reflected in the general-purpose financial statements.

Note 7: CONTINGENT LIABILITIES

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

Note 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts 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 . survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate s~d alone financial audit report and a copy can be obtained from the Geo~gia 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 ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.29% and employer contributions for the cuirent fiscal year and the preceding two fiscal years are as follows:

- 16-

BURKE COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 8: RETIREMENT PLANS
Fiscal Year
2001 2000 1999

Percentage Contributed
100% 100% 100%

Required Contribution
$ 1,991,136.00 $ 1,968,504.28 $ 1,991,079.55

- 17 -

BURKE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2001

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

763,755.57 $

60,724.39

308,227.40

6,263.72

2,289,51

20,651.32 17,363.62

Total Assets

$ 1,116,261.63 $===6=:3,0.1..3=,=90=

Total liabilities and Fund Equity
See notes to the general-purpose financial statements, -18 -

$ 1,116,261.63 $===6=:3,0.1.3.=.9=0;;".

EXHIBIT"E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

824,479.96 $

740,689.71

308,227.40

308,227.40

$

774,149.94

782,703.17

360,885.29

20,651.32 17,363.62

21,850.57 15,206.97

$

774,149.94 $ 1,953,425.47 $ 1,446,859.94

$

511,636.49 $

511,636.49 $

79,595.78

60,894.98

83,524.39

85,432.23

201,160.31

328,596.71

327,383.03

458.16

458.16

15,543.49

$

774,149.94 $

924,215.75 $

507,954.53

$

20,651.32 $

21,850.57

17;363.62

15,206,97

$

o~.O.;:.;;O;...

991.194.78

901,847.87

$

0.00 $_-..:1..10=2=9,'2:'0:9':.'7;=2 - $

938,905.41

$

774,149.94 $ 1.953,425.47 $ 1,446,859.94

- 19

BURKE COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2001

FUND BALANCE JUNE 30
See notes to the general-purpose financial statements. - 20-

$ 1,029,209.72 $=====0,:=00,,=

EXHIBIT"F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$

713,989.31 $

694,988.27

$ 2,589,834.37

4,171,393.03

3,725,689.09

160,176.76

186,020.09

$ 2,589,834.37 $ 5,045,559.10 $ 4,606,697.45

$ 2,069,072.65 $ 2,524,852.57 $ 2,113,621.65

152,159.82 83,308.34
221,320.87 9,724.26 148.00
3,482.80 1,279.30 55,398.33

210,656.61 85,030.27
243,695.31 9,724.26 3,202.23 675.00
16,007.80 1,279.30
55,398.33 1,811,750.51

227,210.50 121,896.40 135,625.91
275.09 4,016.26 22,238.00 10,670.01
54,476.26 1,769,220.61

$ 2,595,894.37 $ 4,962,272.19 $ 4,459,250.69

$

-6,060.00 $

83,286.91 $

147,446.76

6,060.00

6,060.00

$

0.00 $

89,346.91 $

147,446.76

0.00

938,905.41

792,690.54

-1,199.25 2,156.65

2,259.66 -3,491.55

$

0.00 $ 1,029,209.72 $ 0::====::9=3=85,9=05=..4..1...

- 21 -

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture. U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food SerVices School Breakfast Program National School Lunch Program

10.553
10.555

Total Child Nutrition Cluster

N1A

$ 256.598,92

(2)

N1A

1.207.362.56 $

1,811.750,51 (3)

$ 1,463,961,48 $

1,811,750.51

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutrition Program

Food Distribution Program (1)

10.550

N1A

117,597,18

117,597,18

Total U, S.Department of Agriculture

$ 1.581,558,66 $

1,929,347,69

Education. U, S, Departmert of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Capacity Building Improvement Grant Flow Through Preschool

84.173 84.027
84,173

Total Special Education Cluster

N1A

$

5.576,90 $

N/A

274.191.67

N/A

27,125.40

$ 306.893.97 $

5.576.90 274.191.67
27,125.40
306,893.97

Other Programs

Direct

Twenty-first Century Community Leaming centers

84.287

176;440,46

176,440.46

Pass-Through From Georgia Department of Education

Comprehensive School Reform Demonstration Project 84.332

N1A

4.300.00

4.300.00

Elementary and Secondary Education Act

Title I

Even Start Grants to Local Educational Agencies

84.213 84,010

N1A N1A

20.550,75 1,432.948.65

20.550.75 1,432.948.65

Title II

Eisenhower Professional Development

84.281

N1A

39,402.21

39,402.21

TItle III

Technology Literacy Challenge Fund Grants

84.318

N1A

124,738.65

124.738~65

TrtleVI

Innovative Education Program Strategies

84.298

N1A

79.079.70

85,139.70 (3)

Class Size Reduction

84.340

N1A

163,817.03

163,817.03

Safe and Drug-Free Schools and Communities

84.186

N1A

26,621.56

26,621.56

Vocational Education - Basic Grants to States

High School Program

Basic Grant

84.048

N1A

85,156.08

85,156.08

Total U. S, Department of Education

$ 2,459,949.06 $

2.466,009.06

Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Resources Substance Abuse Program

93.959

N1A

$ 50,000.00 $

50,000,00

- 22-

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Labor, U. S. Department of Pass-Through From Richmond/Burke Job Training Authority Job Training Partnership Act
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

17.250

NlA $ 40,382.57 $

40,382.57

$ 39,502.74 $

39,502.74

Total Federal Financial Assistance
= N/A Not Available

$ 4,171,393.03 $ ====4,=52=50,52;;,;4.2=.0=6

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 2001 National School Lunch Program.
(3) Expenditures for this program include State. and/or Other Funds. Expenditures are not maintained by fund source.

Major Programs are identified by an asterisk (0) 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 Burke 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 general purpose financial statements.

see notes to the general-purpose financial statements.

23

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2001

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of Local Assistance Grants
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 Middle School (6-8) Program High School General Education (9-12) Program Vocational Lab~ratory (9-12) Program Students with Disabilities category I Category II' Category III Category IV Gifted Student - category VI Remedial Education Program Alternative Education Program Media Center Program Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Food Services Vocational Education Other State Programs AtRisk Summer School Program Health Insurance Indirect Cost (School of Excellence) Mentor Teachers Preschool Handicapped Program Remedial Summer School Lottery Programs Computers in the Classroom
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of Georgia's Reading Challenge . Reading First Program

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

65,000.00

$

65,000.00

598,511.00 56,720.00
1,399,776.00 644,787.00. 784,473.00
1,717,443.00 1,320,133.00
340,683.00
3,507.00 285,971.00 390,460.00
9,195.00 41,207.00 211,527.00 121,671.00 259,906.00 70,465.00 1,547,609.00

855,695.00 253,874.00 108,211.00
14,610.00 22,371.00
30,015.32

$ 159,362.00

10,598.83 419,212.19
2,000.00 9,943.00 57,696.00 6,371.37

94,330.03

460,297.28

80,440.00

598,511.00 56,720.00
1,399,776.00 644,787.00 784,473.00
1,717,443.00 1,320,133.00
340,683.00
3,507.00 285,971.00 390,460.00
9,195.00 41,207.00 211,527.00 121,671.00 259,906.00 70,465.00 1,547,609.00
855,695.00 253,874.00 108,211.00
14,610.00 22,371.00 159,362.00 30,015.32
10,598.83 419,212.19
2,000.00 9,943.00 57,696.00 . 6,371.37
94,330.03
460,297.28
80,440.00

47,500.00 32,577.41.

47,500.00 32,577.41

See notes to the general-purpose financial statements.

$ 11,820,159.12 $ 713,989.31 $ 12,534,148.43 -25 -

,----------------------------------------------~--~-~~~--~~

BURKE COUNTY BOARD OF EDUCATION GENERAL FUND - auALITY BASIC EDUCATION PROGRAM (aBE)
EARNINGS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2001

SCHEDULE "3"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE aBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Eiementary Grades (4-5) Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category II

category III

category IV

Gifted Student - category VI

Remedial Education Program

Alternative Education Program

1,094,181,00 $ 103,695.00
2,559,033.00 1,178,783.00 1,434,152.00
3,139,784,00 2,413,432.00
622,827,00 1,259,855.00
75,332.00 386,708.00 222,436.00

1,207,319.16 $ 176,495.31
2,679,156.55 1,173,798.21 1,568,166.52
1,466.00 3,100,411.98 2,572,136.54
604,444.64
503,475.87 647,994.85
62,282.05 73,842.30 586,n6.52 580,566.17

17,684.68 $ 420.75
107,902.67 99.51
44,919.99
118,723.68 135,155.45
91,314.19
3,087.57 3,118.87
389.65 2,543.86
350.45 8,080.29

1,225,003.84 176,916.06
2,787,059.22 1,173,897.72 1,613,086.51
1,466.00 3,219,135.66 2,707,291.99
695,758.83
506,563.44 651,113.72
62,671.70 76,386.16 587,126.97 588,646.46

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

14,490,218.00 $ 15,538,332.67 $ 533,791.61 $ 16,072,124.28

Media center Program Staff and Professional Development

475,153.00 128,823.00

478,306.53 64,504,24

99,836.90 79,616.89

578,143.43 144,121,13

TOTAL aBE FORMULA FUNDS

$

15,094,194.00 $ 16,081,143.44 $ 713,245.40 $ 16,794,388.84

(1). Comprised of State Funds plus Local Five Mill Share.

See notes to the general-purpose financial statements.

- 26-

BURKE COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM CQBE)
EARNINGS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2001

SCHEDULE "4"

Burke County Middle School S G A Elementary School Burke County High School Waynesboro Primary School Blakeney Elementary School Burke County Altemative School Central Office (Alternative Education Program)
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share.

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE aBE PROGRAM COSTS

$

3,486,440.00 $

3,537,652.29

1,290,079.00

1,436,852.03

3,457,699.00

3,750,976.50

3,220,304.00

3,521,780.44

2,813,260.00

2,957,758.90

573,622.94

222,436.00

293,481.18

$

14,490,218.00 $ . 16.072,124.28

See notes to the general-purpose financial statements. - 27-

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta. Georgia 3,0334-8400
January 25,2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Burke Cotinty Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofBurke County Board ofEducation as ofand for the year ended June 30, 2001, and have issued our report thereon dated January 25, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Burke 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 grants, noncompliance with which couldhave a direct and material effect on the determination offmancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, .we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Burke County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2001YB-40

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 ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Burke County Board of Education's ability to record, process, summarize and report fmancial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6171-01-01 and FS-6171-01-02.

A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course 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, ofthe reportable conditions described above, we consider item FS-6171-0102 to be a material weakness.

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

.---..

W.~

Rus ell W. Hinton State Auditor

RWH:gp 200 1Y B - 4 0

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta. Georgia 30334-H400
January 25,2002

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Burke County Board of Education

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

Ladies and Gentlemen:

Compliance

We have audited the compliance ofBurke County Board ofEducation with the types ofcompliance
u.s. requirements described in the Office of Management and Budget (OMB) Circular A-i33

Compliance Supplement that are applicable to each ofits major Federal programs for the year ended

June 30, 2001. Burke County Board of Education's major Federal programs are identified in the

Summary of Auditor's Results Section ofthe accompanying Schedule ofFindings and Questioned

Costs. Compliance with the requirements of laws, regulations, contracts arid grants applicable to

each of its major Federal programs is the responsibility of Burke County Board of Education's

management. Our responsibility is to express an opinion on Burke County Board of Education's

compliance based on our audit.

.

We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 Burke County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Burke County Board of Education's compliance with those requirements.

2001SA-30

In our opinion, the Burke 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, 2001.

Internal Control Over Compliance

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

We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Burke County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6171-01-01.

A material weakness is a condition in which the design or operation of one or more of the intc;:rnal

control components does not reduce to a relatively low level of risk that noncompliance with the

applicable requirements oflaws, regulations, contracts and grants that would be material in relation

to a major Federal program being audited may occur and not be detected within a timely period by

employees in the normal course of performing their assigned functions. Our consideration of the

internal control over compliance would not necessarily disclose all matters in the internal control that

might be reportabie conditions and, accordingly, would not necessarily disclose all reportable

conditions that are also considered to be material weaknesses. However, we believe the reportable

condition described above is not a material weakness.

.

This report is intended solely for the information and use ofthe management, members ofthe Burke 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,
1:1... (xLW~ ~ll W. Hinton State Auditor

RWH:gp 2001SA-30

SECTIONm AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

BURKE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6171-98-02 FS-6171-99-0l FS-6171-99-02 FS-6171-99-03 FS-61 71-00-01 FS-6171-00-02 FS-6171-00-03 FS-6171-00-04

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

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS GENERAL LEDGER Inadequate Internal Controls Finding Control Number: FS-6171-00-02

Corrective Action hnplemented July 1,2001 .

. GENERAL FIXED ASSETS Failure to Maintain Gen~ral Fixed Assets Account Group Finding Control Number: FS-6171-00-04

Weare in the process ofselecting software to meet GASB 34 in 2003. We do not feel that it is financially feasible to attempt other avenues until that time.

SECTIONIV . FINDINGS AND QUESTIONED COSTS

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Burke County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements

The audit report for the Burke County Board of Education disclosed financial statement

reportable conditions related to the following control categories.

.

General Ledger .

General Fixed Assets

Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit ofthe Burke 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 Burke County Board ofEducation disclosed a reportable condition in internal control over major programs for the following compliance requirement.

Reporting

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

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

6. Audit Findings Required to be Reported by Section .51 OCa) of OMB Circular A-133 The Burke County Board of Education's audit disclosed an audit fmding required to be reported by section .510(a) ofOMB Circular A-133. This audit finding is included in section IV of this report.

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

- 1-

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs

84.027 84.173

Individuals with Disabilities Education Act - Part B - Special Education Flow Through
Individuals with Disabilities Education Act - Part B - Special Education..: Preschool

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

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

IT FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition Repeated From Prior Year Finding Control Number: FS-6171-01-01

A review of the School District's internal control policies and procedures noted deficiencies in providing for adequate internal control over the General Ledger (The Journal Entry Process) control category. Journal entries were not consistently supported by adequate documentation and explanations. In addition,journal entries were not reviewed and approved by someone independent of the general ledger posting function. Procedures should be implemented to ensure that internal controls are strengthened.relative to the Journal Entry Process. .

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6171-01-02

The Burke County Board of Education did not main~ a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose fmancial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to

-2-

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6171-01-02

provide for the maintenance of a General Fixed Assets Account Group. These subsidiary records

should include an inventory of land, buildings, and equipment owned by the School District and

should include, but may not be limited to, date acquired, acquisition cost, estimated replacement

cost, location and description. Detailed records should be maintained ofalladditions and deletions

to the General Fixed Assets Account Group.

.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Inadequate Documentation Reportable Condition U. S. Department of Education Through Georgia Department ofEducation Finding Control Number: FA-6171-:-01-01

A review of the School District's internal control policies and procedures noted deficiencies. in providing for adequate internal control over Reporting (Special Reports) for the Title I - Grants to Local Education Agencies (CFDA 84.010). Documentation could not be provided to support data included in the Student FI'E (Full Time Equivalent) Data Collection System Report for October 3, 2000. The School District is required to submit this data to the Georgia Department ofEducation to report the State Per Pupil Expenditure to the National Center for Education Statistics. This condition was a result ofmanagement's failure to implement internal controls for monitoring compliance with Federal guidelines. The School District should review the Federal compliance procedures in place and design procedures which would enhance monItoring compliance with Federal guidelines and proper internal control over the Federal programs.

-3-