Burke County Board of Education, Waynesboro, Georgia, report on audit of financial statements for the fiscal year ended June 30, 2002

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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS

BURKE COUNTY BOARD OF EDUCATION
WAYNESBORO, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
Russell W. Hinton State Auditor

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

6

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

7

ADDITIONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

16

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

18

G

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

20

SCHEDULES

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

21

2 SCHEDULE OF STATE REVENUE

23

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

3

BY PROGRAM

24

4

BY SITE

25

BURKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND 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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W.Suite214 Atlanta, Georgia 30334-8400
July 24, 2003

Honorable Sonny Perdue, 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, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Burke County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon.
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:

2002ARL-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, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, 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, 2001, were improperly recorded in the year ended June 30, 2002. 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 of Education as of June 30, 2002, 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 July 24, 2003, on our consideration ofthe Burke County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, 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 of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules l 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 NonProfit Organizations, are presented for purposes ofadditional analysis and are not a required part of
2002ARL-13

the general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects ofthe 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 of this 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:as 2002ARL-13

State Auditor

BURKE COUNTY BOARD OF EDUCATION

BURKE COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30, 2002

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

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$ 19,941,565.55

2,000,000.00 $

308,227.40

330,582.78

935,030.26

36,702.89 23,502.47

Total Assets

$ 22,272,148.33 $ 1,303,463.02

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

16,136.88

$

7,537.00

93,133.89

366,215.61

1,135.02

12,190.69

$

7,537.00 $

488,812.09

$
$ 22,264,611.33 $ 22,264,611.33 $

36,702.89 23,502.47
754,445.57
814,650.93

Total Liabilities and Fund Equity

$ 22,272,148.33 $ 1,303,463.02

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

EXHIBIT "A"

TYPES CAPITAL
PROJECTS FUND

FIDUCIARY FUND TYPE
AGENCY FUND

TOTALS

(Memorandum Only)

JUNE 30, 2002

JUNE 30, 2001

$ 14,290,044.15 $

0.00 $ 34,231,609.70 $ 8,968,123.56

1,755,533.55

4,063,760.95

29,342,338.86

1,265,613.04

1,019,260.56

36,702.89 23,502.47

20,651.32 17,363.62

$ 16,045,577.70 $ = = = = = 0.0= 0 $ 39,621,189.05 $ 39,367,737.92

$

12,530.00

709,177.90 493,326.71
$
$ 1,215,034.61 $

$
0.00 0.00 $

16,136.88 113,200.89 $ 366,215.61
1,135.02 709,177.90 493,326.71
12,190.69
1,711,383.70 $

85,591.54 328,596.71
458.16 75,393.93
6,382.66
496,423.00

$ 14,830,543.09 $ 14,830,543.09

$

36,702.89 $

20,651.32

23,502.47

17,363.62

37,849,599.99

38,833,299.98

$ 37,909,805.35 $ 38,871,314.92

$ 16,045,577.70 $====0==00= $ 39,621,189.05 $ 39,367,737.92 -3-

BURKE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 2002

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

$ 13,051,147.48 $
19,893,042.67 1,262,411.56

799,602.34 5,020,097.85
139,766.94

$ 34,206,601.71 $ 5,959,467.13

$ 17,845,282.36 $
972,411.63 412,391.73 590,766.21 1,101,880.31 2,139,395.34 133,656.42 2,588,949.22 2,216,088.96
80,910.81 2,714.21
44,760.93

3,101,445.23
307,636.79 134,884.86
278,450.44 7,660.37 1,076.50
42,102.02 26,387.51
163,136.38 2,209,601.86

$ 28, 129,208.13 $ $ 6,077,393.58 $

6,272,381.96 -312,914.83

$ $ -14,199,206.03
$ -14,199,206.03 $

76,165.62 76,165.62

$ -8, 121,812.45 $ 30,386,423.78

-236,749.21 1,029,209.72

16,051.57 6,138.85

FUND BALANCE JUNE 30

$ 22,264,611.33 $ ==8=1=4=,6=50==93=

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

EXHIBIT "B"

CAPITAL PROJECTS
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$ 13,850,749.82 $ 12,534,148.43

5,020,097.85

4,121,393.03

19,893,042 67

19,604,204.32

$

141,096.74

1,543,275.24

2,221,518.00

$

141,096.74 $ 40,307,165.58 $ 38,481,263.78

$ 20,946,727.59 $ 20,199,291.15

$ 6,889,275.48

1,280,048.42 547,276.59 590,766.21
1,380,330.75 2,147,055 71
134,732.92 2,631,051.24 2,242,476.47
80,910.81 165,850.59 2,209,601.86
44,760.93 6,889,275.48

1,078,344.67 613,291.25 588,744.27
1,324,620.99 1,923,278.53
137,991.73 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

$ 6,889,275.48 $ 41,290,865.57 $ 33,991,756.58

$ -6,748,178.74 $

-983,699.99 $ 4,489,507.20

$ 14,123,040.41 $ 14,199,206.03 $ -14, 199,206.03

$ 14,123,040.41 $

0.00 $

575,248.62 -575,248.62
0.00

$ 7,374,861.67 $

-983,699.99 $ 4,489,507.20

7,455,681.42

38,871,314.92

34,380,850.32

16,051.57 6,138.85

-1,199.25 2,156.65

$ 14,830,543.09 $ 37,909,805.35 $ 38,871,314.92 -5 -

BURKE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 2002

EXHIBIT"C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 11,915,822.00 $ 13,051,147.48

16,074,566.29 1,000,00000

19,893,042.67 1,262,411.56

Total Revenues EXPENDITURES

$ 28,990,388.29 $ 34,206,601.71

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

$ 18,091,243.27 $ 17,845,282.36

947,367.29 423.492.59 585,294.91 1,191,300.81 2,052,217.48 146,414.22 3,007,795.69 2,525,754.42
83,833.98

972,411.63 412,391.73 590,766.21 1,101,880.31 2,139,395.34 133,656.42 2,588,949.22 2,216,088.96
80,910.81 2,714.21

44,760.93

Total Expenditures

$ 29,054,714.66 $ 28,129,208.13

Excess of Revenues over (under) Expenditures

$

-64,326.37 $ 6,077,393.58

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses

$ -14, 199,206.03

Total Other Financing Sources (Uses)

$ -14, 199,206.03

Excess of Revenues and Other Financing Sources

over (under) Expenditures and Other Financing

Uses

$

-64,326.37 $ -8, 121,812.45

FUND BALANCE JULY 1, 2001

32,045,439.46

30,386.423.78

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

-3,659.82

FUND BALANCE JUNE 30 2002

$ 31,977.453.27 $ 22,264,611.33

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 334.441.00 $ 799,602.34

4,754,404.00

5,020,097.85

169,900.00

139,766.94

$ 5,258,745.00 $ 5,959,467.13

$ 2,513,773.23 $ 3,101.445.23

120,355.00 201,443.00

307,636.79 134,884.86

153,577.00 12,520.00

278.450.44 7,660.37 1,076.50
42,102.02 26,387.51

320,958.00 2,444,350.00

163,136.38 2,209,601.86

$ 5,766,976.23 $ 6,272,381.96 $ -508,231.23 $ -312,914.83

$

76,165.62

$

76,165.62

$ -508,231.23 $ -236,749.21

854,894.54

1,029,209.72

16,051.57 6,138.85
$ 346,663.31 $ 814,650.93

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

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Burke County Board of Education (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 purchase. 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 financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control 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 the 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 are 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.
-7-

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

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.
FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements 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.
Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount 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. Property taxes and interest are considered to be 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 2002, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety
-8-

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 200 I and ending in August 2002. 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, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2002. Also, the State's portion ofthe compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. 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.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Burke County Board of Education'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 prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level 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 of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting of the 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 of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist 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.
-9-

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds and 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 of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Burke County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on October 16, 2001 (levy date). Taxes were due on December 20, 2001 (lien date).
- 10 -

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Burke County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $19,786,843.47.

The tax millage rate levied for the 2001 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 of net current assets.

INTERFUND TRANSACTIONS

The School District has the following types of interfund 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.

MEMORANDUM ONLY -TOTAL COLUMNS

Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position 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. Certain reclassifications have been made to the comparative data to conform to the current year classifications.

- 11 -

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

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 of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. 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 any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(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, 2002, the bank balances were $40,579,198.73. The amounts ofthe total bank balances are classified into three categories of credit risk:

- 12 -

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 2: DEPOSITS

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, 2002, as follows:

Risk Category

Bank Balance

1

$ 700,000.00

2

35,028,224.45

3

4,850,974.28

Total

$40,579,198.73

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 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 same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

- 13 -

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 4 RISK MANAGEMENT

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

2001 2002

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

1,844.00 $

4,120.00 $

3,918.00 $

2,046.00

$

2,046.00 $ 22,128.00 $ 15,140.00 $

9,034.00

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

Position Covered

Amount

Superintendent Principals JTPA Coordinator

$ 20,000.00 $ 10,000.00 $ 20,000.00

Note 5: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $467,297.94 for health insurance and retirement contributions paid on the School District's behalf by 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 $407,876.94

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $59,421.00

Note 6: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available:

- 14 -

BURKE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 6: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

Burke County Central Office Blakeney Elementary School

$ 224,295.67 $ 290,795.00 6,533,313.67

$ 6.757.609.34 $ 290.795.00

The amounts described in this note are 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 of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

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

Fiscal Year

Percentage Contributed

Required Contribution

2002 2001 2000

100% 100% 100%

$ 1,705,455.16 $1,991,136.00 $ 1,968,504.28

- 15 -

BURKE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 2002

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

531,255.82 $

10,871.26

308,227.40

17,267.56

57,593.80

36,702.89 23,502.47

Total Assets

$

916,956.14 $ ===6=8'=4=65=.0=6=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Un designated
Total Fund Equity

$

10,313.14 $

15,219.17

91,992.07

53,245.89

$

102,305.21 $

68,465.06

$

36,702.89

23,502.47

754,445.57 $

0.00

$

814,650.93 $

000

Total Liabilities and Fund Equity
See notes to the general-purpose financial statements. - 16 -

$

916,956.14 $ ===6=8,4=65=.0= 6

EXHIBIT "E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2002

JUNE 30, 2001

$

542,127.08 $

837,823.79

308,227.40

308,227.40

$

860,168.90

935,030.26

769,359.34

36,702.89 23,502.47

20,651.32 17,363.62

$

860,168.90 $ 1,845,590.10 $ 1,953,425.47

$

558,263.96 $

558,263.96 $

511,636.49

67,601.58

93,133.89

83,524.39

220,977.65

366,215.61

328,596.71

1,135.02

1,135.02

458.16

12,190.69

12,190.69

$

860,168.90 $ 1,030,939.17 $

924,215.75

$

$ _ _ _ _o_.o_o_

$

0.00 $

36,702.89 $ 23,502.47
754,445.57
814,650.93 $

20,651.32 17,363.62
991,194.78
1,029,209.72

$

860,168.90 $ 1,845,590.10 $ 1,953,425.47

- 17 -

BURKE COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

165,266.00 $

1,665,584.58

139,766.94

$ 1,970,617.52 $

634,336.34 634,336.34

$

487,898.81

109,009.97 833.51

$ 2,207,366.73

$ 2,207,366.73 $

$

-236,749.21 $

32,126.64 11,220.00
56.91
641,145.84 -6,809.50

$

-236,749.21 $

1,029,209.72

16,051.57 6,138.85

6,809.50
0.00 0.00

FUND BALANCE JUNE 30 See notes to the general-purpose financial statements.
- 18 -

$

814,650.93 $====0==00=

EXHIBIT"F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$

799,602.34 $

713,989.31

$ 3,354,513.27

5,020,097.85

4,121,393.03

139,766.94

160,176.76

$ 3,354,513.27 $ 5,959,467.13 $ 4,995,559.10

$ 2,613,546.42 $ 3,101,445.23 $ 2,524,852.57

198,626.82 134,051.35 278,450.44
7,660.37 1,076.50 9,975.38 15,167.51
163,079.47 2,235.13

307,636.79 134,884.86 278,450.44
7,660.37 1,076.50 42,102.02 26,387.51
163,136.38 2,209,601.86

210,118.38 85,030.27
194,381.54 9,724.26 3,054.23 675.00
16,007.80 1,279.30
55,398.33 1,811,750.51

$ 3,423,869.39 $ 6,272,381.96 $ 4,912,272.19

$

-69,356.12 $

-312,914.83 $

83,286.91

69,356.12

76,165.62

6,060.00

$

0.00 $

-236,749.21 $

89,346.91

0.00

1,029,209.72

938,905.41

16,051.57 6,138.85

-1,199.25 2,156.65

$

0.00 $

814,650.93 $ 1,029,209.72

- 19 -

BURKE COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30. 2002

EXHIBIT "G"

FAMILY CONNECTION ASSETS
Cash and Cash Equivalents Accounts Receivable
LIABILITIES Funds Held for Others

BALANCE JULY1,2001

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 2002

$ -13,343.83 $ 52,640.83 $ 13,343.83

39,297.00 $ 13,343.83

$

0.00 $ 52,640.83 $ 52,640.83 $

0.00 0.00
0.00

$===o=.o=o= $ 52,640.83 $ 52,640.83 $====0=.0=0=

See notes to the general-purpose financial statements.

- 20-

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2002

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

N/A

$ 315,272.02

(2)

N/A

1,201,459.13 $

2,058,513.30 (3)

Total Child Nutrition Cluster

$ 1,516,731.15 $

2,058,513.30

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutrition Program Food Distribution Program (1)

10.550

N/A

148,853.43

148,853.43

Total U. S. Department of Agriculture

$ 1,665,584.58 $

2,207,366.73

Education, U. S. Department 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

84.027 84.027 84.173

N/A

$

1,763.04 $

N/A

344,066.92

N/A

31,306.22

1,763.04 344,066.92
31,306.22

Total Special Education Cluster

$ 377,136.18 $

377,136.18

Other Programs Direct Twenty-First Century Community Learning Centers Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Project Elementary and Secondary Education Act Title I Even Start Grants to Local Educational Agencies Title II Eisenhower Professional Development Title Ill Technology Literacy Challenge Fund Grants Title VI Innovative Education Program Strategies Class Size Reduction Safe and Drug-Free Schools and Communities Vocational Education - Basic Grants to States High School Program Basic Grant

84.287 84.332
84.213 84.010 84.281 84.318 84.298 84.340 84.186
84.048

460,789.17

505,277.23 (3)

N/A

40,311.26

40,311.26

N/A

329,456.39

329,456.39

N/A

1,482,242.00

1,482,242.00

N/A

30,703.88

30,713.14 (3)

N/A

125,000.00

125,000.00

N/A

47,555.42

47,555.42

N/A

209,290.00

234,148.80 (3)

N/A

72,554.00

72,554.00

N/A

107,254.74

107,254.74

Total U. S. Department of Education

$ 3,282,293.04 $

3,351,649.16

Labor, U. S. Department of Pass-Through From Richmond/Burke Job Training Authority Job Training Partnership Act

17.250

N/A

$ 31,798.04 $

31,798.04

- 21 -

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
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

$ 40,422.19 $ _ _ _4.;._0,c.:.4.;;;22;:.;.:.19:;_

Total Federal Financial Assistance

$ 5,020,097.85 $==5,=6=31=,2=3=6=.1=2

NIA = Not Available

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 2002 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 (*) 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.

- 22 -

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2002

SCHEDULE "2"

AGENCY/FUNDING
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 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 Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program Twenty Additional Days Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Mid-term Hold-Harmless Food Services Vocational Education Other State Programs Alternative Program Health Insurance Mentor Teachers PayforPertormance Post Secondary Options Preschool Handicapped Program Statewide After School Program (4-8) Statewide Reading Program (K-3) Lottery Program Computers in the Classroom
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Georgia Institute of Technology Student Information System

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

615,356.00

132,185.00

1,334,449.00

782,772.00

840,599.00

316,908.00

1,752,486.00

1,397,989.00

386,680.00

7,507.00 268,224.00 482,288.00
9,381.00 82,561.00 28,834.00 128,840.00 273,516.00 86,352.00 50,390.00 1,642,494.00

$

615,356.00

132,185.00

1,334,449.00

782,772.00

840,599.00

316,908.00

1,752,486.00

1,397,989.00

386,680.00

7,507.00 268,224.00 482,288.00
9,381.00 82,561.00 28,834.00 128,840.00 273,516.00 86,352.00 50,390.00 1,642,494.00

924,055.00 265,917.00 102,885.00
18,379.00 24,147.00 263,877.00
$ 28,576.47

165,266.00

20,000.00 407,876.94
11,169.00 132,000.00
1,287.00 68,197.87 50,477.24 53,070.96

117,426.05

924,055.00 265,917.00 102,885.00
18,379.00 24,147.00 263,877.00 165,266.00 28,576.47
20,000.00 407,876.94
11,169.00 132,000.00
1,287.00 68,197.87 50,477.24 53,070.96
117,426.05

459,758.49

459,758.49

59,421.00

59,421.00

57,151.80

57,151.80

See notes to the general-purpose financial statements.

- 23 -

$ 13,051,147.48 $ 799,602.34 $ 13,850,749.82

BURKE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002

SCHEDULE "3"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE 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 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 II

Category Ill

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

1,059,471.00 $ 227,586.00
2,297,551.00 1,347,716.00 1,447,277.00

1,108,737.12 $ 275,174.94
2,434,234.82 1,286,184.14 1,583,556.54

545,628.00 3,017,294.00 2,406,948.00
665,756.00 1,321,250.00
142,148.00 49,644.00
221,827.00

430,578.50 3,103,395.57 2,705,650.66
623,983.27
498,547.31 728,273.88
9,873.72 119,973.43
99,698.42 456,515.95

1,650.95 $ 942.03
28,016.76 31,635.67
2,997.43

1,110,388.07 276,116.97
2,462,251.58 1,317,819.81 1,586,553.97

3,516.67 20,673.05 11,067.59 42,599.98

434,095.17 3,124,068.62 2,716,718.25
666,583.25

7,790.71 19,055.26
353.74 638.02 863.10 6,583.79

506,338.02 747,329.14
10,227.46 120,611.45 100,561.52 463,099.74

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

14,750,096.00 $ 15,464,378.27 $ 178,384.75 $ 15,642,763.02

Media Center Program Staff and Professional Development

470,917.00 86,755.00

490,117.86 31,625.47

90,947.76 65,878.25

581,065.62 97,503.72

TOTAL QBE FORMULA FUNDS

$

15,307,768.00 $ 15,986,121.60 $ 335,210.76 $ 16,321,332.36

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

See notes to the general-purpose financial statements.

- 24 -

BURKE COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2002

SCHEDULE "4"

SITE Burke County Middle School S G A Elementary School Burke County High School Waynesboro Primary School Blakeney Elementary School Burke County Alternative 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 QBE PROGRAM COSTS

$

3,378,023.00 $

3,473,845.85

1,336,040.00

1,409,751.21

3,490,617.00

3,823,062.51

3,310,682.00

3,558,393.41

3,012,907.00

2,942,188.94

430,823.58

221,827.00

4,697.52

$

14,750,096.00 $ 15,642,763.02

See notes to the general-purpose financial statements. - 25 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
July 24, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Burke County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Burke County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated July 24, 2003. 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 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 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 control over financial reporting. However, we noted a certain matter involving the internal control
2002YB-40

over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Burke County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-6171-02-02.
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, we consider the reportable condition described above to be a material weakness.
This report is intended solely for the information and use ofthe management, members ofthe Burke County Board of Education, 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,

RWH:as 2002YB-40

State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S. W. Suite 214 Atlanta, Georgia 30334-8400
July 24, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Burke County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Burke County Board of Education with the types of compliance 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, 2002. Burke County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of 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 of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the 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 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.
2002SA-65

As described in items FA-6171-02-01 and FA-6171-02-02 in the accompanying Schedule of Findings and Questioned Costs, Burke County Board ofEducation did not comply with requirements regarding Allowable Costs/Cost Principles and Matching, Level of Effort and Earmarking types of compliance requirements that are applicable to its Elementary and Secondary Education Act - Title I - Grants to Local Education Agencies (CFDA 84.010), Elementary and Secondary Education Act Title I - Even Start (CFDA 84.213) and Twenty-First Century Community Leaming Centers (CFDA 84.287) major Federal programs. Compliance with such requirements is necessary, in our opinion, for Burke County Board of Education to comply with requirements applicable to those programs.
In our opinion, except for the noncompliance described in the preceding paragraph, the Burke County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002.
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 0MB Circular A-133.
We noted certain matters involving the internal control over compliance 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 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. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6171-02-01 and FA-6171-02-02.
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 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 reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all of the reportable conditions noted above are also considered to be material weaknesses.
2002SA-65

This report is intended solely for the information and use ofthe management, members ofthe Burke County Board of Education, 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,
RWH:as 2002SA-65

SECTION III 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, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-61 71-00-02 FS-61 71-00-04 FS-6171-01-01 FS-6171-01-02

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

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Inadequate Internal Control Procedures Finding Control Number: FS-6171-01-02

Burke County Board of Education has purchased a software package that will enable it to properly maintain a General Fixed Asset Account Group. This is in the process of being implemented.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6171-01-01

Previously Reported Corrective Action Implemented

SECTION IV FINDINGS AND QUESTIONED COSTS

BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
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 a financial statement reportable condition related to the following control category. General Fixed Assets
The reportable condition described above is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements
The audit ofthe Burke County Board of Education disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Burke County Board of Education disclosed reportable conditions in internal control over major programs for the following compliance requirements.
Allowable Costs/Cost Principles Matching, Level of Effort and
Earmarking
All of the reportable conditions described above are considered to be material weaknesses. 5. Type of Report Issued on Compliance for Major Programs
The auditor's opinion on the Burke County Board of Education's report on compliance with requirements applicable to major programs was qualified.
6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Burke County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV of this report.
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BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
I SUMMARY OF AUDITOR'S RESULTS
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 84.213 Elementary and Secondary Education Act - Title I - Even Start 84.287 Twenty-First Century Community Learning Centers
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 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Nonmaterial Noncompliance Finding Control Number: FS-6171-02-01
The Burke County Board of Education failed to have its bank balances fully collateralized as provided for by the Official Code of Georgia Annotated Section 45-8-12 which states, in part, as follows:
"The collecting officer or officers holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given a bond to the public body as set forth in this Code section ... The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance."
This condition was a result of management's failure to monitor the collateralization ofbank balances. The School District should implement procedures to monitor the collateralization ofbank balances to ensure compliance at all times with State laws governing deposits and investments.
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BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Nonmaterial Noncompliance Finding Control Number: FS-6171-02-01
Management's Response:
The School District has implemented procedures to monitor the collateralization of bank balances. In addition, the School District does not release any pledged assets [used as collateralization] unless the proper collateralization is maintained.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6171-02-02
The Burke County Board of Education did not maintain 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 financial statements of the 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 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 costs, location and description. Detailed records should be maintained of all additions and deletion to the General Fixed Assets Account Group.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6171-02-01
A review of split-funded salaries charged to the Elementary and Secondary Education Act - Title IGrants to Local Educational Agencies Program (CFDA 84.010) and Twenty-First Century Community Learning Centers Program (84.287) disclosed that employee time and attendance records
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BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6171-02-01
were not being utilized as required by Chapter 41, of the Financial Management of Georgia Local Units of Administration (FMGLUA). Salary charges to Federal programs should be based on actual time worked by employees in that program. This condition occurred because the School District did not have adequate control procedures in place to ensure that split-funded salaries were charged to proper programs according to time and attendance records. The School District should implement procedures to ensure that all split-funded salaries are charged to the accounting records according to time and attendance records as required by Chapter 41, of the FMGLUA. For the Title I grant, the Georgia Department of Education and for the Twenty-First Century Community Leaming Centers Program, the U. S. Department of Education should review this matter to determine if a refund is appropriate.
Management's Response:
The School District has educated the applicable personnel in the importance of maintaining time records to ensure that split-funded salaries are charged to the proper program. The School District is also following up to ensure that this is done.
MATCHING, LEVEL OF EFFORT, AND/OR EARMARKING Failure to Transfer Local Matching Funds Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6171-02-02
The Burke County Board of Education received a grant award for the Elementary and Secondary Education Act -Title I - Even Start Program (CFDA 84.213). The special terms and conditions of the grant agreement signed by the School District to receive this funding requires the School District to match a portion of the budget. In year two of the program (fiscal year 2002) the School District was required to provide a 20% match of non-Federal funds which amounted to $65,891.00. The School District failed to expend non-Federal funds on this program. This condition occurred because the School District did not have adequate controls in place to ensure that the total expenditures ofthe program were funded with the required non-Federal funds. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
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BURKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS MATCHING, LEVEL OF EFFORT, AND/OR EARMARKING Failure to Transfer Local Matching Funds Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6171-02-02 Management's Response: The School District has reviewed the Matching Funds requirements for Even Start with the Local Director as well as with the Georgia DOE personnel. As a result the School District has adopted a plan and procedures to ensure that the total expenditures ofthe program are funded with the required non-Federal funds.
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