Calhoun County Board of Education, Morgan, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

CALHOUN COUNTY BOARD OF EDUCATION MORGAN; GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30; 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CALHOUN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

25

CALHOUN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

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

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

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Calhoun County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Calhoun County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Calhoun County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Calhoun County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Calhoun County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Calhoun County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated September 15, 2009, on our consideration of the Calhoun County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Calhoun County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
w~
Russ I W. Hinton, CPA, CGFM
State Auditor
RWH:as 2008ARL-11

CALHOUN COUNTY BOARD OF EDUCATION

CALHOUN COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Capital Assets Land Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

1,941,408.58

999,207.73

4,876.56 145,675.15 475,839.17 304,611.67
5,087.32 5,879.43

1,483,278.88 561,344.62
6,064,425.74 1,396,056.78 -5,481,390.88

$ ====7'=90==6=,3=0=0=7.=5

$

196,629.68

632,738.26

13,686.00

240,367.77 413 271.17

$

1,496,692.88

$

3,882,883.06

11,236.88 230,892.25 747,612.96 1,536,982.72

$

6,409,607.87

$ ===7'=90=6=,3=0=0=7.=5

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

CALHOUN COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

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

EXPENSES

CHARGES FOR SERVICES

$

4,757,388.83 $

282,206.73 216,068.75 216,956.17 446,620.32 700,984.70 105,705.74 536,165.10 450,080.70
14,492.22

78,986.12 427,341.73
27,589.49

$

8,260,586.60 $

30,782.14
5,000.00
69,791.85 20,431.38 126,005.37

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

3,665,513.15

177,304.30 133,819.44 98,368.68 476,678.14 402,528.11
5,587.14 219,241.04 167,950.48 $
4,943.33

429,455.60

$

5 781 389.41 $

$ 29,769.00 29 769.00 $

-1,061,093.54
-104,902.43 -82,249.31 -118,587.49 30,057.82 -293,456.59 -100,118.60 -316,924.06 -252,361.22 -9,548.89
-9, 194.27 22,545.25 -27 589.49
-2,323.422.82

$

1,949,074.31

20,073.01

214,374.50 232,038.43
18,161.59 2,978.08 401,560.00 70,512.73 56 913.55

$

2,965,686.20

$

642,263.38

5 767 344.49

$===6"=.4=09=,6=0=7=.8=7

-3-

CALHOUN COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,882,315.08 $
3,280.82 52,243.29 475,839.17 304,611.67
5,087.32 5 879.43

74,510.74 950,097.62 $
1,595.74 69,011.06

$ 49,110.11

1,956,825.82 999,207.73
4,876.56 121,254.35 475,839.17 304,611.67
5,087.32 5 879.43

Total Assets

$ 2,729,256.78 $ 1,095,215.16 $

49 110.11 $ ===-3,=87=3=,5=8=2.=05=

LIABILITIES AND FUND BALANCES

LIABILITIES

Cash Overdraft

$

Accounts Payable

$ 196,629.68

Salaries and Benefits Payable

632,738.26

Deferred Revenue

13,686.00

Total Liabilities

$ 843,053.94

$

FUND BALANCES

Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund

$

5,357.45

$

5,879.43

46,000.29 1,828,965.67

197,199.38 $ 898,015.78

Total Fund Balances

$ 1,886,202.84 $ 1,095,215.16 $

15,417.24 $ 15 417.24 $
$ 33,692.87
33,692.87 $

15,417.24 196,629.68 632,738.26 13 686.00
858471.18
5,357.45 230,892.25
5,879.43 898,015.78
46,000.29
1,828,965.67
3,015,110.87

Total Liabilities and Fund Balances

$ 2,729,256.78 $ 1,095,215.16 $

49110.11 $===3=,8=73=,5=8=2=.0=5

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

CALHOUN COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT"D"

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

$ 3,015,110.87

$ 1,483,278.88 561,344.62
6,064,425.74 1,396,056.78 -5,481,390.88

4,023,715.14

24,420.80

$ -455,000.00 -198,638.94

-653,638.94

$ 6,409,607.87

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

CALHOUN COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

EXHIBIT"E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,940,024.91 21,139.67 $
4,694,155.24 1,518,563.17
126,005.37 42,280.42 56,913.55

$ 232,038.43 $ 214,374.50
28,232.31

1,940,024.91 467,552.60
4,694,155.24 1,518,563.17
126,005.37 70,512.73 56,913.55

$ 8,399,082.33 $ 260,270.74 $ 214,374.50 $ 8,873,727.57

$ 4,612,640.48

$ 4,612,640.48

282,206.73 216,068.75 209,594.74 446,620.32 700,984.70 105,705.74 534,412.59 387,217.99 $
14,492.22 78,986.12 407,756.81

13,975.00 118,873.18

282,206.73 216,068.75 209,594.74 446,620.32 700,984.70 105,705.74 534,412.59 401,192.99
14,492.22 78,986.12 407,756.81 118,873.18

46,382.63 13,214.99

$ 200,000.00 14,374.50

246,382.63 27,589.49

$ 8,056,284.81 $ 132,848.18 $ 214,374.50 $ 8,403,507.49

$ 342,797.52 $ 127,422.56 $

0.00 $ 470,220.08

1,543,405.32

967,792.60

33,692.87

2,544,890.79

$ 1,886,202.84 $ 1,095,215.16 $ 33,692.87 $ 3,015,110.87

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

CALHOUN COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lifes as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Change in Net Assets of Governmental Activities (Exhibit "B")

$ 470,220.08

$ 110,541.34 -214,003.08

-103,461.74

29,122.41

$ 200,000.00 46,382.63

246,382.63

$ 642,263.38

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

CALHOUN COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS
JUNE 30, 2008
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Other
Total Assets
LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities

EXHIBIT"G"

AGENCY FUNDS
$ 4,582.29 14,375.85
$ 18,958.14

$

248.26

18,709.88

$ 18,958.14

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

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Calhoun County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Calhoun County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, exceptfor fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
-9-

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
- 10 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building 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
- 11 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

RECEIVABLES

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

PROPERTY TAXES

The Calhoun County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on August 16, 2007 (levy date). Taxes were due on December 20, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Calhoun County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $1,919,951.90.

The tax millage rate levied for the 2007 tax year (calendar year) for the Calhoun County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

13.88 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $446,412.93 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported

- 12 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 10,000.00 15 to 30 years

$ 10,000.00 15 to 40 years

$ 10,000.00 10 to 30 years

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

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service

- 13 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as issuance costs, should be deferred and amortized over the life of the bonds using the straight-line method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

- 14 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

(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 ofthe 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 or securities guaranteed 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, 2008, the bank balances were $2,499,691.27. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

2,304,358.82

3

0.00

Total

$ 2,304,358.82

- 15 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2008, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Equity Mutual Funds

$ 999,207.73

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances July 1. 2007

Increases

Decreases

Balances June 30, 2008

$ 1,483,278.88 $ 98,359.00
$ 1.581.637.88 $

0.00 $
0.00 $

$ 1,483,278.88

98,359.00

0.00

98,359.00 $ 1,483,278.88

$ 5,869,500.40 $ 1,382,081.78 561,344.62

194,925.34 $ 13,975.00

0.00 $ 6,064,425.74 1,396,056.78 561,344.62

3,794,751.93 974,912.33 497,723.54

137,471.79 71,500.62
5,030.67

$ 2,545,539.00 $ -5,102.74 $

$ 4 121,116.88 $ -5 IQ214 $

3,932,223.72 1,046,412.95
502,754.21
0.00 $ 2,540,436.26
28 352.QQ $ 4 023115.14

- 16 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Capital assets being acquired under capital leases as of June 30, 2008, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 118,800.00 53,460.00

$ 65,340.00

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services Maintenance and Operation of Plant Student Transportation Services Food Services

$ 131,084.60

$

6,666.54

1,587.08

56,928.69

65,182.31 17,736.17

$ 214,003.08

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

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

$ 74,510.74

$ 197,199.38

$

$ 602,495.42 $ 150,402.82

49,110.11

- 17 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 7: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any ofthe 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. A premium is charged when needed by the General Fund to each user program on the basis ofthe percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. The School District has not experienced any unemployment compensation claims during the last two fiscal years.

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent Each Principal

$ 50,000.00 $ 10,000.00

Note 8: LONG-TERM DEBT

CAPITAL LEASES The Calhoun County Board ofEducation has entered into various lease agreements for school buses, copiers and an energy management system. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value ofthe future minimum lease payments as of the date of their inception.

- 18 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 8: LONG-TERM DEBT

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

Purpose

Interest Rate

Amount

General Government - Series 2004

2.59%

$ 455,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

Balance
July I. 2007

Governmental Funds

Additions

Deductions

Balance June 30, 2008

Due Within One Year

G.O.Bonds Capital Leases

$ 655,000.00 $ 245,021.57
$ 2QQ Q21 5.Z $

0.00 $ 200,000.00 $ 455,000.00 $ 225,000.00

46,382.63

198,638.94

15,367.77

Q,QQ $ 246,382.63 $ 65.3,638.24 $ 24Q 367.ZZ

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

Principal

Interest

2009 2010 2011 2012 2013 2014 - 2018 2019 - 2020

$ 15,367.77 $ 11,215.51

12,603.56

9,978.44

13,289.77

9,292.23

14,013.35

8,568.65

14,776.33

7,805.67

86,862.02

26,047.98

41,726.14

3,437.86

Total Principal and Interest

$ 198,638.94 $ 76,346.34

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2009 2010

$ 225,000.00 $ 230,000.00

8,871.00 2,979.00

Total Principal and Interest

$ 455,000.00 $ 11,850.00

- 19 -

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $190,311.41 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 ofNon-Certified Personnel In the amount of $186,682.30
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $2,568.11
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 $1,061.00
Note 10: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
Note 11: POSTEMPLOYMENT BENEFITS
Georgia Retiree Health Benefit Fund
Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.
Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.
-20-

CALHOUN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 11: POSTEMPLOYMENT BENEFITS

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $626,913.99, which equaled the required contribution.

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System 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% oftheir 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 338,046.53 $ 31 7,31 7.44 $ 306,142.00

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(This page left intentionally blank)

CALHOUN COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Enterprise Operations Community Services Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under} Expenditures
OTHER FINANCING SOURCES {USES}
Other Sources Other Uses
Total Other Financing Sources (Uses}
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

1,993,128.00 $

1,993,128.00 $

1,940,024.91

11,000.00

21,139.67

4,214,287.00

4,621,746.87

4,694, 155.24

1,002,374.00

1,095,966.00

1,518,563.17

18,000.00

126,005.37

25,000.00

26,000.00

42,280.42

39,920.00

39,920.00

56,913.55

$

7,274,709.00 $

7,805,760.87 $

8,399,082.33

$

4,351,337.00 $

4,700,255.51 $

4,612,640.48

292,437.00 185,771.00 184,775.00 466,483.00 624,427.00 108,636.00 512,184.74 466,701.00 45,713.00
10,031.00 454,452.00

363,029.00 293,044.00 203,428.00 492,593.00 733,215.00 108,636.00 556,685.00 494,559.74
46,713.00
7,031.00 455,251.25

282,206.73 216,068.75 209,594.74 446,620.32 700,984.70 105,705.74 534,412.59 387,217.99
14,492.22 78,986.12
407,756.81 59,597.62

$

7702 947.74 $

8,454,440.50 $

8,056,284.81

$

-428,238.74 $

-648,679.63 $

342,797.52

$

25,000.00

-25,000.00

$

0.00

$

-428,238.74 $

-648,679.63 $

342,797.52

1,543,358.72

1,543,358.72

1,543,405.32

816.31

-4,233.02

Fund Balances - Ending

$ 1,115,936.29 $

890,446.07 $

1,886,202.84

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

-23-

CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Enhancing Education Through Technology Program Improving Teacher Quality State Grants Migrant Education Reading First State Grants Rural Education State Grants for Innovative Programs Title I Grants to Local Educational Agencies
Total U. S. Department of Education
Labor, U.S. Department of Pass-Through From Georgia Department of Labor Workforce Investrnent Act Youth Activities

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

NIA N/A $
$

(2) 337,816.03
337,816.03

10.550

N/A
$

19,059.57 356,875.60

84.027 84.173

N/A $ N/A
$

169,462.30 7,839.55
177,301.85

84.048 84.318 84.367 84.011 84.357 84.358 84.298 * 84.010

N/A

12,035.44

N/A

88,957.16

N/A

90,359.24

N/A

5,172.18

N/A

247,622.47

N/A

25,266.74

N/A

1,683.74

N/A

467,658.74

$ 1,116,057.56

17.259

N/A $

29,032.58

Total Federal Financial Assistance

$

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($108,221.28) were not maintained separately and are included in the 2008 National School Lunch Program.

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

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

The 11ccompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Calhoun County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

1,501,965.74

See notes to the basic financial statements.

-24-

CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Sparsity - Alternative Nursing Services Mid-term Adjustment Hold-Harmless Migrant Education Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches Health Insurance Middle School Summer Program National Defense Cadet Corps Preschool Handicapped Program Teachers' Retirement
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Human Resources, Georgia Department of Family Connection Peer Mentoring Grant

See notes to the basic financial statements.

-25-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

91,878.00

159,400.00 151,447.00 352,689.00 207,780.00 275,238.00
26,575.00 364,913.00 338,322.00 136,378.00
23,483.00 156,034.00 184,036.00
36,649.00 -405.00 -719.00
22,596.00 33,734.00 70,842.00 22,455.00 13,422.00
273,930.00 207,040.00 175,367.00
154,551.00 29,769.00
252,358.00 12,000.00 30,972.00
131,831.00 14,689.00
401,560.00 23,112.00 14,824.87 -65,527.00
42,096.00 186,682.30
421.00 54,930.98 23,362.00
2,568.11
1,061.00

31,865.62 27944.36

$

4,694, 155.24

CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

The funding of the payment of principal and

interest on the Calhoun County School District

General Obligation Bonds, Series 1999, coming

due on October 1, 2004, in an amount up to

$100,000.00; rehabilitating, adding to, repairing,

renovating, extending and improving Calhoun

County Elementary School and Calhoun County

Middle/High School, and related facilities useful or

desirable in connection therewith, including

without limitation, roof replacements and repairs,

mechanical system repairs and replacements,

wiring and infrastructure modifications,

renovations and improvements to physical

education and athletic facilities, additional parking

and paving, and security systems; acquiring any

necessary property therefor, both real and

personal, and acquiring any necessary or

desirable rights in connection therewith;

renovations and repairs to the School District's

bus shop; the acquisition and installation of

technology additions and improvements; the

acquisition of school buses; and purchasing

school furnishings, equipment and fixtures; and

paying costs incident to accomplishing the

foregoing.

$ 2,000,000.00 $

2,000,000.00 $

147,222.68 $ 947,838.95 Ongoing

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

See notes to the basic financial statements.

- 26-

CALHOUN COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION

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

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 Grades (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

184,423.00 $ 171,888.00 412,846.00 246,704.00 309,000.00

114,358.93 $ 183,875.34 443,703.42 286,880.05 242,579.35

36,010.00 418,622.00 380,900.00 165,174.00 457,406.00
25,141.00 38 519.00

115,033.77 397,355.98 402,225.41 278,101.17
11,206.61 217,609.70 131,454.24
77,183.53 36,548.40
2,093.17 44,528.28 24,240.07

9,229.45 $ 3,131.60 81,422.99 7,233.42 41,118.50
168.20 31,697.26 65,598.03 35,597.33

123,588.38 187,006.94 525,126.41 294,113.47 283,697.85
115,201.97 429,053.24 467,823.44 313,698.50
11,206.61 217,609.70 131,454.24
77,183.53 36,548.40
2,093.17 44,528.28 24,240.07

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

2,846,633.00 $ 3,008,977.42 $ 275,196.78 $ 3,284,174.20

Media Center Program Staff and Professional Development

81,599.00 15441.00

150,540.26 484.44

34,942.38 13,736.24

185,482.64 14,220.68

TOTAL QBE FORMULA FUNDS

$

2,943,673.00 $ 3,160,002.12 $ 323,875.40 $ 3,483,877.52

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the Stale amended formula adjustment.

See notes to the basic financial statements.

-27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Calhoun County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofCalhoun County Board ofEducation as ofand for the year ended June 30, 2008, which collectively comprise Calhoun County Board of Education's basic financial statements and have issued our report thereon dated September 15, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Calhoun County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Calhoun County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Calhoun County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2008YB-40

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Calhoun County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Calhoun County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Calhoun County Board ofEducation's internal control. We consider items FS-6191-08-0 I, FS-6191-08-02, FS-6191-08-03 and FS-6191-08-04 in the accompanying Schedule ofFindings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Calhoun County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider item FS-6191-08-01 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Calhoun County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Calhoun County Board of Education in a separate letter dated September 15, 2009.
Calhoun County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Calhoun County Board of Education's response and, accordingly, we express no opinion on it.
2008YB-40

This report is intended solely for the information and use ofmanagement, members ofthe Calhoun County Board of Education, others within the entity, 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,
~~-~~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Calhoun 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 Calhoun County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-13 3 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Calhoun County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Calhoun County Board of Education's management. Our responsibility is to express an opinion on Calhoun 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 financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Calhoun County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the

2008SA-30

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Calhoun County Board of Education's compliance with those requirements.

In our opinion, the Calhoun County Board ofEducation 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, 2008.

Internal Control Over Compliance

The management of Calhoun 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 Calhoun County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Calhoun County Board of Education's internal control over compliance.

Our consideration ofthe internal control over compliance was for the limited purpose described in

the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal

control that might be significant deficiencies or material weaknesses as defined below. However, as

discussed below, we identified certain deficiencies in internal control over compliance that we

consider to be significant deficiencies.



A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiency in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as item FA-6191-08-01 to be a significant deficiency.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. We do not consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness.

Calhoun County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Calhoun County Board of Education's response and, accordingly, we express no opinion on it.

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This report is intended solely for the information and use of management, members ofthe Calhoun County Board of Education, others within the entity, 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 2008SA-30

~,.__,~l,U~~
Russell W. Hinton, CPA, CGFM State Auditor

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

CALHOUN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6191-04-03 Further Action Not Warranted

(1)

FS-6191-06-01 Further Action Not Warranted

FS-6191-06-02 Further Action Not Warranted

FS-6191-07-01 Unresolved - See Corrective Action/Responses

FS-6191-07-02 Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Finding Control Number: FS-6191-07-01

The Board has taken action to improve inadequate accounting procedures; however, the Board has not been able to fully implement an adequate system to prevent unacceptable error rates.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Finding Control Number: FS-6191-07-02

The Board installed a new system-wide accounting system for school accounting beginning in January 2008. The system allows for auditing ofthe schools' accounts at any time. The system improved the reporting of school accounts for the last half of the year; however, serious problems still exist.

AUDITOR'S COMMENTS

(1) The final resolution ofthis finding rests with the Georgia Department of Community Health.

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CALHOUN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6191-07-01

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACTIVITIES ALLOWED/UNALLOWED Inadequate Accounting Procedures over Expenditures Finding Control Number: FA-6191-07-01

The Board has implemented controls to require greater documentation, but the efforts have not been successful in resolving issues.

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SECTION IV FINDINGS AND QUESTIONED COSTS

CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

I SUMMARY OF AUDITOR'S RESULTS

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

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Calhoun County Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Employee Compensation Revenues/Receivables/Receipts Accounting Controls (Overall)

Expenditures/Liabilities/Disbursements General Ledger Capital Assets

All ofthe significant deficiencies described above are considered to be material weaknesses.

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

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Calhoun County Board of Education disclosed a significant deficiency in internal control over major programs for the following compliance requirement.

Allowable Costs/Cost Principles

The significant deficiency described above is not considered to be a material weakness.

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

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Calhoun County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) of 0MB 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 Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.010 Title I Grants to Local Educational Agencies

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

I SUMMARY OF AUDITOR'S RESULTS

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

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6191-08-01

Condition:

This is a repeat finding (FS-6191-07-01, FS-6191-06-01, FS-6191-05-01, FS6191-04-01 and FS-6191-03-01) from the years ended June 30, 2007, June 30, 2006, June 30, 2005, June 30, 2004, and June 30, 2003, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents Several of the School District's bank reconciliations did not include evidence of approval by someone other than the person performing the bank reconciliation function.

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6191-08-01
The School District's School Food Service outstanding check list did not agree to the amount listed on the School Food Service bank reconciliation.
Revenues/Receivables/Receipts The School District did not have procedures in place to ensure that all revenues were accurately posted to the accounting records. Errors were made by the School District in recording property tax revenues and receivables. An adjustment was made by the School District's consultant to correct these errors on the financial statements; however, the general ledger and subsidiary ledgers were not corrected.
Expenditures/Liabilities/Disbursements The School District did not have procedures in place to ensure all expenditures were adequately documented, supported by original invoices and received before disbursement of funds or paid in accordance with State Law. Our tests of operating expenditures revealed instances where funds were disbursed without proper documentation to support the expenditure or evidence of receipt of goods.
Employee Compensation The School District did not have adequate procedures in place to ensure that employee compensation expenditures were approved before disbursement of funds. Our tests of employee compensation records revealed that several employees were either overpaid or underpaid due to errors in salary and leave calculations, including problems with hours worked on the timesheets. The School District also failed to properly calculate leave balances for some employees. In addition, the School District could not provide supporting documentation for extra pay provided to a few employees included in the compensation test.
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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6191-08-01
The School District did not have procedures in place to ensure that salaries and benefits payables recorded on the financial statements were supported with adequate documentation. The salaries and benefits payable amount recorded on the financial statements was significantly less than the detailed listing that was provided as supporting documentation. In addition, the salaries and benefits payable amount recorded on the financial statements was less than the accounts payable listing.
General Ledger The School District did not have adequate procedures in place to ensure that journal entries were properly maintained and documented before posting to the general ledger. Our tests of journal entries posted to the general ledger revealed several that were not documented.
Capital Assets The School District did not have adequate procedures in place to ensure that the Capital Assets listing agreed to the financial statements. Numerous errors were made by the School District in recording capital assets additions and their respective depreciation amounts on the capital assets listing.
Accounting Controls (Overall) Access controls in the Financial System do not prevent users from accessing accounting functions that are outside of their area of responsibility.
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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUESIRECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6191-08-01

Cause:

These deficiencies were a result of management's failure to ensure that: (1) bank statements are properly reconciled; (2) revenues are properly recorded; (3) expenditures are properly documented, and received before disbursement of funds; (4) amounts paid to system employees are adequately documented and properly approved; (5) approved sick leave records are properly calculated; (6) journal entries are adequately documented before posting to the general ledger; (7) capital assets are properly recorded on the capital assets listing and (8) access to financial system information is limited.

Effect:

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

Recommendation: The School District should establish and implement appropriate controls over the significant processes and procedures noted above.

Additionally, management should ensure that the access controls in the accounting information system complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of that employee's duties. The School District should seek reimbursement for the salary overpayments for deposit to the School District's operating account and should make payments for the underpayments to the appropriate employees.

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-6191-08-02

Condition:

This is a repeat finding (FS-6191-07-02, FS-6191-06-02, FS-6191-05-02 and FS-6191-04-02) from the years ended June 30, 2007, June 30, 2006, June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over the school activity accounts.

Criteria:

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

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The School District's school activity bank accounts did not reconcile to the general ledger. The bank reconciliation function was not separated from the record keeping and voucher payment function.

The bank reconciliations did not include evidence ofapproval by someone other than the person performing the bank reconciliation.

Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash custody functions.

There were no receipts provided for one ofthe schools tested. In addition, our tests of additional receipts revealed that it was not possible to determine where the receipts were recorded on the general ledger. It was also not possible to determine if the deposits were made in a timely manner.

Expenditures/Liabilities/Disbursements The check writing function was not separated from record keeping or processing of signed checks.

No documentation was found for several expenditures tested. Additionally, errors were noted with all vouchers tested.

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-6191-08-02

Our tests revealed thirty-four signed blank checks were given to employees to make purchases.

Cause:

The School District has not assigned responsibilities to achieve appropriate separation of duties nor utilized management oversight of the incompatible activities to properly safeguard assets. These deficiencies were also a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level.

Effect:

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

Recommendation:

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

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures Significant Deficiency Nonmaterial Noncompliance Finding Control Number: FS-6191-08-03

Condition:

The School District did not have sufficient controls in place to ensure that all expenditures were for appropriate educational purposes in accordance with State laws.

Criteria:

The Official Code ofGeorgia Annotated Section 20-2-411 provides, in part, as follows, "... schools funds shall be used for educational purposes and may be used to pay the salaries of personnel and to pay for the utilization of school facilities, including school buses; for extracurricular and interscholastic activities, including literary events, music, and athletic programs within individual schools and between schools in the same or

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures Significant Deficiency Nonmaterial Noncompliance Finding Control Number: FS-6191-08-03

different school systems when such activities are sponsored by local boards ofeducation as an integral part ofthe total school program, and for no other purpose... ".

Questioned Cost: $4,956.65

Information:

During the review of General Fund expenditures, several voucher packages were noted with descriptions of various supplies, meals and dinners. After reviewing the invoices, it was determined that the expenditures were for meals at various restaurants; gifts for Board members; payments to School Food Service employees for preparing meals for a Retiree's Banquet; gift cards and extracurricular athletic team uniforms.

Cause:

Expenditures ofthis nature are considered to be beyond the customary scope of expenditures, for "educational purposes", as set forth in Georgia law.

Effect:

The School District is not in compliance with Georgia law.

Recommendation:

The School District should implement procedures to ensure compliance with Georgia laws. In addition, appropriate action should be taken to ensure reimbursement of the unallowable expenditures for deposit to the School District's General Fund.

EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Significant Deficiency Finding Control Number: FS-6191-08-04

Condition:

The School District failed to process all employee compensation through the payroll system.

Criteria:

All payments made to employees for services rendered should be processed through the payroll system. Federal income taxes are generally required to be withheld for all payments of compensation.

Questioned Cost: NIA

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Significant Deficiency Finding Control Number: FS-6191-08-04

Information:

A review ofexpenditures charged to the principal accounts at the high school revealed twenty-three payments totaling $1,650.00 that were not reported as employee compensation. Seven employees of the School District received total payments ranging from $50.00 to $240.00 for extra work that were not properly reported by the School District.

Cause:

The School District failed to process all employee compensation through the payroll system.

Effect:

Gross wages for these individuals were underreported for income tax purposes. Failure to follow tax regulations could result in the assessment of penalty charges against the employee for underpayment ofindividual income taxes and could result in a liability to the School District.

Recommendation:

The School District should implement procedures to ensure that all payments made to employees for services rendered are processed through the payroll system. The School District should adjust employee earnings records to properly reflect actual wages earned by the individuals affected.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Inadequate Accounting Procedures over Expenditures Significant Deficiency U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6191-08-01

Condition:

A review of expenditures charged to the Child Nutrition Cluster (CFDA 10.553 and 10.555) program revealed that costs were not adequately documented to ensure compliance with grant requirements.

Criteria:

Provisions of0MB Circular A-87 Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be ... authorized or not prohibited under state or local laws or regulations and supported by underlying documentation."

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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Inadequate Accounting Procedures over Expenditures Significant Deficiency U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6191-08-01

Questioned Cost: NIA

Information:

A review of expenditure vouchers for the Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed the following deficiencies:

1) Several vouchers had no evidence of receipt of goods. 2) One voucher had no documentation.

See Finding Control Number: FS-6191-08-01

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved and properly documented.

Effect:

Failure to ensure that expenditures are allowable and properly documented can result in noncompliance with the requirements of the Federal grant.

Recommendation: The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, and properly documented.

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SECTIONV MANAGEMENT'S RESPONSES

CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008
Finding Control Number: FS-6191-08-01 We concur with the finding. The Board will strengthen procedures to ensure proper coding, documentation, and approval of all expenditures, including employee compensation, before disbursing funds. The Board will strengthen procedures to ensure adequate documentation and approval of all entries to General Ledger. The size of central office staff requires that all staff perform multiple roles in accounting system. The Board will review staff access to accounting system to restrict personnel to read only status where full access is not required. Additional training of staff will be conducted to ensure compliance. The above will be put in place by October 30, 2009. Finding Control Number: FS-6191-08-02 We concur with this finding. Calhoun County Board ofEducation has taken action to transfer some personnel at school level to improve accounting procedures at schools. The Board issued procedural regulations to ensure there is a separation of key accounting functions and increased management review ofthese functions. Additional training will be offered to staffat schools. The regulations will be issued by October 30, 2009. Finding Control Number: FS-6191-08-03 We concur with the finding. Calhoun County Board ofEducation has implemented procedures as of September 14, 2009, to immediately stop the use of General Fund monies for unallowable expenditures. Finding Control Number: FS-6191-08-04 We concur with the finding. Calhoun County Board ofEducation has implemented procedures as of September 14, 2009, to immediately stop the direct payment of Board employees by schools.
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CALHOUN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FA-6191-08-01

We concur with this finding. Calhoun County Board of Education will implement procedures to ensure that all costs are allowable under 0MB Circular A-87. We will also implement procedures to ensure documentation and approval of all expenditures. These procedures will be put in place by October 30, 2009.

Contact Person: Telephone: Fax: Email:

Harvey Causey, Superintendent (229) 849-2765 (229) 849-2113 harveycausey@calhoun.k12.ga.us

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