Camden County Board of Education, Kingsland, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004

CAMDEN COUNTY BOARD OF EDUCATION
KINGSLAND, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CAMDEN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

11

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

12

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

CAMDEN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
26 28 30 31

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

CAMDEN 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
June 16, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Camden County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Camden County Board of Education, as of and for the year ended June 30, 2004, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Camden County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Camden County Board of Education, as ofJune 30, 2004, 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.
2004ARL-1 l

In accordance with Government Auditing Standards, we have also issued our report dated June 16, 2005, on our consideration of the Camden County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, are not a required part of the basic financial statements but are 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 Camden 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 ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,

RWH:gp 2004ARL-11

State Auditor

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Introduction
The discussion and analysis of Camden County Board ofEducation's financial performance provides an overall review ofthe School District's financial activities for the fiscal year ended June 30, 2004. The intent ofthis discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2004 are as follows:
The School District's financial status improved slightly during fiscal year 2004. In total, net assets increased $3.9 million, representing a 3.6 percent increase from fiscal year 2003. This total increase was due to governmental activities since the School District has no business-type activities.
On the District-wide financial statements, the assets of the School District exceeded liabilities by $114.7 million due in part to the absence of debt. Of this amount, $26.1 million is unrestricted and available for spending at the School District's discretion.
The School District has $71.7 million in expenses relating to governmental activities; only $47.3 million ofthese expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $28.3 million were adequate to provide for these programs.
As stated above, General revenues accounted for $28.3 million or 37 percent of all revenues totaling $75.6 million. Program specific revenues in the form ofcharges for services, grants and contributions accounted for the rest.
Among Major funds, the General Fund has $74.6 million in revenues, $69.4 million in expenditures. The General Fund's balance increased to $14.3 million from $12.9 million.
Overview of the Financial Statements
This annual report consists of three parts; management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements.
The District-wide financial statements include the "Statement of Net Assets" and "Statement of Activities". These statements provide information about activities ofthe School District presenting both short-term and long-term information about the School District's overall financial status.
1

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
The fund financial statements focus on individual parts ofthe School District, reporting the School District's operation in more detail. The "Governmental Funds" statements disclose how basic services are financed in the short-term as well as what remains for future spending. The "Fiduciary Funds" statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Camden County School District, the General Fund and District-wide Capital Projects Fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section ofrequired supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-wide Statements
Since Camden County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all the School District's operating funds into one column called governmental activities. In reviewing the Districtwide financial statements, a reader might ask the question, are we in a better financial position than last year? The "Statement of Net Assets" and the "Statement of Activities" provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position ofthe School District has improved or diminished. The causes ofthis change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The "Statement of Net Assets" and the "Statement of Activities" reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds: Most ofthe School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual
11

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004

method of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The difference between governmental activities (reported in the Statement ofNet Assets and the Statement ofActivities) and governmental funds is reconciled in the financial statements.

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

Financial Analysis of the School District as a Whole

Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1 provides a summary ofthe School District's net assets for fiscal year 2004 compared to fiscal year 2003.

Table 1 Net Assets (in Thousands)
Assets Current and Other Assets Capital Assets, Net
Total Assets
Liabilities Current and Other Liabilities Long-Term Liabilities
Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted
Total Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2004 Year 2003

$ 35,224 87,060
$ 122,284

$ 30,566 87,102
$ 117,668

$ 7,580 0
$ 7,580

$ 6,943 0
$ 6,943

$ 87,060 1,504
26,140
$ 114!704

$ 87,102 1,055
22,568
$ 110!725

Total net assets increased $3.9 million in fiscal year 2004.

111

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004

Table 2 shows the changes in net assets for fiscal year 2004 compared to the changes in net assets for fiscal year 2003.

Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2004

Year 2003

$ 2,226 44,645 393
$ 47,264

$ 2,108 43,240
$ 45,348

$ 18,338 14
334 314 167
7,404 255
1,480
$ 28,306
$ 75,570
$ 46,900
3,351 2,049 1,430
490 4,717
558 4,036 3,349
439 100
35 502 3,704
$ 71,660
$ 3 910

$ 17,880
3,117 252 77
6,960 322
1 343
$ 29,951
$ 75,299
$ 42,990
3,406 2,195 1,465
725 4,721
567 4,042 3,125
479 91
10 525 3,513 312
$ 68,166
$ 7,133

lV

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004

Governmental Activities

Instruction comprised 65 .45 percent ofgovernmental program expenses in fiscal year 2004. Camden County incurred no interest expense during fiscal year 2004.

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost ofservices comparing fiscal year 2004 with fiscal year 2003. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities
(in Thousands)

Total Cost of Services

Fiscal

Fiscal

Year 2004 Year 2003

Net Cost of Services

Fiscal

Fiscal

Year 2004 Year 2003

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

$ 46,900 $ 42,990 $

3,351 2,049 1,430
490 4,717
558 4,036 3,349
439 100

3,406 2,195 1,465
725 4,721
567 4,042 3,125
479 91

35 502 3,704

10 525 3,513 312

8,135 $ 13,460

2,907 1,123
603 330 4,625 557 3,959 2,054 407
69

-767 1,369
620 -286 2,990 567 1,503 1,733 480
63

-16

10

-438

525

82

238

312

Total Expenses

$ 71,660 $ 68,166 $ 24,397 $ 22,817

Although program revenues make up a majority ofthe revenues, the School District is still dependent upon tax revenues for governmental activities. Over 17.3 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 34.0 percent.

Financial Analysis of the School District's Funds

The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of$79.0 million and total expenditures and other financing uses of $75.5 million.

V

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2004, the School District amended its general fund budget as needed. For the General Fund, the final actual revenues and other financing sources of $74.6 million exceeded the original budgeted amount of $66.8 million by $7.8 million. This difference was primarily due to an increase in Federal revenues over original budget of $4.6 million, charges for services over original budget of $0.9 million and miscellaneous revenues over original budget of $0.9 million. Federal revenues far exceeded the original budget due to the system's eligibility as a Heavily Federally Impacted district through the U. S. Department ofEducation Impact Aid program. Final budgeted expenditures and other financing uses of $70.2 million exceeded the original budgeted amount of$68.9 million by $1.3 million. This difference was primarily due to increases in improvement of instruction of $0.5 million, general and school administration of$0.1 million each and pupil transportation of $0.2 million. Although the School District intended to use financial reserves to balance its fiscal year 2004 budget, General Fund revenues and other financing sources exceeded the expenditures and other financing uses by $1.4 million. This increase is the result ofactual revenues exceeding budgeted revenues and the School District's continued monitoring of the budgeted expenditures. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year end June 30, 2004 the School District had $87.0 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2004 balances compared with fiscal year 2003 balances.
Vl

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004

Table 4 Capital Assets at June 30 (Net of Depreciation, in Thousands)

Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements
Total

Governmental Activities

Fiscal

Fiscal

Year 2004 Year 2003

$ 10,250 901
71,076 3,829 1,004

$ 10,250
72,042 3,716 1,094

$ 87,060 $ 87,102

The School District has numerous construction projects including new buildings, additions and renovations.

Debt

At fiscal year end June 30, 2004, the School District had no obligation for debt.

Current Issues

Camden County is located in the southeast comer of Georgia, bordered on the south by Florida and to the east by the Atlantic Ocean. The two major municipalities, Kingsland and St. Mary's, are approximately 30 miles from Jacksonville, Florida. Camden County is the home ofKings Bay Naval Submarine Base, homeport to a fleet of Trident Nuclear Submarines. The school system, naval base and associated Federal contractors make up the core ofemployment opportunities in the county. The recent publication of the Department of Defense Base Realignment and Closure report revealed the potential addition of nearly 4,000 new Federally connected jobs on board Kings Bay. This recent development and the dramatic increase in coastal real estate investments by planned community developers will present many opportunities for school and community leaders in the coming years. Military families from every part of the nation, families employed in Florida seeking a quality education for children and retiring baby boomers from northern states will shape the growth of the community. As the ninth largest county in the state of Georgia, Camden County covers an area of approximately 659 square miles. The county has a population of43,664 residents who reside in one of three municipalities or in a vast unincorporated area.

Anticipated population growth may lead to the expansion ofthe school system beyond the current 9 elementary schools, 2 middle schools and single high school. The School District's goal for funding this growth will be to use reserves and to capitalize on Federal funds available for impacted school systems.

Vll

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Although residents approved a Special Purpose Local Option Sales Tax for Education and associated bond issue in 1997 to meet demands ofa rapidly growing population associated with the military, the Board of Education elected not to ask voters for a second SPLOST at its conclusion in 2003. The sales tax rate, then, in Camden County is 6% while the property tax assessment for education at 14.578 mills is 97% of the state average of 14.968 for school systems. Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and show the School District's accountability for the money received. Ifyou have questions about this report or need additional financial information, contact Dr. William C. Hardin, Assistant Superintendent for Finance and Operations at the Camden County Board of Education, P.0. Box 1330, Kingsland, Georgia, 31548. You may email your questions to Whardin@camden.kl2.ga.us.
vm

CAMDEN COUNTY BOARD OF EDUCATION

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,635,722

22,790,867

2,817,840 5,059,753
810,956 108,986

10,249,891 901,425
1,807,859 83,378,106 10,364,091 -19 641 508

$ ===12=2=!:,2=8=3'6=9=88=

$

687,965

6,791,272

46,750

50,096

4 247

$

7 580 330

$

87,059,864

1,058,497 445,281
26 140 016

$

114 703 658

$ ===12=2=1=,2=8=3"=,9=88=

The notes to the basic financial statements are an integral part of this statement. -3-

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2004

EXPENSES

CHARGES FOR SERVICES

GOVERNMENTAL ACTIVITIES

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services
Total Governmental Activities

$

46,899,787 $

3,351,077 2,049,130 1,430,549
490,374 4,716,723
557,498 4,035,858 3,348,926
438,509 100,427

35,426 502,206 3,703,912

71,660 402 $

494,243
51,509 488,330 1 192 417 2,226,499

General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax 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 (Restated)

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

38,166,338 $

444,428 926,428 819,727 156,920
79,012

73,189 1,055,143
31,356 31,675

451,557 2,408,823

$

44,644,596 $

104,046 $ 19
8,291 3,744 12,489 3,762 240,068
20 382 392,801 $

-8,135,160
-2,906,630 -1, 122,702
-602,531 -329,710 -4,625,222 -557,498 -3,958,907 -2,053,715 -407,153
-68,752
16,083 437,681 -82 290
-24,396,506

$

18,337,705

14,392

334,206 313,717 167,489 7,404,098 254,920 1479515

$

28,306,042

$

3,909,536

110 794 122

$ ===1=1=4=7,=03='=65=8=

-5-

CAMDEN COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2004

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Capital Projects
Unreserved Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

3,254,397 $

381,325 $

3,635,722

12,218,707

10,572,160

22,790,867

348,650 5,059,753
810,956 108 986

239,329

587,979 5,059,753
810,956 108,986

$ 21,801,449 $ 11192,814 $ 32,994,263

$

687,965

6,791,272

$

4 247

$

7,483,484 $

$ 46,750 50,096
96,846 $

687,965 6,791,272
46,750 50,096
4,247
7,580,330

$

949,511

$

949,511

108,986

108,986

$

445,281

445,281

13,259,468

10,650,687

13,259,468 10,650,687

$ 14,317 965 $ 11,095,968 $ 25,413,933

$ 21,801,449 $ 11,192,814 $ 32,994,263

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

CAMDEN COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2004

EXHIBIT "D"

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

$ 25,413,933

$ 10,249,891 901,425
1,807,859 83,378,106 10,364,091 -19,641,508

87,059,864

2,229,861

$ 114,703,658

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

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2004

EXHIBIT "E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 11,710,040 481,206 $
46,306,507 12,139,125
2,226,499 254,920
1 522,654
$ 74,640 951 $

$ 334,206
152,733

11,710,040 815,412
46,306,507 12,291,858 2,226,499
254,920 1,522,654

486 939 $ 75 127,890

$ 45,410,579

$ 45,410,579

3,357,303 2,049,130 1,310,096
465,515 4,535,282
557,498 4,037,655 3,121,264
438,509 100,427
35,426 502,206 3,436,504
$

2,234,915

3,357,303 2,049,130 1,310,096
465,515 4,535,282
557,498 4,037,655 3,121,264
438,509 100,427
35,426 502,206 3,436,504 2234,915

$ 69 357,394 $ 2,234,915 $ 71,592,309

$ 5,283,557 $ -1,747 976 $

3,535,581

$ 3,910,000 $ $ -3,910,000

3,910,000 -3,910,000

$ -3,910,000 $ 3 910,000 $

0

$ 1,373,557 $ 2,162,024 $

3,535,581

12 944,408

8,933,944

21,878,352

Fund Balances - Ending

$ 14317965 $ 11,095,968 $ 25,413,933

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

CAMDEN 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, 2004

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the gain on the sale of the equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the equipment sold.

$
$ 1,749,148 -1,817 241

3,535,581
-68,093 485,187 -43, 139

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

$ ===3,=90=9=,5=3=6

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

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2004
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS $ ==2=1=7,=30=2=
$ ==2=17='=30=2=

The notes to the basic financial statements are an integral part of this statement. - 11 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Camden 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 Camden County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods 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.

- 12 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities.
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 of accounting 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 and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. 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. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.

- 13 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

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.
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR
As a result of the adoption of GASB Statement No. 34, the School District was required to make certain changes in accounting principles, specifically (1) recording capital assets and (2) depreciation on certain capital assets. In the prior year, certain equipment items and the associated depreciation were recorded incorrectly. Net assets atJuly 1, 2003, were increased by $69,166 for the cumulative effect of these changes.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
- 14 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(5) Prime banker's acceptances,

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

(7) Repurchase agreements, and

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

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 Camden County Board of Commissioners fixed the property tax levy for the 2003 tax digest year (calendar year) on September 5, 2003 (levy date). Taxes were due on December 5, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Camden 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, 2004, for maintenance and operations amounted to $11,695,648.

The tax millage rate levied for the 2003 tax year (calendar year) for the Camden County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.578 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $334,206 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.

- 15 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

Any Amount

$

25,000

$

50,000

$

5,000

NIA 20 years 20 to 80 years 8 to 20 years

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

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 of insurance, or by collateral. The aggregate of the face

- 16 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS
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. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $6,866,141. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
- 17 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2004, as follows:

Risk Category

Bank Balance

1

$ 334,227

2

6,531,914

3

0

Total

$ 6,866,141

CATEGORIZATION OF INVESTMENTS At June 30, 2004, the carrying value of the School District's total investments was $22,712,321 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase

- 18 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2004, was 24 days. The average investment duration for Fund 6 on June 30, 2004, was 0.22 years.

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

Balances July 1, 2003

Increases

Decreases

Balances June 30, 2004

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

$ 10,249,891 0 $

901 425 $

$ 10,249,891

0

901 425

Total Capital Assets Not Being Depreciated $ 10,249,891 $ 901 425 $

0 $ 11,151,316

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 83,294,815 $ 9,719,241 1,807,859

83,291 764,432 $

$ 83,378, I06 119,582 10,364,091
1,807,859

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

11,253,184 5,933,734
713 792

1,048,918 677,930 90 393

76,443

12,302,102 6,535,221
804 185

Total Capital Assets, Being Depreciated, Net $ 76,921,205 $ -969 518 $

43 139 $ 75,908,548

Governmental Activity Capital Assets - Net $ 87,171.096 $

-68 093 $ __4_3_J_39 $ 87,059,864

Current year depreciation expense by function is as follows:

- 19 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 5: CAPITAL ASSETS

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

$ 895,516

$

162

71,360

32,221

107,491

32,381

502,680

746,295 175,430

$ 1,817,241

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and Lottery funds are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2004, were as follows:

District-wide Capital Projects

Bond

Lottery

SPLOST

Proceeds

Restricted Cash and Cash

Equivalents:

Capital Acquisitions

$

54,964 $ 150,148 $

840

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2004, consisted of the following:

Transfer to

Transfers From General Fund

District-wide Capital Projects

$ 3,910,000

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as supplemental funding source for capital construction projects.

- 20-

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 8: RISK MANAGEMENT

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

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

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

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

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

2003 2004

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

2 560 $

IO 189 $

8 500 $

4 249

$

4 249 $

13 406 $

15 467 $

2 188

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 $400,000 loss per occurrence, up to $2,000,000.

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

- 21 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 8: RISK MANAGEMENT

Position Covered
Superintendent High School Principal Each Middle School Principal Each Elementary School Principal Alternative School Principal Each Assistant Principal Vocational Supervisor Athletic Director All Employees

Amount

$

20,000

$ 100,000

$

50,000

$

20,000

$

10,000

$

10,000

$

10,000

$

10,000

$ 100,000

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $500,844 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $463,285

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $32,079

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 $5,480

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2004, together with funding available:

Project
03/02S-620-007; SAO 1S-620-017; 03G/02S-620-007

Unearned Executed Contracts

Funding Available From State

$ 17,472,808 $ 8,968,079

The amounts described in this note are not reflected in the basic financial statements.

- 22 -

CAMDEN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 11: SIGNIFICANT CONTINGENT LIABILITIES

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

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

Fiscal Year

Percentage Contributed

Required Contribution

2004 2003 2002

100% 100% 100%

$ 3,960,951 $ 3,748,714 $ 3,429,351

- 23 -

CAMDEN COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2004

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1}

FINAL (1}

ACTUAL AMOUNTS

$

11,274,315 $

11,274,316 $

11,710,040

481,206

45,771,380

46,049,383

46,306,507

7,534,635

8,035,678

12,139,125

1,277,300

1,277,300

2,226,499

278,762

278,762

254,920

619 378

616,373

1,522,654

$

66,755,770 $

67,531,812 $

74,640,951

$

44,349,513 $

44,581,602 $

45,410,579

3,410,452 1,751,587 1,301,977
480,253 4,426,771
717,418 4,666,871 2,976,265
425,479 102,051
523,616 3,395,442

3,465,338 2,205,321 1,362,289
636,905 4,532,814
701,848 4,636,983 3,198,203
445,883 106,014
531,206 3,406,375
12,960

3,357,303 2,049,130 1,310,096
465,515 4,535,282
557,498 4,037,655 3,121,264
438,509 100,427
35,426 502,206 3,436,504

$

68,527,695 $

69,823,741 $

69,357,394

$

-1,771,925 $

-2,291,929 $

5 283 557

$

3,865 $

3,865

-400 000

-400,000 $

-3,910,000

$

-396,135 $

-396 135 $

-3910000

$

-2,168,060 $

-2,688,064 $

1,373,557

13 087 537

13,087,537

12 944 408

$

10919477 $

10,399,473 $

14,317,965

Notes to the Schedule of Revenues, Ex11enditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2004

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 Program (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Enhancing Education Through Technology Program Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U. S. Department of Education
Justice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention
Defense, U.S. Department of Direct Department of the Navy R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 * 10.555

N/A

N/A

$

$

(2) 4 357 641
4.357.641

10.550

N/A
$

261 736 4 619 377

* 84.027 * 84.173

N/A

$

N/A

$

1,289,157 81 328
1,370,485

84.041
84.332 84.318 84.367 84.298 84.010 84.048

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

(3)
159,300 40,272 440,113 55,604 1,563,084 103,266
3,732,124

16.540

N/A

$

48100

$

56 707

Total Federal Financial Assistance N/A = Not Available

- 26 -

$ ===8=,4=5=6'=3=08=

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2004

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts 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 ($523,024) were not maintained separately and are included in the 2004 National School Lunch Program.
(3) Funds earned on the Impact Aid program, in the amount of $6,309,603, do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Camden County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 27 -

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 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 Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program K-3 Statewide Reading Program Apprenticeship Program Health Insurance Mentor Teachers National Teacher Certification Preschool Handicapped Program Special Education Low Incidence Grant Student Information System (Reporting) Teachers' Retirement
- 28 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

741,794

2,667,085 257,033
5,877,663 801,167
3,109,291 643,884
5,299,900 4,472,049 1,460,111
334,748 743,890 2,667,884 216,409
73,824 1,246,088
46,527 414,256
43,482 863,812 272,766 172,502
993,830 1,715,731 2,551,700
988,648 240,068 186,981
34,832 42,039 7,683,608 240,798
4,000 -1,913,295
56,682 119,042
33,250 463,285
1,345 53,997 120,890 11,041 43,358 32,079

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004
AGENCY/FUNDING
GRANTS Education, Georgia Department of Lottery Programs Assistive Technology Computers in the Classroom Technology Installation Office of Treasury and Fiscal Services Public School Employees Retirement

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

102

919

169,932

$ ===4=6"=3=06-50;;7=

See notes to the basic financial statements.

- 29 -

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2004

SCHEDULE "4"

PROJECT
The acquisition, construction and equipping of a new elementary school and a new alternative school and psychoeducational center; renovations of and additions to Camden County High School, Camden Middle School, St. Mary's Middle School, St. Mary's Elementary School, Sugarmill Elementary School and Woodbine Elementary School; the acquisition of new technology, equipment and furniture for all schools system-wide; the acquisition, construction and equipping of the science wing and the vocational wing at Camden County High School, which are currently being leased from the Georgia School Boards Association, Inc. and a new middle school; renovations of and additions to St. Mary's Middle School and Camden Middle School; classroom additions as needed for all schools system-wide

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 31,000,000 $ 34,250,277 $

1,401,542 $ 32,848,735 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 Camden 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.

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CAMDEN COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2004

SCHEDULE "5"

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

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

$

2,947,394 $ 3,396,940 $

137,969 $

3,534,909

290,204

517,607

2,335

519,942

6,549,883

5,902,521

577,818

6,480,339

859,440

988,082

7,145

995,227

3,467,744

4,015,800

230,239

4,246,039

686,529 5,939,440 4,838,058 1,720,273 4,422,337
1,290,056 57,670
459,805 45,727

690,764 998
6,350,223 5,626,254 1,416,150
299,444 847,226 2,139,021 286,177
27,556 944,796 318,192 376,390
78,490

2,125
352,387 423,039 151,019
6,201 10,751 50,518
1,197 311
25,685 880
33,049 1,260

692,889 998
6,702,610 6,049,293 1,567,169
305,645 857,977 2,189,539 287,374
27,867 970,481 319,072 409,439
79,750

$

33,574,560 $ 34,222,631 $

2,013,928 $

36,236,559

954,508 191 121

1,191,844 52,402

112,681 157,884

1,304,525 210,286

TOTAL QBE FORMULA FUNDS

$

34,720,189 $ 35,466,877 $

2,284,493 $ ==,,;3~7,.;,7~5;,,;,1g,3;;.7;;;.0

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

See notes to the basic financial statements.

- 31 -

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
June 16, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Camden County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Camden County Board ofEducation as of and for the year ended June 30, 2004, which collectively comprise Camden County Board of Education's basic financial statements and have issued our report thereon dated June 16, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Camden County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Camden County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6201-04-01, FS-6201-04-02, FS-6201-04-03 and FS-6201-04-04.
2004YB-30

A material weakness is a reportable condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Camden County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management and members of the Camden County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~ w. ~ ...d::::.
Russell W. Hinton State Auditor
RWH:gp 2004YB-30

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 16, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Camden 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 Camden County Board of Education with the types of compliance requirements described in the US. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2004. Camden 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 Camden County Board of Education's management. Our responsibility is to express an opinion on Camden County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Camden County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Camden County Board of Education's compliance with those requirements.
2004SA-10

In our opinion, the Camden County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2004.
Internal Control Over Compliance
The management of Camden 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 Camden County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Camden County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~-~ Russell W. Hinton State Auditor
RWH:gp 2004SA-10

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

CAMDEN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6201-03-01 FS-6201-03-02

Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6201-03-01

In fiscal year 2005, the School District has implemented procedures to increase the number of administrative staff at the various sites responsible for the accounting functions.

EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6201-03-02

In fiscal year 2005, the School District changed the method of calculating employer contributions to the Department of Community Health. Certified employees holding positions that do not require a certificate are treated as if they hold positions requiring certification. Remuneration has been made to the Department of Community Health.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6201-03-01

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-6201-03-01

The School District has implemented procedures in fiscal year 2005 to combine Title I funds with funds from other sources to support the school-wide programs.

- 1-

CAMDEN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-6201-03-01 Auditors' Note: The School District has implemented changes to resolve this finding in fiscal year 2005 and this finding will be shown as resolved in the fiscal year 2005 audit report.
-2-

SECTION IV FINDINGS AND QUESTIONED COSTS

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004

I SUMMARY OF AUDITOR'S RESULTS

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

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

Cash and Cash Equivalents Revenues/Receivables/Receipts Capital Assets

Expenditures/Liabilities/Disbursements Employee Compensation

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

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

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

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Camden 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 Camden County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.

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 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $442,977.

- 1-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Camden County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Repeated From Prior Year Finding Control Number: FS-6201-04-01
Our examination of the principals' accounts disclosed weaknesses in internal control as discussed below:
Cash and Cash Equivalents The bank reconciliation function is not separated from the cash receipting, record keeping and voucher payment functions.
Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash custody functions.
Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping or processing of signed checks.
Based on a review of forty items, one did not contain supporting documentation and twenty were not properly approved by appropriate personnel.
These deficiencies were a result of management's decision to limit the number ofadministrative staff made responsible, at the various principal account sites, for the accounting functions and their failure to ensure established controls were functioning as designed. Management should implement additional procedures to ensure that the key accounting functions of custody, record keeping and authorization are segregated.
-2-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Failure to Reconcile Bank Statement Reportable Condition Finding Control Number: FS-6201-04-02
Our examination ofthe principals' accounts revealed one account which was not properly reconciled to the ending book balance and the listing of outstanding checks provided did not agree with the amount shown on the bank reconciliation. This deficiency was a result of management's failure to ensure that internal control procedures for cash were in place and working effectively. Management should reassess internal control procedures for cash to ensure that all bank accounts are properly reconciled on a timely basis and that all reconciling items are properly documented.
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6201-04-03
During the fiscal year ended June 30, 2004, the School District may have under paid employer cost associated with health insurance plans administered by the Georgia Department of Community Health (DCH). The School District has employees with health insurance under the Health Insurance Plan for Public School Teachers (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 1) and Health Insurance Plan for Public School Employees (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 2). While the employee costs and benefits are identical under either plan the employer costs varies by plan.
Employer costs for the Health Insurance Plan for Public School Teachers is determined by multiplying the State based component of teacher's salary by 13 .1 percent. Employer cost for the Health Insurance Plan for Public School Employees is a flat rate of$162.72 per month per employee.
We performed an analytical audit procedure designed to estimate the employer cost due on the Health Insurance Plan for Public School Teachers for the month ofMarch 2004. While the results of this procedure is not accurate enough to determine the exact amount of employer cost due on teacher salaries paid in March 2004, the procedure is an indicator ofpossible under payments. The results of this procedure indicated that the School District may have under paid the March 2004 billing in the amount of $109,484 which represents a 31.7 percent error. In addition, as part of our payroll sampling procedures we looked at various job codes where employer health insurance cost errors have occurred in other School Districts and we found indications that the School District may have misclassified employees between the two health insurance plans.
-3-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2004
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6201-04-03
The School District should establish policies and procedures to ensure that employer contributions for employee health insurance plans are paid in accordance with State Laws. In addition, the School District should contact the Georgia Department of Community Health to determine whether the School District should make payment to DCH for employer cost under payments.
CAPITAL ASSETS Inadequate Capital Asset Records Reportable Condition Finding Control Number: FS-6201-04-04
The Camden County Board of Education's (School District) capital asset records failed to include two equipment items and ten land improvement items which were included on the prior year listing and which were determined not to have been legitimate capital assets deletions. There were also thirty equipment items on the current year capital assets listing which were not on the prior year capital assets listing and which required a restatement ofNet Assets - Beginning ofYear as the assets were determined not to have been current year capital asset additions. In addition, the listing of depreciation expense by function provided did not agree with depreciation expense on the fixed asset listing. The School District failed to ensure that internal control procedures were working effectively in order to properly record and maintain capital asset records. The School District should establish appropriate policies and procedures to ensure that capital assets and associated depreciation are reported accurately as required.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
-4 -

SECTIONV MANAGEMENT'S RESPONSES

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-6201-04-01
The School District implemented procedures to increase the number ofadministrative staffwhen this finding was brought to light. Unfortunately, the timeliness of the audit did not allow full implementation of changes prior to fiscal year 2004 year end. The School District has implemented procedures to increase the number of administrative staff at the various principal account sites responsible for accounting functions. The School District will monitor internal controls to ensure established controls are functioning as designed. Additional procedures will be implemented as needed to ensure key accounting functions of custody, record keeping and authorization are segregated.
Finding Control Number: FS-6201-04-02
It is true the High School's principal account was not reconciled to the ending book balance during the fiscal year 2004 school year. We have reassessed internal control procedures and worked with staff at the school to implement procedures for cash that ensure all bank accounts are properly reconciled on a timely basis and that all reconciling items are properly documented.
Finding Control Number: FS-6201-04-03
Auditor's note the School District classified various employees as eligible for the Health Insurance Plan for Public School Employees (HIPPSE). Auditors question this designation and indicate said employees may be ineligible under this plan. The School District did, in fact include employees holding certain positions in the school system in the HIPPSE. The basis for the School District's action was correspondence from the Interim Director of the State Health Benefit Plan (SHBP) including excerpts from SHBP Regulations. Specifically, the director provided text from regulation 478-6. Item 5 of this regulation states: "The employer contribution rate for the teacher's health insurance fund shall be a percentage of the salary approved by the State Board of Education under the Quality Basic Education Act for persons holding certificated positions". The individuals included in the HIPPSE are certificated employees holding positions within the school system not requiring a professional certificate issued by the Professional Practices Commission. Further support for the School District's decision was provided in Volume 3, No. 1 ofthe Partners publication by the Georgia Department of Community Health. Page 8 of this issue contains a segment specifically related to the issue at hand. The segment under the headingAccountingfor School System Personnel includes the following test:
"Even if an employee holds a teaching certificate, he or she also must be employed in a certificated position before you account for them as a certificated employee for monthly billing purposes. If they are not in a certificated position, then report them as a non certificated employee."
- 1-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-6201-04-03
John Hays, an auditor with the Department of Community Health, responded to the School District's inquiry regarding the practice called in question by the Department of Audits. Mr. Hays confirmed responsibility for the miscommunication and indicates ".. .it is highly unlikely that we will pursue any underpayments for prior years that were a result of this misinterpretation". The Department of Community Health has no plans to seek reimbursement since the inaccuracy was perpetuated by their office.
The School District based the exclusion of the identified employees from the SHBP and included them in the HIPPSE on clear direct communication from the agencies charged with the administration ofthe respective plans. The auditor's decision to include this practice as a reportable condition and include language suggesting impropriety to School Board members and the Governor seems unjust. The auditors concede the interpretation of 47-4-2 (20) is unclear. Given the concession by the Department of Community Health that the misinformation originated with their office, the Camden County School District respectfully requests that the reportable condition relative to employee compensation be removed from the auditor's opinion letter.
In fiscal year 2005, the School District changed the method of calculating employer contributions to the Department of Community Health. Certified employees holding positions that do not require a certificate are treated as if they hold positions requiring certification. Remuneration has been made to the Department of Community Health.
Finding Control Number: FS-6201-04-04
The School District acknowledges discrepancies with regard to capital assets records. Capital asset records were discrepant as a result of two distinct occurrences. Land improvement capital asset records were misreported due to the misinterpretation of a ruling with regard to infrastructure, its definition and its inclusion as a school asset. Further, the capital asset records for the system were revised during fiscal year 2004 and two school buses deleted without proper documentation. The School District will establish appropriate procedures to ensure capital assets and associated depreciation are reported accurately as required.
Contact Person: Dr. Will Hardin, Assistant Superintendent, Finance and Operations Phone: (912) 729-5687 Fax Number: (912) 729-1489 E-mail Address: Whardin@camden.kl2.ga.us
-2-