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

CAMDEN COUNTY BOARD OF EDUCATION KINGSLAND, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

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

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

CAMDEN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

26

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

27

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

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

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

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

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
July 12, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe 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) ofthe Camden County Board of Education, as of and for the year ended June 30, 2006, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Camden County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Camden County Board ofEducation, as ofJune 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2006ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated July 12, 2007, 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 considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 23 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States 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 of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~ IA)_~::1-;_
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006ARL-11

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Introduction
The discussion and analysis ofCamden County Board ofEducation's financial performance provides an overall review ofthe School District's financial activities for the fiscal year ended June 30, 2006. 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 2006 are as follows:
The School District's financial status improved slightly during fiscal year 2006. In total, net assets increased $1.7 million from fiscal year 2005. This total increase was due to governmental activities since the School District has no business-type activities.
On the District-wide financial statements, the net assets of the School District exceeded liabilities by $129.1 million due in part to the absence of debt. Ofthis amount, $20 million is unrestricted and available for spending at the School District's discretion.
The School District has $83.3 million in expenses relating to governmental activities; only $50.3 million ofthese expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $34.7 million were adequate to provide for these programs.
As stated above, general revenues accounted for $34.7 million or 40.8% ofall revenues totaling $84.9 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
Among major funds, the General Fund has $84.7 million in revenues, $82.1 million in expenditures. The General Fund's fund balance decreased to $10.8 million from $18.9 million.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists ofthree 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.
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CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
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 ofothers. 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. The 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 of the 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 method of accounting which measures cash and all other financial assets that can readily be
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CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

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 ofNet Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for fiscal year 2006 compared to fiscal year 2005.

Table 1 Net Assets (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2006 Year 2005

Assets Current and Other Assets Capital Assets, Net

$ 30,838 107,548

$ 39,243 98,737

Total Assets

$ 138,386 $ 137,980

Liabilities Current and Other Liabilities

$ 9,244 $ 10,497

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

$ 107,548 1,539
20,055

$ 98,737 7,097
21,649

Total Net Assets

$ 129.142 $ 127,483

Total net assets increased $1.7 million in fiscal year 2006.

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

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

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
Special Items Loss on Disposal of Building Loss on Disposal of Land
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 ofNon-Instructional Services Enterprise Operations Community Services Food Services
Total Expenses
Increase in Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

$ 2,073 47,827 423
$ 50,323

$ 2,251 45,167 8,391
$ 55,809

$ 21,341
53 530 324
9,605 1,059 1,742
$ 34,654
$ 84.977
$ 53,249
5,067 2,456 1,645
666 5,272
658 4,783 3,610
491 95
543 604 4,179
$ 83,318
$ 11659

$ 20,135 29
135 405 215
9,807 655
1,431
-21 -70
$ 32,721
$ 88,530
$ 48,891
4,093 2,245 1,465
606 4,912
552 4,429 3,432
449 104
5 673 3,894
$ 75,750
$ 12,780

- IV -

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

Governmental Activities

Instruction comprised 63.91 percent of governmental program expenses in fiscal year 2006. Camden County incurred no interest expense during fiscal year 2006.

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 of services comparing fiscal year 2006 with fiscal year 2005. 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

Year2006 Year 2005

Net Cost of Services

Fiscal

Fiscal

Year2006 Year2005

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

$ 53,249 $ 48,891 $ 16,301 $ 8,512

5,067 2,456 1,645
666 5,272
658 4,783 3,610
491 95

4,093 2,245 1,465
606 4,912
552 4,429 3,432
449 104

4,245 1,883
711 -563 3,333 658 2,257 2,327 491
84

3,344 1,654
120 -784 2,370 552 1,630 2,187 449
84

543 604 4.179

5 673 3,894

179

5

603

673

486

-855

Total Expenses

$ 83,318 $ 15,150 $ 32,225 $ 12,241

Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 30.6 percent ofinstruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 39.6 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 of$85.0 million and total expenditures of $92.1 million.

-v-

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

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 2006, the School District amended its general fund budget as needed.

For the General Fund, the final actual revenues of $84.7 million exceeded the original budgeted amount of$76.1 million by $8.6 million. This difference was primarily due to an increase in Federal revenues over original budget of $4.3 million, investment earnings over original budget of $0.5 million, charges for services over original budget of$0.87 million and miscellaneous revenues over original budget of $0.87 million. Federal revenues far exceeded the original budget due to the system's eligibility as a Heavily Federally Impacted School District through the U. S. Department of Education Impact Aid Program.

Final budgeted expenditures and other financing uses of $83 .1 million exceeded the original budgeted amount of $82.6 million by $0.5 million.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At fiscal year end June 30, 2006 the School District had $107.5 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2006 balances compared with fiscal year 2005 balances.

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

Governmental Activities

Fiscal

Fiscal

Year 2006 Year 2005

Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements

$ 10,180 22,688 70,303 3,553 824

$ 10,180 13,775 70,345 3,524 913

Total

$ 107.548 $ 28,737

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

- VI -

CAMDEN COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Debt
At fiscal year end June 30, 2006, 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. Marys, are approximately 30 miles from Jacksonville, Florida. Camden County is the home of Kings Bay Naval Submarine Base, homeport to a fleet of Trident Nuclear Submarines. The School District, naval base and associated Federal contractors make up the core ofemployment opportunities in the county. 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 ofthe nation, families employed in Florida seeking a quality education for children and retiring baby boomers from northern states will shape the growth ofthe community. As the ninth largest county in the state ofGeorgia, Camden County covers an area ofapproximately 659 square miles. The County has a population of 43,664 residents who reside in one of three municipalities or in a vast unincorporated area.
Anticipated population growth may lead to the expansion ofthe School District 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.
Although residents approved a Special Local Option Sales Tax for Education and associated bond issue in 1997 to meet demands of a rapidly growing population associated with the military, the Board of Education elected not to ask voters for a second SPLOST at its conclusion in 2004. The sales tax rate, in Camden County is 6% while the property tax assessment for education is at 14.750 mills.
Contacting the School District's Financial Management
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview ofthe 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 Ms. Angela C. Metts, Director ofFinance at the Camden County Board ofEducation, 311 S. East Street, Kingsland, Georgia, 31548. You may email your questions to ametts@camden.kl2.ga.us.
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CAMDEN COUNTY BOARD OF EDUCATION

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Salaries Payable
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

$

2,566,785

18,376,027

2,723,211 5,963,988 1,051,183
36,178 121,397

10,180,006 22,688,315
1,807,859 85,296,389
9,417,998 -21,842,843

$ ===13=8=,3=86='=49..3. =

$

9,243,827

$

107,547,724

760,532 778,999 20,055,411

$

129,142,666

$ ==1=3=8,=38=6=,4=93.,..

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

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

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

EXPENSES

CHARGES FOR SERVICES

$

53,249,190 $

5,066,949 2,456,461 1,644,980
666,098 5,272,240
658,068 4,782,947 3,610,122
490,697 94,789

543,016 603,598 4179179

$

83,318,334 $

553,397
363,994 1,155,803 2,073,194

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

36,240,656 $

821,352 573,303 921,546 1,223,733 1,918,943

2,516,503 1,093,445

10,844

2,506,966

$

47,8271291 $

153,867 $ 523 466
12,899 5,826 19,854 9,928 189,528
30 355 423246 $

-16,301,270
-4,245,074 -1,882,692
-710,535 563,461 -3,333,443 -658,068 -2,256,516 -2,327,149 -490,697 -83,945
-179,022 -603,598 -486 055
-32,994,603

$

21,341,134

53,002 529,426 323,954 9,605,422 1,059,285 1 741 569

$

34,653,792

$

1,659,189

127,483,477

$ =-=======1,..29=1,,1=4=2=,6=66.,.

-3-

CAMDEN COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Due From Other Funds Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Salaries Payable Due To Other Funds
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

$ 2,131,421 $

435,364 $

7,633,004

10,743,023

425,427 5,963,988 1,051,183
36,178
121,397

6,308 19,163

2,566,785 18,376,027
431,735 5,963,988 1,051,183
36,178 19,163 121 397

$ 17,362,598 $ 11,203,858 $ ===2=8.i.;,5=6..,6,-45=6=

$ 9,243,827 19163
$ 9,262,990

$

9,243,827

19163

$

9,262,990

$

639,135

$

121,397

$

778,999

7,339,076

10.424,859

$ 8,099,608 $ 11,203,858 $

639,135 121,397 778,999
7,339,076 10.424,859
19,303,466

$ 17,362,598 $ 11,203,858 $ ===2=8=,5=6=6=.4=56...

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

CAMDEN COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT "D"

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

$ 19,303,466

$ 10,180,006 22,688,315 1,807,859 85,296,389 9,417,998 -21,842,843

107,547,724

2,291,476

Net Assets of Governmental Activities (Exhibit "A")

$ 129,142,666

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

CAMDEN COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay
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

$ 14,985,536 853,380 $
51,117,505 12,896,885
2,073,194 1,041,092 1,736,991
$ 84,704,583 $

$ 53,002 16,314 217,404
18,193
304 913 $

14,985,536 906,382
51,133,819 13,114,289
2,073,194 1,059,285 1,736,991
85,009,496

$ 52,120,802 $

149,234 $

5,177,724 2,489,067 1,562,896
629,022 5,145,900
658,068 4,710,730 3,463,883
490,697 94,789
543,016 603,598 3,986,011 433,880

31,586 9,833,141

$ 82,110,083 $ 10,013,961 $

$ 2,594,500 $ -9,709,048 $

52,270,036
5,177,724 2,489,067 1,562,896
629,022 5,145,900
658,068 4,742,316 3,463,883
490,697 94,789
543,016 603,598 3,986,011 10,267,021
92,124,044
-7114 548

$ 13,447,348 $ $ -13 447 348

13,447,348 -13447348

$ -13,447,348 $ 13,447,348 $

0

$ -10,852,848 $ 3,738,300 $ -7, 114,548

18,952,456

7,465,558

26,418,014

Fund Balances - Ending

$ 8,099,608 $ 11,203,858 $ 19,303,466

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 STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$ 10,690,683 -1,859,973

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 building and 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 building and equipment sold.

-7, 114,548
8,830,710 -36,551 -20 422

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

$ ==1,=65;9;!:,1=8==9

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

(This page left intentionally blank)

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

EXHIBIT"G"
AGENCY FUNDS
$ ======2=80='=57=2=
$ ======2=80='=57=2=

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

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

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The 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 ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

- 10 -

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

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds, grants from U. S. Department ofEducation and grants from Georgia State Financing and Investment Commission 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 ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.

- 11 -

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

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and

- 12 -

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

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

RECEIVABLES

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

PROPERTY TAXES

The Camden County Board of Commissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on November 9, 2005 (levy date). Taxes were due on January 31, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The 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, 2006, for maintenance and operations amounted to $14,985,536.

The tax millage rate levied for the 2005 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 $53,002 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for

- 13 -

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

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

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

Any Amount

$

25,000

$

50,000

$

5,000

$

5,000

NIA 20 years 20 to 80 years 10 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 ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 11 Opercent 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.

- 14 -

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

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS
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, 2006, the bank balances were $7,306,917. The amounts of the total bank balances are classified into four categories of custodial credit risk:
Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.
The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

- 15 -

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

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

Custodial Credit Risk Category

Bank Balance

1

$ 400,422

2

6,906,495

3

0

4

0

Total

$ 7,306.917

CATEGORIZATION OF INVESTMENTS At June 30, 2006, the carrying value of the School District's total investments was $18,295,118 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 ofthe 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. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U.S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2006, was 28 days.

- 16 -

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

EXHIBIT "H"

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

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

Balances July 1, 2005

Increases

Balances Decreases June 30, 2006

$ 10,180,006 13,775,338 $ 8,950,106 $
$ 23,955,344 $ 8,950,106 $

$ 10,180,006 37,129 22,688,315
37,129 $ 32,868,321

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

$ 84,364,384 $ 8,981,588 1,807,859
14,019,124 5,458,037
894,578
$ 74,782,092 $
$ 28,131,436 $

1,075,796 $ 701,910
1,113,139 657,479 89,355 -82,267 $
8,86'.Zi839 $

143,791 $ 85,296,389

265,500

9,417,998

1,807,859

138,091 250,778

14,994,172 5,864,738
983,933

20,422 $ 74,679,403
51,551 $ 10:Z,54:z,72~

Current year depreciation expense by function is as follows:

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

$ 883,943

$

3,002

2,676

74,102

33,471

114,055

57,037

517,302

801,645 174,385

$ 1,859.973

- 17 -

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

EXHIBIT"H"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and Federal funds are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable statutory provisions. Restricted assets at June 30, 2006, were as follows:

District-wide Capital Projects SPLOST Federal Funds

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

$ 343,575 $ 429,116

Note 7: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2006, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund District-wide Capital Projects

$
$_~1~9,~16~3

19,163

Note 8: INTERFUND TRANSFERS

$

19.163 $====19-,1===6==3

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

Transfer to

Transfers From General Fund

District-wide Capital Projects

$ 13,447,348

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.

- 18 -

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

EXHIBIT "H"

Note 9: 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 ofthat loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

2005 2006

$

2,188 $

22,096 $

20,965 $

3 319

$

3,319 $

12,434 $

7 979 $

7 774

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

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

- 19 -

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

EXHIBIT"H"

Note 9: RISK MANAGEMENT

Position Covered

Amount

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

$

20,000

$ 100,000

$

50,000

$

20,000

$

10,000

$

10,000

$

10,000

$ 100,000

Note 10: SIGNIFICANT COMMITMENTS

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

Project

Unearned Executed Contracts

Funding Available From State

03/02S-620-007; SA0lS-620-017; 03G/02S-620-007
Camden County 9th Grade Center Addition

$ 970,240 $ 356,677
$ 1,326,217 $

896,807 826,8Q7

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

Note 11: SIGNIFICANT CONTINGENT LIABILITIES

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

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

- 20-

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

EXHIBIT "H"

Note 12: RETIREMENT PLANS

survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

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

Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$ 4,597,397 $ 4,263,149 $ 3,960,951

- 21 -

(This page left intentionally blank)

CAMDEN COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1}

FINAL (1}

ACTUAL AMOUNTS

$

14,173,169 $

14,173,169 $

14,985,536

853,380

50,769,322

50,884,351

51,117,505

8,598,912

8,889,014

12,896,885

1,200,400

1,200,400

2,073,194

536,913

536,913

1,041,092

867 799

893 875

1,736,991

$

76,146,515 $

76,577,722 $

84,704,583

$

54,003,815 $

52,912,725 $

52,120,802

4,821,925 2,069,254 1,555,462
678,229 5,147,445
871,186 4,786,151 3,397,094
498,118 154,844
709,040 3,848,171

5,277,099 2,660,101 1,607,361
645,694 5,163,904
757,713 4,847,835 3,501,939
504,705 124,625
710,458 3,849,801
442 574

5,177,724 2,489,067 1,562,896
629,022 5,145,900
658,068 4,710,730 3,463,883
490,697 94,789
543,016 603,598 3,986,011 433,880

$

82,540,734 $

83,006,534 $

82,110,083

$

-6,394,219 $

-6,428,812 $

2,594,500

$

91,467 $

110,023

-13 750 $ -13,447,348

$

91467 $

96273 $ -13 447 348

$

-6,302,752 $

-6,332,539 $ -10,852,848

19,636,080

19,644,427

18,952,456

Fund Balances - Ending

$

13,333,328 $

13,3111888 $

8,099,608

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

-23-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Advanced Placement Program English Language Acquisition Grants Enhancing Education Through Technology Program Hurricane Education Recovery Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Pass-Through From Georgia Department of Technical and Adult Education Fund for the Improvement of Education
Total U.S. Department of Education
Justice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention
Labor, U. S. Department of Pass-Through From Georgia Department of Education Workforce Investment Act - Adult Program
Defense, U. S. Department of Direct Department of the Navy R.O.T.C. Program

Total Federal Financial Assistance
NIA = Not Available

- 24 -

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 . 10.555

N/A NIA $
$

(2) 3,520,377
3,520,377

10.550

N/A $

196,982 3,717,359

84.027 84.173

N/A $ N/A
$

1,658,331 84380
1,742,711

84.041
84.330 84.365 84.318
84.938
84.367
. 84.298 84.010 84.048
84.215

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

(3)
1,564 10,631 27,852 (4) 350,420 24,502 1,519,709 102,976
167 067
3,947,432

16.540

N/A $

47 266

17.258

NIA $

4 011

$

93,992

$

7,810,060

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($587,023) were not maintained separately and are included in the 2006 National School Lunch Program.
(3) Funds earned on the Impact Aid Program, in the amount of $6,609,553 do not require reporting of expenditures. (4) Funds earned on the Hurricane Education Recovery program, in the amount of $150,233, 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.

- 25-

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

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 CategoryV 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 Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs K-8 Statewide Reading and Mathematics Program National Teacher Certification Preschool Handicapped Program Virtual Schools State Grant Vocational Construction Related Equipment
Georgia State Financing and Investment Commission Reimbursement on Construction Projects

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

842,594

$

842,594

3,065,487 154,965
6,404,413 383,800
3,240,224 268,368
5,817,501 5,071,327 1,646,401
592,668 794,542 3,144,678 269,999
50,127 1,505,643
80,990 460,208
95,148 921,546 297,299 175,732
1,094,108 1,859,010 2,499,797
1,060,256 189,528 177,481 31,344 27,275 175,791
9,753,075 237,384 48,063
-2,097,909
137,311 130,917 135,562
75 374,777

$

16 314

3,065,487 154,965
6,404,413 383,800
3,240,224 268,368
5,817,501 5,071,327 1,646,401
592,668 794,542 3,144,678 269,999
50,127 1,505,643
80,990 460,208
95,148 921,546 297,299 175,732
1,094,108 1,859,010 2,499,797
1,060,256 189,528 177,481 31,344 27,275 175,791
9,753,075 237,384 48,063
-2,097,909
137,311 130,917 135,562
75 374,777
16 314

See notes to the basic financial statements.

$ 51,117,505 $

16 314 $ =,....;;:5~1,.:,;13~3~,8.:,;19:,.

- 26-

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

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 YEAR (3)

PROJECT STATUS

$ 31,000,000 $ 33,092,282 $

168 439 $ 32,923,843 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. 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.

- 27 -

(This page left intentionally blank)

CAMDEN COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

3,373,590 $
187,687 7,127,228
446,847 3,604,945
319,947
6,443,914 5,584,512 1,815,403 5,384,254
1,652,001 87,759
508,808 101 274

4,057,088 $
397,518 6,803,146 1,058,929 4,356,672
625,686
7,093,672 6,687,016 1,702,542
164,723 899,852 3,576,968 333,362 407,515 1,653,176 380,682 445,244 150,886

155,337 $
1,897 657,682
4,463 235,260
1,844
702,152 664,480 230,106
8,707 16,158 67,521
2,576 51
14,014 800
14,696 704

4,212,425 399,415
7,460,828 1,063,392 4,591,932
627,530
7,795,824 7,351,496 1,932,648
173,430 916,010 3,644,489 335,938 407,566 1,667,190 381,482 459,940 151 590

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

36,638,169 $ 40,794,677 $

2,778,448 $ 43,573,125

Media Center Program Staff and Professional Development

1,022,628 196019

1,280,711 79667

277,557 123 855

1,558,268 203,522

TOTAL QBE FORMULA FUNDS

$

37856816 $ 42,155,055 $

3,179,860 $ ==4=5=,3=3=4=,9=15=

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

See notes to the basic financial statements.

- 29-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 12, 2007

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 ofand for the year ended June 30, 2006, which collectively comprise Camden County Board of Education's basic financial statements and have issued our report thereon dated July 12, 2007. 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 opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect Camden County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS6201-06-01.
2006YB-30

A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not 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-~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006YB-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
July 12, 2007

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 U.S. 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, 2006. Camden County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of 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 ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Camden County Board of Education's compliance

2006SA-40

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.
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, 2006. The results of our auditing procedures disclosed an instance of nonmaterial noncompliance with those requirements, which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6201-06-03.
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 of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Camden County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6201-06-01 and FA-6201-06-02.
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the 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. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above are material weaknesses.
2006SA-40

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,
C ~.'!it~~~
State Auditor
RWH:as 2006SA-40

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, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6201-04-01 FS-6201-05-01 FS-6201-05-02

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

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6201-05-01

The School District will review the staff assigned to complete the tasks related to the school activity accounts. The School District will implement additional procedures to ensure that key accounting functions of custody, record keeping and authorization are separated. The changes will be implemented effective July 1, 2006 (fiscal year 2007).

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

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

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Camden County Board ofEducation'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 ofEducation disclosed a financial statement reportable condition related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

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

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 ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed

Allowable Costs/Cost Principles

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

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the 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 .5 IO(a) of 0MB Circular A-133 The Camden County Board of Education's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section IV of this report.

We also noted a certain instance ofnonmaterial noncompliance which is included in section IV of this report.

-I-

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

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.010 Title I Grants to Local Educational Agencies 84.938 Hurricane Education Recovery

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $437,095.

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 Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6201-06-01

Condition:

This is a repeat finding (FS-6201-05-01 and FS-6201-04-01) from the years ended June 30, 2005, and 2004, respectively. The accounting procedures for the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria:

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

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions.

Revenues/Receivables/Receipts Based on a review oftwenty-five items, adequate documentation was not maintained to support cash collections for two gate receipts.

-2 -

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6201-06-01

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

Cause:

These deficiencies were a result of management's decision to limit the number of administrative staff made responsible for accounting functions applicable to the various principal's accounts and management's failure to ensure that established controls were functioning as designed.

Effect:

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

Recommendation:

Management should implement procedures to ensure that the key accounting functions of custody and record keeping and authorization are separated. In addition, management should monitor controls to provide reasonable assurance that transactions are processed according to established policies and implement procedures deemed necessary to strengthen internal controls over these accounting functions.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Control Procedures Reportable Condition U.S. Department of Education Through Georgia Department of Education Hurricane Education Recovery (CFDA 84.938) Finding Control Number: FA-6201-06-01

Condition:

There were no procedures in place to ensure that Hurricane Education Recovery Act (HERA) funds provided to the School District for displaced students reported as having disabilities were used for the excess costs of providing special education and related services to students with disabilities.

-3-

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

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Control Procedures Reportable Condition U.S. Department of Education Through Georgia Department of Education Hurricane Education Recovery (CFDA 84.938) Finding Control Number: FA-6201-06-01

Criteria:

The following guidance applied to the management of Emergency Impact Aid for Displaced Students to include funds made available for displaced students:

1. Section 107(e) of HERA, 2. Volumes "I" and "II" ofU. S. Department of Education (USED)
guidelines included in "Frequently Asked Questions, Emergency Impact Aid for Displaced Students" and 3. State of Georgia issued publication titled "Georgia Guidance on Federal Emergency Hurricane Act" (GDOE Guidelines).

Provisions ofHERA, USED and GDOE guidelines state that HERA funds for students with disabilities may only be used to pay for special education and related services consistent with the Individuals with Disabilities Education Act (IDEA). Both Volumes "I" and "II" of USED guidance state that the funds provided for students with disabilities must be recorded and tracked separately from those HERA funds provided for non-disabled students. This Federal requirement was not specifically included in GDOE guidelines.

Provisions of HERA and GDOE guidelines state that these funds may become a part of a School District's special education budget to ensure that they are only used to pay for special education and related services consistent with IDEA. The guidelines further state that since these funds are to be applied and used in a manner as funds made available under Part B oflDEA, it was also advised to consult with State and local staffwho are cognizant of IDEA requirements.

Questioned Cost: $22,500

Information:

HERA funds received by the School District included $22,500 for students with disabilities. Although required by Federal guidelines, the receipt and expenditure of these funds were not maintained separately.

-4-

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

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Control Procedures Reportable Condition U.S. Department of Education Through Georgia Department of Education Hurricane Education Recovery (CFDA 84.938) Finding Control Number: FA-6201-06-01

We further noted that the budget for special education was not modified for the increase in HERA funds designated for special education and related purposes. There was no evidence that State or local special education staff was consulted about the use of these funds in keeping with IDEA requirements.

Cause:

The School District relied solely on GDOE Guidelines which did not require that the School District provide separate accountability of HERA funds provided for students with disabilities. Consideration had not been given to consulting with local and State special education staff or revising its special education budget to ensure that these HERA funds were applied in line with IDEA.

Effect:

We were unable to determine if the $22,500 of HERA funds earmarked for students with disabilities were used for special education and related purposes.

Recommendation:

Management should ensure that procedures are in place to comply with both Federal and State guidelines when administering HERA funds for special education purposes. GDOE should review this matter and determine ifthese funds were used properly or if a refund is appropriate.

-5-

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

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6201-06-02

Condition:

The accounting procedures ofthe School District were insufficient to provide for adequate separation of duties over the Food Services - School Breakfast Program (CFDA 10.553) and the Food Services - National School Lunch Program (CFDA 10.555).

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs require that "governmental units are responsible for the efficient and effective administration of Federal awards through the application of sound management practices" and "to be allowable under Federal awards, costs must be adequately documented".

Questioned Cost: NIA

Information:

The following deficiencies were identified: The bank reconciliation function was not separated from the record keeping and voucher payment functions. The bank reconciliation was not reviewed by an administrator not directly connected with cash operations. The check writing function was not separated from the record keeping and purchasing functions. The School District did not have adequate procedures in place to ensure that expenditures for the program were properly approved prior to purchasing.

Cause:

The School District did not assign responsibilities to achieve appropriate separation of duties nor utilize management oversight of the incompatible activities to properly safeguard assets. In addition, management failed to implement controls for monitoring compliance with Federal guidelines to ensure that expenditure items purchased for the School Breakfast Program and the National School Lunch Program were properly approved as allowable expenditures prior to being charged to the applicable program.

-6 -

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

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6201-06-02

Effect:

Failure to ensure that key accounting functions are separated and expenditures are monitored for proper approval prior to purchase could result in noncompliance with the requirements of the Federal grant. In addition, errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities. In addition, the School District should review the control procedures in place, and implement procedures deemed necessary to strengthen internal controls over the accounting functions and ensure all costs are allowable under 0MB Circular A-87.

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6201-06-03

Condition:

The School District did not have adequate procedures in place to ensure that teachers meet the requirements of "Highly Qualified" personnel for those individuals teaching in a schoolwide school.

Criteria:

"Highly Qualified" requirements are set forth in 34 CFR section 200.58, which states, in part as follows: "An LEA must ensure that each teacher who is hired by the LEA after the first day ofthe 2002-2003 school year to teach a core academic subject and who works in a program supported with Title I funds meets specific qualification requirements.

Questioned Cost: NIA

-7-

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

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6201-06-03

Information:

The School District made an offer of employment for one teaching position after identifying that the employee was not "highly qualified". The employee was hired and allowed to teach at a schoolwide school throughout the school year.

Cause:

The School District did not have adequate procedures in place to ensure that employees not meeting "highly qualified" status were not hired or offered positions requiring this status.

Effect:

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

Recommendation:

The School District should implement procedures to ensure that only "highly qualified" employees are hired for positions requiring "Highly Qualified" status. The Georgia Department of Education should further review this matter to determine if a reclaim of funds is necessary.

-8-

SECTIONV MANAGEMENT'S RESPONSES

CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6201-06-01
We concur with this finding. Effective July 1, 2006, the School District established receipting and verification methods which would display adequate internal controls. The procedures ensured that the accounting functions of custody, record keeping and authorization are separated. However, the school began the procedures in October rather than at the beginning of the year as directed. The School District has enforced the guidelines set forth as of July 1, 2006, effective immediately. To ensure that the function ofrecord keeping and voucher payment functions is adequately monitored, the School District now requires monthly review of the bank reconciliation documents by the principal. Effective July 1, 2007, the principal and the bookkeeper must sign the bank reconciliation documents.
Contact Person: Angela C. Metts, Finance Director Phone: (912) 729-8349 Fax Number: (912) 729-1489 E-mail Address: ametts@camden.k12.ga.us
Finding Control Number: FA-6201-06-01
We concur with this finding. The funds for Special Education purposes were not accounted for separately. The account code and guidelines were followed as directed by GDOE. Future Federal grant funds will require review of the Federal requirements as well as GDOE directives.
Contact Person: Angela C. Metts, Finance Director Phone: (912) 729-8349 Fax Number: (912) 729-1489 E-mail Address: ametts@camden.kl2.ga.us
Finding Control Number: FA-6201-06-02
We concur with this finding. The School District will implement procedures to ensure that the key accounting functions of custody, record keeping, and authorization are separated. The School District will implement accounting procedures which require the School Nutrition Director to review and sign all invoices prior to payment by the school nutrition bookkeeper. The School Nutrition Director and bookkeeper will review and sign the bank reconciliation documents monthly. The changes will be implemented effective July 1, 2007 (fiscal year 2008).
Contact Person: Michele Wright, School Nutrition Director Phone: (912) 729-8319 Fax Number: (912) 729-1489 E-mail Address: mwright@camden.kl2.ga.us
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CAMDEN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006 Finding Control Number: FA-6201-06-03 We concur with this finding. The School District will implement procedures to ensure that only highly qualified employees are hired for positions requiring "Highly Qualified" status. Communication will take place between the personnel director, program directors, and Superintendent to avoid a repeated occurrence. The changes will be implemented effective July 1, 2007 (fiscal year 2008). Contact Person: Angela C. Metts, Finance Director Phone: (912) 729-8349 Fax Number: (912) 729-1489 E-mail Address: ametts@camden.kl2.ga.us
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