Audit report, Candler County Board of Education, Metter, Georgia, year ended June 30, 1998 [June 30, 1998]

UP ,
A'2oo
. R\ CH.
C-2. \qc\l -q~
AUDIT REPORT CANDLERCOUNTY BOARD OF EDUCATION
METTER, GEORGIA YEAR ENDEDJUNE 30, 1998
'~-------------------_/
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CANDLER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXlllBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

22

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

23

3 SCHEDULE OF STATE REVENUE

25

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

27

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

29

7

BY PROGRAM

30

CANDLER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-I33
SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 19, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Candler County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Candler County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Candler County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose fmancial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.

98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose
fmancial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Candler County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 19, 1999, on our consideration of the Candler County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Candler County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Candler County Board of Education does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the Candler County Board of Education taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-l33, Audits ofStates, Local Governments, andNon-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general purpose fmancial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose fmancial statements taken as a whole.
98ARL-l3B

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,
~!J.~ Russell W. Hinton State Auditor
RWH:gp 98ARL-13B

CANDLER COUNTY BOARD OF EDUCAnON

CANDLER COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1998

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount Available in Debt Service Fund
Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements
Total Assets

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

556,079,63 $

328,031.32 $

4,806,750.40

98,512.10

239,993.44

6,890,47 2,463,72

$

654,591.73 $

5n378.95 $ _ _~ 4,8~ 06,7~ 50.4~ 0

Total Liabilities and Fund Equity

$

654,591.73 $

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

5n378.95 $ _ _~ 4,8~ 06,7~ 50.4~ 0

EXHIBIT "A"

DEBT SERVICE
FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 1998

JUNE 30, 1997

$

254,630.84

$ 5,945,492.19 $

655,583.03

142,339.25

480,844.79

205,266.50

$

396,970.09

6,890.47 2,463.72
396,970.09

5,947.23 2,405.38

4,503,029.91 199,319.27

4,503,029.91 199,319.27

118,037.37

$

396,970.09 $

5,099,319.27 $ 11,535,010.44 $

9~ 87,~ 239..5.1. .

$

104,328.32 $

45,267.05

114,937.83

99,081.03

6,261.34

29,380.82

25,000.00

$

199,319.27

199,319.27

118,037.37

4,900,000.00

4,900,000.00

$

5,099,319.27 $ 5,349,846.76 $

291,766.27

$

396,970.09

0.00

$

396,970.09

$

2,823.37 $

149,092.90

396,970.09

8,115.24

6,890.47 2,463.72 4,796,850.40
821,957.49
$ 6,185,163.68 $

17,380.01
8,115.24
5,947.23 2,405.38
661,625.38 695.473.24

$

396,970.09 $

5,099,319.27 $ 11,535,010.44 $

9~ 87,~ 239.5.1. .

-3-

CANDLER COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1998

FUND BALANCE JUNE 30
The notesto the general purpose financial statements are an integral partof this statement. -4-

$

610,132.24 $ _ _.3=.8:.1&,:2:.1:;0:,.9;,5:;~

EXHIBIT "B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$ 7,104,468.89 $ 7,004,947.58

1,454,237.26

1,152,565.88

$

373,391.52

1,892,272.80

1,496,681.72

$

142,892.40

1,918.99

473,002.99

244,360.04

$

142,892.40 $

375,310.51 $ 10,923,981.94 $ 9,898,555.22

$ 6,471,161.77 $ 6,101,801.12

$

123,192,88

119,234.12

308,171.39 299,121.77 157,441.75 240,965.22 599,935,37 255,262.81 610,323.32 355,222.47
42,470.12 847,356.68
1,299.87 231,360.14

326,427.47 148,444.17 149,269.87 275,906,60 562,666.38 123,665.49 535,639.57 266,470.94 33,183.94 763,433.87
2,154.51 47,579.60

87,656.98

22,818.34

14,526.88

4,736.66

$

500.00

500.00

$

242,427.00 $

500.00 $ 10,522,776.54 $ 9,364,198.53

$

-99,534.60 $

374,810.51 $

401 ,205.40 $

534,356.69

$ $ 4,900,000.00
-3,615.00
$ 4,896,385.00 $ $ 4,796,850.40 $
0.00

22,159.58 $ 22,159.58 $

22,159.58
4,900,000.00 -3,615.00
168,938.88 $ 25,283.51 -25,283.51
5,087,483.46 $

396,970.09 $ 0.00

5,488,688.86 $ 695,473.24

943.24 58.34

41,500.00 17,538.16 -17,538.16 41.500.00
575,856.69 124,024.14
-4,786.22 378.63

$ 4,796,850.40 $

396,970.09 $ 6,185,163.68 $ _.....6.9..5.,.4..7.3...2.4..

-5-

CANDLER COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 1998

EXHIBIT"C"

FUNp BALANCE JUNE 30 1998

$ 518,827.43 $ 610,132.24

$ 206,733.42 $ 381,210.95

The notes to the general purpose financial statements arean Integral part of this statement. -7-

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Candler County Board of Education(Board) 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 subjectto approvalby any other entity. Accordingly, the Board is a primary governmentand consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an accountgroupto report on its financial position and the results of its operations. Fund accountingis designedto demonstrate legal compliance and to aid financial managementby segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accountingprinciples,a GeneralFixed Assets AccountGroup should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "schoolactivityaccounts" are maintained at the individual schools, neitherthe assets, liabilitiesand fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generallyaccepted accountingprinciples, these accounts should be recorded in the general purpose financial statements.
The generalpurpose financial statements accountfor all State,Federal,Taxes and Other funds under control ofthe Board, in compliancewith generally acceptedaccounting principles applicable to governmental units, unless otherwisedisclosedin these notes. Funds andthe accountgrouppresentedin this report are as follows:
GOVERNMENTAL FUND TYPES - are used to accountfor all or most ofa Board'seducational activities. Governmental Fund Types include:
GENERALFUND - the fund used to accountfor all financial resources ofthe Board except those required to be accounted for in another fund. Thesetransactions relateto resources obtained and used for services provided by a board of education.
SPECIALREVENUEFUND - the fund usedto accountfor the proceedsofspecificrevenue sources(other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are receivedprimarilyfrom the GeorgiaDepartment of Educationand from the Federal government to accomplish specific educational objectives.
-8-

CANDLER COUNTY BOARD OF EDUCAnON

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available).
"Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the fmal two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment
-9-

CANDLER COUNTY BOARD OF EDUCAnON

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred; rather than when funds are received or disbursed.
BUDGET
The Candler County Board of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for these governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 10-

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Candler County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on September 12, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Candler County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 1% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the Board.

The tax millage rate levied for the 1997 tax year (calendar year) for the Candler County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

11.50 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $373,391.52 and was recorded in the Debt Service Fund. The State will terminate collection of this tax once an additional $5,926,608.48 has been collected or on December 31, 2002, whichever occurs first.

INVENTORIES

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

GENERAL OBLIGATION BONDS

The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group.

- 11 -

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERFUND TRANSACTIONS
The Board has the following types of interfund transactions:
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
Note 2: DEPOSITS
COLLATERALIZAnON OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities of the State of Georgia,
- 12-

CANDLER COUNTY BOARD OF EDUCAnON

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS

(5) Bonds of any public authority created by the laws ofthe 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 and 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.

CATEGORIZAnON OF DEPOSITS At June 30, 1998, the bank balances were $6,823,456.50. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Cate~OlY

Bank Balance

1

$ 469,413.29

2

6,150,723.53

3

203.319.68

Total

$,g.823.456.50

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories

- 13 -

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 4: RISK MANAGEMENT

The Board 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; natural disaster and unemployment compensation.

The Board has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illness or injuries to employees. However, the errors or omissions policy excludes coverage for sexual harassment and discrimination. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three years.

The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.

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

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

Beginning o f Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear LiabiJity

1997

$

0.00 $

s 1,080.00

s 1,080.00

0.00

1998

$

0.00 s

0.00 s

0,00 $

0,00

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

Position Covered

Amount

Superintendent Curriculum Director Each Principal Each Secretary

$ 50,000.00
s 5,000.00 s 5,000.00
$ 2,000.00

Note 5: GENERAL LONG-IBRM DEBT

CAPITAL LEASES The Candler County Board of Education has entered into various lease agreements as lessee for buses, equipment and portable classrooms. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date oftheir inception.

- 14-

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: GENERAL LONG-TERM DEBT

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

Purpose General Government - Series 1997

Interest Rates 4,05% - 4,25%

Amount $ 4,900,000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 1998, were as follows:

Balance July 1, 1997
Retroactive Restatement of Prior Year Balances
Balance July 1, 1997 Restated
Additions
Deductions Payments
Balance June 30, 1998

Capital Leases
$ 118,220,95

General Obligation
Bonds

$

0,00

Total $ 118,220,95

-183.58

-183,58

$ 118,037.37 168,938,88

$

0,00

4,900,000.00

$ 118,037.37 5,068,938,88

-87,656.98 $ 199,319,27

$,4,900,000.00

-87,656,98 $ 5,099.319,27

At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year
Ended June 30
1999 2000 2001 2002 2003
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value of Future Minimum Lease Payments

Capital Leases
$ 93,915,96 60,902,56 40,067,86 30,255.46
$ 225,141.84
-25,822,57

General Obligation
Bonds
$ 289,779.17 1,204,550,00 1,164,050,00 1,522,550,00 1,563,750,00
$ 5,744,679.11

Total Debt
$ 383,695,13 1,265,452,56 1,204,117,86 1,552,805.46 1.563,750,00
$ 5,969,82 LQ1

$ 199.319.27

- 15 -

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 6: ON-BEHALF PAYMENTS
The Board has recognized revenues and expenditures in the amount of$161,390.45 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.
Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of$141,164.05
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $3,263.40
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$16,963.00
Note 7: CQNTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position.
Note 8: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION
Substantially all teachers, administrative and clerical personnel employed by local school systems are covered
by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
TRS CONTRIBUTIONS REQUIRED AND MAD~ Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:
- 16-

CANDLER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 8: RETIREMENT PLANS
Fiscal Year
1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 636,251.76 $ 583,015.11 $ 536,357.25

- 17-

CANDLER COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1998

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Uabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Uabilities and Fund Equity
See notes to the general purpose financial statements. -18 -

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$ 252,883.35 $

48,285.29

9,694.17

4,979.03

6,890.47 2,463.72

$ 271,931.71 $ _.....5.i.3iii,l2i;i6, 4.3_2

$

18,163.46 $

21,650.20

$

39,813.66 $

12,982.92 36,941.62
3,339.78
53,264.32

$

6,890.47

2,463.72

222,763.86 $

0.00

$ 232,118.05 $

0.00

$ 271,931.71 $

5..3...,.2..64.3_2

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS
JUNE 30, 1998 JUNE 30, 1997

$

1,862.68 $

25,000.00 $ 328,031.32 $ 292,844.14

225,320.24

239,993.44

122,748.73

6,890.47 2,463.72

5,947.23 2,405.38

$ 227,182.92 $

25,000.00 $ 577,378.95 $ 423,945.48

$

12,241.40

$

18,885.36

$

50,031.74

42,863.79

56,346.01

114,937.83

99,081.03

2,858.65

6,198.43

27,950.87

$

25,000.00

25,000.00

$

78,090.02 $

25,000.00 $ 196,168.00 $ 182,137.09

$ 149,092.90
0.00 $ $ 149,092.90 $

$ 149,092.90

0.00 0.00 $

6,890.47 $ 2,463.72
222,763.86
381,210.95 $

5,947.23 2,405.38
233,455.78
241,808.39

$ 227,182.92 $

25,000.00 $ 577;378.95 $ 423,945.48

-19 -

CANDLER COUNTY BOARD OF EDUCATION
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPEC~LREVENUEFUND
YEAR ENDED JUNE 30, 1998

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

FUND BALANCE JUNE 30

See notes to the general purpose financial statements.

"

-20-

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

$

46,480.00 $ 368,123.50

586,527.69

195,628.87

88.10

$ 828,636.56 $ 368,211.60

$ 316,870.78
41,060.67 1,407.83 202.08 35.00 9,645.08

$ 839,328.48

7,938.06

$ 839,328.48 $ 377,159.50

$

-10,691.92 $

-8,947.90

$

-10,691.92 $

241,808.39

943.24 58.34

8,947.90
0.00 0.00

$ 232,118.05 $

..0....0..0..

EXHIBIT"F"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS YEAR ENDED
JUNE 30, 1998 JUNE 3D, 1997

$ 867,709.57 337.50 $
$ 868,047.07 $

$ ......;.0.;.;;;,0.;..0

414,603.50 $ 1,454,237.26
196,054.47

565,601.53 1,152,565.88
168,399.52

....;;O..;.;;..O~O $ 2,064,895.23 $ 1,886,566.93

$ 638,903.89 27,812.82 48,824.11 5,903.91 55.94 1,850.01 11,939.10 $
$ 735,289.78 $ $ 132,757.29 $
16,335.61
$ 149,092.90 $ 0.00
$ 149,092.90 $

$ 955,774.67 $ 936,689.06

68,873.49

54,230.64

50,231.94

35,214.51

6,105.99

45,430.30

35.00

35.00

9,701.02

13,073.03

1,850.01

10,723.45

11,939.10

14,233.48

0.00

847,266.54

763,433.87

0.00 $ 1,951,777.76 $ 1,873,063.34

0.00 $ 113,117.47 $

13,503.59

25,283.51

17,538.16

0.00 $ 0.00

138,400.98 $ 241,808.39

31,041.75 215,174.23

943.24 _ _ _..;5;.;;,8;.,;.3..;.,.4

-4,786.22 378.63

0.00 $ 381,210.95 $ 241,808.39

- 21 -

CANDLER COUNTY BOARD OF EDUCATION

SCHEDULE" 1"

SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

At June 30, 1998, the Candler County Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely
affected. As of June 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Board's fmancial accounting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department of Education). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as of December 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. - 22-

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.1998

SCHEDULE "2"

-23-

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERALAWARDS
YEAR ENDEDJUNE 30,1998

SCHEDULE"2"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Pass-Through FromGeorgia Department of Education Individuals with Disabilities Education Act Part B - Special Education FlowThrough 1998 Grant Preschool 1998 Grant Vocational Education - BasicGrantsto States High SchoolProgram Basic Grant 1998 Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.027 84.173

N/A

$

97,333.00 $

N/A

12,790.00

105,020.58 (3) 18,010.54 (3)

84.048

N/A

21,4n.19

$ 867,709.57 $

25,242.18 (3) 735,289,78

Total Federal Financial Assistance N/A = Not Available

$ 1,454,237.26 $

Notesto the Schedule ofExpenditures ofFederal Awards

(1) The amounts shownfor the FoodDistribution Program represents the Federally assigned valueof nonmonetary assistance for donated commodities received and/orconsumed by the system during the currentfiscal year.
(2) Expenditures for the Summer FoodService Program for Children, Childand Adult CareFood Program andthe SchoolBreakfast Program werenot maintained separately andare included in the 1998 National School Lunch Program.
(3) Expenditures for this program includeState, and/orOtherFunds. Expenditures are not maintained by fund source.

MajorPrograms are identified by an asterisk (*) in front of the CFDAnumber.

The Boarddid not proVide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal Awards includes the Federal grantactivity of the Candler County Boardof Education and is presented on the modified accrual basisof accounting which is the samebasisof accounting usedin the presentation of the general purpose financial statements.

1,574,618.26

See notesto the general purpose financial statements

-24-

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30,1998

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Sparsity Grant Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Migrant Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Alternative Program At-Risk Summer School Program Health Insurance Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Teachers'Retirement Tuition for the Multi-Handicapped Lottery Programs Alternative School Program Instructional Technology Assistive Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and FisCal Services Public School Employees Retirement
See notes to the general purpose financial statements.

GOVERNMENTAL FUND TYPES

GENERAL

SPECIAL REVENUE

FUND

FUND

TOTAL

$ 3,644,139.00 461,364.00 82,557.00 152,292.00 45,176.00
1,004,791.00
202,858.00 58,868.00 89,602.00 132,856.00 252,875.09 81,459.00 41,907.00 23,282.00 17,On.00 28,842.00 -490,917.00 435,440.00
$ 63,937.00
43,146.00 59,150.00 7,412.00 141,164.05 9,572.00 24,840.00 2,703.15 3,263.40 53,246.70

$
46,480.00
792.22 4,979.03 53,000.00

3,644,139.00 461,364.00 82,557.00 152,292.00 45,176.00
1,004,791.00
202,858.00 58,868.00 89,602.00 132,856.00 252,875.09 81,459.00 41,907.00 23,282.00 17,On.00 28,842.00 -490,917.00 435,440.00 46,480.00 63,937.00
43,146.00 59,150.00
7,412.00 141,164.05
9,572.00 24,840.00
2,703.15 3,263.40 53,246.70
792.22
4,979.03 53,000.00

309,352.25

309,352.25

16,963.00

16,963.00

$ 6,689,865.39 $ -25-

7,104,468.89

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30,1998

SCHEDULE "4"

PROJECT
For the Purpose of Acquiring, Constructing, and Equipping a New Metter High School

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS

$ 6,300,000.00 $ 6,300,000.00 $ 242,427.00 $=========0=.0=0=

(1) The Board's original cost estimateas specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board'scurrent estimate of total cost for each project. Includes all cost from project inception to completion.
(3) The voters of CandlerCountyapproved the imposition of a 1% salestax to fund the above projects and retire associated debt. Amounts expended for these projects may include salestax proceeds, state, local property taxes and/or other funds over the life of the project.

See notesto the general purpose financial statements. -26 -

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE30,1998

SCHEDULE "5"

EXPENDITURES
Current Instruction SupportServices PupilServices Improvement of Instructional Services General Administration Business Administration Maintenance and Operation of Plant Food ServicesOperation

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

792.22 $

4,979,03 $

53,025.77 $

258,073.76 $ 316,870,78

41,060,67 1,407.83 202.08 35.00 9,645.08 7,938,06

41,060,67 1,407.83 202,08 35.00 9,645,08 7,938,06

Total Expenditures

$

792.22 $

4,979.03 $

53,025,77 $

3.1.8.,3;,;6.2,..4_.8 $ 377,159,50

RECAP:
salaries and Benefits Pre-Kindergarten Program
Other Expenditures Alternative SchoolProgram Instructional Technology AssistiveTechnology Classroom Technology Pre-Kindergarten Program

$ 298,964.73
792.22
4,979.03 53.025.77 19,397.75

$ 377,159.50

see notesto the generalpurposefinancial statements.

-27

CANDLER COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "6"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

4,382,259.00 $ _ _--12:2.,3:5:8=.0=0~

$

4,497,764.50

211,959.83 $ _ _--1:8.;4~,.7.6=9..=0.8:~

$

4,709,724.33

-2,138.04 .$ _ _...4..,:7.z0.7:.,.5=8.:6.=.2=9:..

$

0.00 $ ====.......===_..0.....0...0...

See notes to the general purpose financial statements. - 29 -

CANDLER COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS. BY PROGRAM
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten C*) Grades 1 3 (*) Sub-Total- K-3 Grades 4 - 5 C*) Grades 6 - 8 (*) Grades 9 - 12 (*) High School Laboratories (*) Vocational Education Laboratories (*) Total General and Career Education Programs
SPEC~LEDUCATIONPROGRAMS Regular Programs Category II (*) Category III (*)
Category rv (*)
Sub-Total Regular Category VI (Gifted) (*)
Total Special Education Programs REMED~EDUCATION PROGRAM"
Total Fourteen Weighted Programs MED~ CENTER PROGRAMS
Salaries Operations
Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL

%

ORIGINAL

MID-TERM

$

423,817.00

$

381,435.30 $

1,127,878,00

1,015,090.20

$ 1,551,695.00 90 $ 1,396,525.50 $

509,342.00 90

458,407.80

800,639,00 90

720,575,10

458,164.00 90

412,347.60

122,390.00 90

110,151.00

201,909.00 90

181,718.10

$ 3,644,139.00

$ 3,279,725.10 $

0.00 0.00 41,907.00
41,907.00

$

447,483.00

$

402,734.70 $

0.00

$

447,483.00 90 $

402,734.70 $

13,881.00 90

12,492.90

$

461,364.00

$

415,227.60 $

$

82,557.00 90 $

74,301.30 $

$ 4,188,060.00

$ 3,769,254.00 $

0.00
0.00 0.00 41,907.00

$

124,372.00 90 $

111,934.80 $

27,920.00 90

25,128.00

$

152,292.00

$

137,062.80 $

0.00 0.00

$ 4,340,352.00

- $ 3,906,316.80 $

41,907.00

STAFF DEVELOPMENT PROGRAMS
Cost of Instruction
Professional Development

$

13,120.00

32,056.00

$

13,120.00 $

32,056.00

0.00 0.00

Total Staff Development Programs (*) Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements.

$

45,176.00 100 $

45,176.00 $

...0....0.0..

30 -

SCHEDULE "7"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

381,435.30 $

353,719.50 $

10,747.05 $

364,466.55

1,015,090.20

1,002,350.09

48,663.39

1,051,013.48

$ 1,396,525.50 $

1,356,069.~9 $

59,410.44 $ 1,415,480.03 $

0.00

458,407.80

566,211.19

4,383.54

570,594.73

0.00

762,482.10

835,413.58

59,298.68

894,712.26

0.00

412,347.60

612,865.02

25,791.01

638,656.03

0.00

110,151.00

143,715.49

6,657.32

150,372.81

0.00

181,718.10

282,052.09

20,518.16

302,570.25

0.00

$ 3,321,632.10 $ 3,796,326.96 $

176,059.15 S 3,972,386.11

$

402,734.70

S

125,273.54 $ 309,297.90
44,256.31

3,148.91 S 4,340.86
220.00

128,422.45 313,638.76 44,476.31

$

402,734.70 S

478,827.75 $

7,709.n S

486,537.52

0.00

12,492.90

21,210.89

68.44

21,279.33

0.00

S

415,227.60 $

500,038.64 $

7,n8.21 $

507,816.85

$

74,301.30 $

74,159.61 $

931.72 S

75,091.33

0.00

$ 3,811,161.00 S 4,370,525.21 $

184,769.08 S 4,555,29429

$

111,934.80 $

127,23929

S

127,239.29

0.00

25,128.00

$

27,190.75

27,190.75

0.00

$

137,062.80 $

127,23929 $

27,190.75 $

154,430.04

$ 3,948,223.80 S 4,497,764.50 $

211,959.83 $ 4,709,724.33 S

0.00

s

13,120.00

32,056.00

$-------45,176.00

$

35,740.01 $

35,740.01

9,439.99

9,439.99

$

45,180.00 $

45,180.00 $

0.0;0.

31

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATEAUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 19, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Candler County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Candler County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated May 19,1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditin~ Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Candler County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditin~ Standards.
Internal Control Over Financial ReportiuK
In planning and performing our audit, we considered Candler County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over fmancial reporting. However, we noted certain matters involving the internal control over financial reporting and its
98YB-40

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 of the internal control over financial reporting that, in our judgement, could adversely affect Candler County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6211-98-01, FS-6211-98-02 and FS-6211-98-03.

A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions noted above are also considered to be material weaknesses.

This report is intended for the information of management, the Federal cognizant agency, Federal awarding
agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.

RWH:gp
98YB-40

Respectfully submitted,
~4"{/f' ~.~ Russell W. Hinton State Auditor

RUSSELL W. HINTON
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 19, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Candler County Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM
AND INTERNAL CONTROL pYERCQMPLIANCE IN ACCORDANCE WITII OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Candler County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OME) Circular A-i33 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Candler County Board of Education's major Federal programs are identified in 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 Candler County Board of Education's management. Our responsibility is to express an opinion on Candler County Board ofEducation's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to fmancial audits contained in Government AuditinK Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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 Candler County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Candler County Board of Education's compliance with those requirements.

98SA-I0

In our opinion, the Candler 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, 1998.
Internal Control Over Compliance
The management of Candler 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 Federalprograms. In planningand performing our audit, we considered Candler County Board ofEducation's internal controlover compliance with requirements that could have a direct and material effect on a major Federal programin order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operationofone or more ofthe internal controlcomponents does not reduceto a relatively low level ofrisk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be materialin relation to a major Federal programbeingaudited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involvingthe internalcontrolover compliance and its operationthat we consider to be material weaknesses.
This report is intendedfor the information of management, the Federal cognizant agency, Federal awarding agenciesand pass throughentities. This restriction is not intended to limitthe distribution ofthis report which is a matter of public record.
Respectfully submitted,
~~.J~ Russell W. Hinton State Auditor
RWH:gp 98SA-IO


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

CANDLER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6211-93-02 6211-93-04 6211-93-06 6211-96-01 FS-6211-97-01 FS-6211-97-02 FS-6211-97-03

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

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS
Failure to Meet Expenditure Requirements Amount: $8,040.61
Finding Control Number: 6211-93-06

The underexpenditure of Quality Basic Education (QBE) funds of$8,040.61 for the various QBE programs will be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
EXPENDITURESILIABILITIESIDISBURSEMENTS
Failure to Meet Expenditure Requirements Amount: $74.63 Finding Control Number: 6211-96-01

The underexpenditure ofQua1ity Basic Education (QBE) funds of$74.63 for the StaffDevelopment programs will be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
CASH AND CASH EQUIVALENTS Inadequate Separation ofDuties Finding Control Number: FS-6211-97-01

The superintendent reviews the bank statements on all bank accounts. Some accounting functions were reassigned in order to obtain a better segregation of duties.

- 1-

CANDLER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEARENDED JUNE 30. 1998
PRIORYEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTIONIRESPONSES EMPLOYEE COMPENSATION Inadequate Personnel Filesffeachers' Compensation Contracts Finding Control Number: FS-6211-97-02 Part of the prioryearfinding related to isolated instances that were not present in the currentyear. Board has developed a form to document pay changes for administrative personnel. GENERAL FIXED ASSETS Failure to MaintainGeneral Fixed AssetsAccount Group Finding ControlNumber: FS-6211-97-03 The Board of Education of CandlerCounty has determined that it is not economically feasible at this time to maintain a separate General FixedAssets Account Group from the primaryaccounting system provided by the Department ofEducation. Although the Boardrealizesthe significant role the General FixedAssets Account Group has on the financial statements, it has decidednot to take anyactionat this time. The Board hopes thatthis issuewill be addressed in the accounting system softwareupdatesissuedby the Department of Education in the future.
-2-

SECTION IV FINDINGS AND QUESTIONED COSTS

CANDLER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998

I SUMMARY OF AUDITOR'S RESULTS

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

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

Cash and Cash Equivalents General Fixed Assets

Employee Compensation

All of the reportable conditions described above are considered to be material weaknesses.

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

4. Re.portable Conditions in Internal Control Over Mqjor ProjU31llS The audit report for the Candler County Board ofEducation did not disclose any reportable conditions in internal control over major programs.
Mw 5. Type ofRe.port Issued on Compliance for or ProiUWs
The auditor's opinion on the Candler County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit FindinGS Required to be Rported by Section .5IO(a) of OMB Circular A-I33 The Candler County Board ofEducation's audit did not disclose audit findings required to be reported
by section .510(a) ofOMB Circular A-133.

7. Major ProlWlJIlS Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.559 Food and Nutrition Program - Summer Food Service Program for Children

8. Type "A" ProGJ1Ul1 Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee
The Candler County Board ofEducation was audited as a low risk auditee based on a waiver granted
by the U. S. Department of Education. -

- 1-

CANDLER COUNTy BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Separation of Duties Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6211-98-01
An examination of the internal accounting control procedures revealed that the Candler County Board of Education did not provide for adequate separation of duties in the performance of the following accounting functions and related procedures:
(I) The bank reconciliation function was not separated from the check preparation function for the payroll account.
(2) The check preparation function was not separated from the purchasing and check signing functions in the capital projects account.
These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The Board should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above functions and implement those procedures to strengthen the internal control over the accounting functions.
EMPLOYEE COMPENSATION Inadequate Personnel Files/Teachers' Compensation Contracts Reportable Condition - Material Weakness Finding Control Number: FS-6211-98-02
The accounting procedures ofthe Board were insufficient to provide for adequate control over the employee compensation process. A sample of compensation paid to 25 employees revealed the following deficiencies:
(1) Fifteen teachers' compensation contracts were incomplete. The contracts did not include documentation for local, responsibility, and/or extended day or year supplements.
(2) Thirteen employees' times sheets were not available for review during the audit.
(3) Eleven employees' W-4s and/or G-4s were not available for review during the audit.
(4) Leave records were not maintained for two employees.
-2-

CANDLER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inadequate Personnel Files/Teachers' Compensation Contracts Reportable Condition - Material Weakness Finding Control Number: FS-6211-98-02
These deficiencies were the results of management's failure to prepare employment contracts which documented total compensation to be received by certified professional personnel, to properly maintain personnel files, to adequately maintain leave records, and to submit supplements to the Board for approval. In addition, management failed to implement proper internal control procedures over the employee compensation functions which are necessary to adequately safeguard the Board's assets.
Management should develop and implement policies and procedures to ensure that employment contracts prepared for certified professional personnel are complete and accurate. An employment contract should contain complete compensation information on the face ofthe contract or referenced to an addendum listing specifically referenced in the contract. Management should submit all supplements to the Board for approval. Management should maintain adequate leave records. In addition, management should adequately maintain personnel files and establish appropriate internal controls.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6211-98-03
The Candler County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
ill FEDERAL AWARD FINDINGS AND QIJESTIONEP COSTS
No matters were reported.
-3-