Carroll County Board of Education, Carrollton, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

CARROLL COUNTY BOARD OF EDUCATION
CARROLLTON, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,2010
(Including Independent Auditor's Reports)

CARROLL 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

EXHlBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

STATEMENT OF REVENUES, EXPENDITURESAND

CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

E

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

TO THE STATEMENT OF ACTIVITIES

F

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

G

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND

CARROLL COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -
SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAllERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECTAND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
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

CARROLL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 18, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Carroll County Board of Education
INDEPENDENTAUDITOR'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 of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Carroll County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Carroll County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standads, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the 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 previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Carroll County Board of Education, as of June 30, 2010, 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.
In accordance with Government Auditing Standards, we have also issued our report dated July 18, 2011, on our consideration of the Carroll County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that 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 GovernmentAuditing Standards and should be considered in assessingthe results of our audit.
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expendituresand Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reportingfor placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Carroll County Board of Education's financial statements as a whole. The accompanying supplementary information consists 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 of States, L m l Governments, and Nun-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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,
CPA, CGFM

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
INTRODUCTION
Our discussion and analysis of the Carroll County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2010. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understandingof the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2010 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $162.9 million. Of this amount, $6.1 million is unrestricted and is available for spending at the School District's discretion.
The School District had $138.3 million in expenses relating to governmental activities; only $86.7 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $58.9 million were adequate to provide for these programs.
As stated above, general revenues accounted for $58.9 million or 40% of all revenues totaling $145.5 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This report consists of several parts including management's discussion and analysis, 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 Dktrid-wide and fundfinancialstatemen&.
The District-wide financial statements include the Statemento f NetAsse& and StatementofAdivties. These statements provide information about the activities of the School District presenting both short-termand long-terminformation about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The GovernmentalFundsstatements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statement provides information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Carroll County School District, the General Fund, District-wide Capital Projects Funds, and Debt Service Funds 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 of required 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.

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmentaladivities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into accounts 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 financialposition of the School District has improved or diminished. The causes of this 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 modifiedaccrualmethod of accounting which measures cash and all other financial asseB that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled within the financial statements.
Fiduciav Funds: The School District is the trustee, or fiduciav,for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1provides a summary of the School District's net assets for this fiscal year.
By far the largest portion of the School District's net assets, (91.2 percent) reflect its investment in capital assets (e.g., land and improvements, building and building improvements, vehicles, furniture, equipment and construction in progress), less any related debt used to acquire those assets that is

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

still outstanding. The School District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the School District's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used t o liquidate these liabilities.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2010

Year 2009

Assets Current and Other Assets Capital Assets, Net

Total Assets

Liabilities Current and Other Liabilities Long-Term Liabilities

Total Liabilities

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

Total Net Assets

Table 2 shows the Changes in Net Assets for this fiscal year.

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

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

Governmental Activities

Fiscal Year

Fiscal Year

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements. The table shows each functions net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the School District's taxpayers by each of these functions.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2010

Year 2009

Net Cost of Services

Fiscal

Fiscal

Year 2010

Year 2009

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

Total Expenses

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
Governmental Funds: The focus of the School District's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School District's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the School District's net resources available for spending at the end of the fiscal year. The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $150.5 million and total expenditures and other financing uses of $171.4 million. General Fund equity increased by $0.4 million during the year. The Capital Projects Fund equity decreased by $21.4 million. Construction of school facilities to be re-paid by SPLOST sales tax receipts were forward-funded with a $70.0 million bond issued during fiscal year 2008. Capital Projects fund equity at June 30, 2010, was $8.6 million to be used in the continuing construction of school facilities.

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

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 2010, the School District amended its general fund budget as needed in particular due to student growth and facility safety needs.
For the General Fund, the actual revenues of $131.8 million were over the final budgeted amounts of $123.7 million by $8.1 million. This difference (actual vs. final budget) was due primarily to charges for services over final budget of $1.6 million, property taxes under final budget by $1.5 million, state revenues under final budget by $6.4 million, Federal revenues over final budget by $13.2 million and miscellaneous revenues over final budget by $1.3 million. The charges for services over final budget were, in part, due to the inclusion of the principals' accounts in our financial statements, but not in the budget.
The actual expenditures of $132.8 million were over the final budgeted amount of $121.8 million by $11.0 million. This difference was due in part to our school principals' accounts not being included in the budget process as well as the exclusion of Federal programs. General Fund revenues and other financing sources were greater than expenditures by $0.4 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2010, the School District had $184.4 million invested in capital assets, including school buildings, athletic facilities, buses and other vehicles, computers, and other equipment, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation.
Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2010

Year 2009

Land Construction In Progress Land lmprovements Buildingand Improvements Equipment

$

8,215,855 $

8,201,246

140,432,190

121,199,132

Total

Due to the ongoing growth in the county, the School District has numerous construction projects including new buildings, additions and renovations.

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

Debt
At fiscal year ended June 30, 2010, the School District had $45.2 million in bonds outstanding, and $2.7 million in other long-term debt. Table 5 summarizes the School District's debt which includes general obligation bonds and compensated absences outstanding.

Table 5 Debt a t June 30

Governmental Activities

Fiscal

Fiscal

Year 2010

Year 2009

Bonds Payable Unamortized Bond Premium Capital Leases Compensated Absences
Total

$

45,225,000 $

765,569

1,349,517

567,747

58,280,000 1,252,809 469,393 588,496

At June 30, 2010, the School District's assigned bond ratings were "AA" as determined by Fitch Ratings, lnc.
CURRENT ISSUES
Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations.
Economic Slowdown - State funding for education has been stagnant and as a result more pressure is being placed on the local School Districts to prioritize its educational programs and provide additional local funding. During fiscal year 2010, the Carroll County Board lost over $10.7 million in state funding shifting the burden to the local tax base. The current millage rate is 18.1 mills with a maximum of 20.0 mills. Currently, a mill of tax in Carroll County generates $1.7 million. Despite these challenges, the Carroll County School District is strong financially and we remain optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students.
Capital Improvements - The School District plans capital improvements as future capital needs arise due t o increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. The School District regularly monitors anticipated capital outlay needs.

CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information contact Mr. Greg Denney, Chief Financial Officer for the Carroll County School System, 1 6 4 Independence Drive, Carrollton, Georgia 30117. You may also email your questions to Mr. Denney at greg.dennev@carrolcountvschools.com.

CARROLL COUNTY BOARD OF EDUCATION

CARROLL COUNTY BOARD OF EDUCATION
STATEMENT OF NET ASSETS JUNE 30,2010

EXHIBIT "A"

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Other Inventory Deferred charges Capital assets (nondepreciable) Capital assets (net of accumulated depreciation) Total assets
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest payable Contracts payable Retainage payable Bonds payable due within one year Bonds payable due in more than one year Capital leases due within one year Capital leases due in more than one year Compensated absences due in less than one year Compensated absences due in more than one year
Total liabilities
NET ASSETS
Investment in capital assets, net of related debt Restricted for:
Capital Projects Continuationof Federal Programs Debt service Unrestricted
Total net assets

Governmental Activities

The accompanying notes are an integral part of these financial statements. 1

CARROLL COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30,2010

EXHIBIT "B"

FunctionsProprams Governmental activ~ties: Instruction Support services:
Pupil services Improvement of instructional
services Educational media services General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Enterprise operation Food services operation Community service operation Interest on short-term and long-term debt Total governmental activities

Expenses

Charges for Services

Program Revenues

Operating

Capital

Grants and Grants and

Contributions Contributions

Net (Expense) Revenue and Changes in
Net Assets

General revenues: Taxes: Property taxes, levied for general purposes Sales taxes: For debt service Intangible taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Other Total general revenues Change in net assets
Net assets, beginning of year Net assets, end of year

The accompanyingnotes a n an integral part of these financial statements. 2

CARROLL COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30,2010

EXHIBIT "C"

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Other Inventory
Total assets
LIABILITIES AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Contracts payable Retainage payable Deferred revenue
Total liabilities
FUND BALANCES Reserved for:
Continuationof Federal Programs Capital outlay Debt service Unreserved: Designated for Student Activities Undesignated Total fund balances Total liabilities and fund balances

General

DistrictWide Capital
Projects

Debt Service

$

2,894,543

Total Governmental
Funds

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.

Cost

$ 225,734,434

Less accumulated depreciation

-41,294,637

184,439,797

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.

Sales taxes

1,625,720

Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the finds.

Bonds

$

-45,225,000

Bond premium, net of amortization

-765,569

Bond issuance costs, net of amortization

191,808

Accrued interest Capital leases

-523,675
- 1,3495 17

Compensated absences

-567,747

-48,239,700

Net assets of governmental activities

$

162,909,885

The accompanying notes are an integral part of these financial statements. 3

CARROLL COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30,2010

EXHIBIT 'ID"

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues
EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educationalmedia services General administration School administration Business administration Maintenanceand operation of facilities Student transportation services Central support services Other support services Enterprise operations Food services operation Community services operation Capital outlay Debt service: Principal retirement Interest and fees Total expenditures
Excess (deficiency)of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets Capital leases incurred Transfers in Transfers out Total other financing sources (uses)
Net change in fund balances
FUND BALANCE, beginning of year
FUND BALANCE, end of year

General

District -
Wide Capital Proiects

Debt Service

Total Governmental
Funds

The accompanying notes are an integral part of these financial statements. 4

CARROLL COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30.2010

EXHIBIT "E"

Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds

$ -20,986,885

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current year.

Capital outlay Depreciation expense
The net effect of the disposal of fixed assets is to decrease net assets
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
Property taxes
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance cost, premiums, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.
- Principal payments bonds
Principal payments - capital leases
Issuance of capital lease Bond premium amortization expense Bond issuance costs amortization expense
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Change in compensated absences Change in accrued interest

-203,975

The accompanying notes are an integral part of these financial statements. 5

CARROLL COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010

EXHIBIT "F"

ASSETS Cash Investments
Total assets LIABILITIES
Funds held for others NET ASSETS
Held in trust for private purposes Total Liabilities and Net Assets

Private Purpose
Trust

Agency Fund

The accompanyingnotes are an integral part of these financial statements. 6

CARROLL COUNTY BOARD OF EDUCATION
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30,2010

EXHIBIT "G"

Investment earnings: Interest
None Noted
Net assets, beginningof year Net assets, end of year

ADDITIONS DEDUCTIONS Changes in Net Assets

Private Purpose Trust

$

363

The accompanying notes are an integral part of these financial statements. 7

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "Hn

Note 1: DESCRIPTIONOF SCHOOL DISTRICTAND REPORTING ENTITY
R e ~ o r t i n gEntity
The Carroll County Board of Education (the 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 Carroll County Board of Education.
District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the 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 nonexchangetransactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Ststements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)
Distriict-wide W t a I Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Senlice Fund accounts for taxes (sales) legally restricted for the payment of general longterm principal, interest and payingagent's fees.
The School District reports the following fiduciary fund types:
The Private Purpose Trust Fund reports a trust arrangement under which principal is to be invested and preserved intact with the resultant income to be used to assist University of West Georgia juniors and seniors who have committed t o a career in education or to veteran teachers who are returning to school to upgrade their teaching credentials.
Agency Funds account for assets held by the School District as an agent for various funds, governments or individuals.
Basis of Accounting
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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 of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Propertytaxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)
The School District funds certain programs by a combination of specific 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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
New Accounting Pronouncements
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 5 1, Accounting and Reporting for Intangible Asse&. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instrumen&. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
Cash and Cash Eauivalents
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
Investments
COMPOSITION OF INVESTMENTS lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(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 Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

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

The School District does not have a formal policy regarding investments that addresses credit risks, custodial credit risks, concentration of credit 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.

P r o ~ e mTaxes

The Carroll County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on August 15, 2009 (levy date). Taxes were due on December 1,2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Carroll County Tax Commissioner bills and collects the property taxes for the School District, withholds 1% 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, 2010, for maintenance and operations amounted to $33,87 1,438.

The tax millage rate levied for the 2009 tax year (calendar year) for the Carroll County Board of Education was as follows (a mill equals $ 1 per thousand dollars of assessed value):

School Operations

18.10 mills

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "HH"

Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)

Sales Taxes

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $11,697,129 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 of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

C a ~ i t aAl ssets

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

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

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements All Equipment

All $ 10,000 $ 10,000 $ 5,000 to $ 10,000

N/A 1 5 to 8 0 years 2 0 to 8 0 years
3 to 2 0 years

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

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)

Com~ensatedAbsences

Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.

Vacation leave is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis, according to the following guidelines:

Classified Employees Certified Employees with 0-5 years experience in Carroll County Certified Employeeswith 6-10 years experience in Carroll County Certified Employeeswith 11plus years experience in Carroll County

1 0 days per year 1 2 days per year 1 5 days per year 18 days per year

No other employees are eligible to earn vacation leave.

Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 20 days for Classified Employees and 2 5 days for Certified Employees.

Changes in compensated absences liability duringthe last three fiscal years are as follows:

Beginningof Year Liability

l ncreases

Decreases

End of Year Liability

General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
Net Assets
The School District's net assets in the District-wide Statements are classified as follows:

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets-These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Fund Balances
Reserved Reserves represent those portions of fund balance equity that are legally segregated for a specific future use.
Unreserved - Designated
Designatedfund balances represent tentative plans for future use of financial resources.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 1 1 0 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1)Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 3: DEPOSITS (Continued)

(2) lnsurance on accounts provided by the Federal Deposit lnsurance 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 MortgageAssociation.

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2010, the bank balances were $36,184,638. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

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

The School District's deposits by custodial credit risk category at June 30, 2010, are as follows:

Custodial Credit Risk Category

Bank Balance

Total

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 4: NON-MONETARYTRANSACTIONS
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:

GovernmentalActivities Capital Assets, Not Being Depreciated:
Land Construction Work In Progress

Balances July 1,2009

Increases

Decreases

Balances June 30,2010

$ 8,201,246$

14,609

$

8,215,855

Total Capital Assets, Not Being Depreciated $ 40,857,353$ 14,913,597$ 19,481,148$ 36,289,802

Capital Assets, Being Depreciated: Buildings and lmprovements Equipment Land lmprovements

Less: Accumulated Depreciation: Buildings and lmprovements Equipment Land lmprovements

Total Capital Assets, Being Depreciated, Net $ 128,660,365$ 19,693,605$

203,975 $ 148,149,995

GovernmentalActivity CapitalAssets - Net $ 169,517,718$ 34,607,202$ 19,685,123$ 184,439,797

Capital assets being acquired under capital leases as of June 30, 2010, are as follows:
Governmental Funds
Equipment Less: Accumulated Depreciation

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

Note 5: CAPITAL ASSETS (Continued)
Instruction Support Services
Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$

$

102,030

16,439

33,031

688,561

EXHIBIT "H"
2,608,903
840,061 164,898

Note 6: INTERFUNDTRANSFERS Interfund transfers for the year ended June 30, 2010, consisted of the following:

Transfer to

Transfers From
District-wide Capital Projects

Debt Service Fund

Transfers are used to move unused bond proceeds in the Capital Projects Fund to the Debt Service Fund to service outstanding debt.
Note 7: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1,1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability, errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 7: RISK MANAGEMENT(Continued)
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1,1992, 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 Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $500,000 loss per occurrence, up to the statutory limit.
The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent Each Principal and Assistant Primcipal All Other Employees

Note 8: LONG-TERM DEBT
CAPITAL LEASES The Carroll County Board of Education has entered into various lease agreements as lessee for HVAC, lighting retrofit, mobile classroom units, and buses. 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 of their inception.
COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 8: LONG-TERM DEBT (Continued)
GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government -Series 2 0 0 7

The changes in Long-Term Debt duringthe fiscal year ended June 30,2010, were as follows:

Balance July 1, 2009

Additions

Governmental Funds

Balance

Deductions

June 30,2010

Due Within One Year

G. 0. Bonds

$ 58,280,000 $

UnamortizedBond Premium

1.252.809

Total Bonds Payable

$ 59,532,809 $

0 $

13,055,000 $ 487,240

45,225,000 $ 765,569

14.495.000 381,679

0 $ 13,542,240 $ 45,990,569 $ 14,876,679

Capital Leases Compensated Absences

469,393 588,496

Total Long-Term Liabilities $ 60,590,698 $

1,541,010 373,531

660,886 394,280

1,349,517 567,747

396,845 397,423

1,914,541 $ 14,597,406 $ 47,907,833 $ 15,670,947

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

l nterest

Total Princi~aal nd lnterest Fiscal Year Ended June 30: Total Principal and lnterest

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT WH"

Note 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $308,492 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $210,376

Paid the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $35,551

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 $62,565
Note 10:SIGNIFICANTCOMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2010:

Project

Unearned Executed Contracts

Temple Middle School Technical High School Technical High Academy Project Central ElementarySchool Renovations New Mt. Zion High School Addition to Villa Rica High School Villa Rica High School Parking Lot

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

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 11: SIGNIFICANTCONTINGENT 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.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 12: POST-EMPLOYMENTBENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009
August 2009 - October 2009
November 2009 -June 2010

18.534% of covered payroll for August Coverage
14.492% of covered payroll for September - November Coverage
18.534% of covered payroll for December - July Coverage

For noncertificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 12: POST-EMPLOYMENT BENEFITS (Continued)

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

Note 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly t o provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 13: RITIREMENT PLANS (Continued)

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(This page left intentionally blank)

CARROLL COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND
- CHANGES IN FUND BALANCES BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "1"

REVENUES Property Taxes Other 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 Maintenanceand Operation of Facilities Student transportation services Central Support Services Other Support Services Enterprise Operations Food ServicesOperation Community Services Operation Capital Outlay Debt Service Principal Retirement Interest and Fiscal Charges
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES) Proceeds From Sale of Capital Assets Capital Leases Incurred Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

Budget

Original (1)

Final (1)

Actual Amounts

Variance With Final Budget

$ 122,899,340 $ 123,675,287 $ 131,756,720 $

8,08 1,433

S

1,851,852 $

1,852,482 $ -1,096,499 S

$ -1,886,632 $

$ -1,886,632

945 $ 1,541,010

-2,948,98 1
945 1,541,010 1,886,632

$

-34,780 $

14,271,952

-34,150 $ 14,271,952

445,456 $ 1 1,909,757

479,606 -2,362,195

Notes to the Scheduleof Revenue. Ex~endituresand 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 accompanyingschedule of revenues, expendituresand changes in fund balances budget and actual is presented on the modified accrual basis of accountingwhich is the basis of accounting used in the presentation ofthe fund financial statements.
See notes to the basic financial statements.

CARROLL COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "2"

Funding Agency ProeramlGrant
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 Sewices
ARRA - Child Nutrition Discretionary Grants Limited Availability
Fresh Fruit and Vegetable Program
Total Other Programs
Total U.S. Department of Agriculture
Education, U. S. Department of Education for Homeless Children and Youth Cluster Pass-Through From Georgia Department of Education Education for Homeless Children and Youth
Education Technology State Grants Cluster Pass-Through From Georgia Department of Education Education Technology State Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education
ARRA - Grants to States ARRA - Preschool Grants
Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education
- ARRA Education State Grants
Title I, Part A Cluster Pass-Through From Georgia Department of Education
- ARRA Title I Grants to Local Educational Agencies
Title I Grants to Local Educational Agencies
Total Title I, Part A Cluster

Pass-

Through

Entity

CFDA

ID

Expenditures

- - Number Number

In Period

10.579 10.582

NIA $ NIA
$
$

15,000 35,374
50,374
6,826,466

* 84.391 * 84.392 * 84.027 * 84.173

NIA $ NIA NIA NIA

1,468,208 50,112
2,534,243 91,951

CARROLL COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "2"

Funding Agency ProeramlGrant
Education, U. S. Department of Other Programs Pass-Through From Georgia Department of Education
Career and Technical Education - Basic Grants to States
English Language Acquisition Grants Improving Teacher Quality State Grants
Total Other Programs
Total U.S. Department of Education
Health and Human Services, U.S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning
ARRA - Child Care and Development Block Grant
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program
Total Federal Financial Assistance

Pass-

Through

Entity

CFDA

ID

Expenditures

- - Number Number

In Period

84.048 84.365 84.367

NIA $ NIA NIA

142,957 42,08 1 568,325

NIA = Not Available
Notes to the Schedule of Exvenditures of Federal Awards
(1)Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $504,838.

(2)Expenditures for the funds earned on the School Breakfast Program ($1,313,586w)ere not maintained separately and are included in the 2010 National School Lunch Program.

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

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Carroll 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.

CARROLL COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "3"

Grants Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program
- Kindergarten Program Early Intervention Program
Primary Grades (1-3) Program
Primary Grades - Early Intervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades - Early Intervention (4-5) Program
Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities
- Program for IntellectuallyGifted Students Category VI
Remedial Education Program Alternative Education Program English Speakersof Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operation Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Funding Georgia SpecialNeeds ScholarshipFund Health Insurance Middle School Support Grant National Teacher Certification Preschool Handicapped Program Residential Treatment Centers Grant Reimbursement Teachers' Retirement Virtual Schools Grant Georgia State Financing and Investment Commission Reimbursement on Construction Projects

Governmental Fund Types

Capital

General

Projects

Fund

Fund

Total

CARROLL COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "3"

AgencvlFunding
Grants Human Resources, Georgia Department of Family Connection Office of Treasury and Fiscal Services Public School Employees Retirement

Governmental Fund Types

Capital

General

Projects

Fund

Fund

Total

See notes to the basic financial statements.

CARROLL COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30,2010

SCHEDULE "4"

Proiect

(A) Funding the acquisition,

construction and equipping of

capital outlay projects, consisting

of four (4) elementary schools,

one (I) new middle school and

two (2) new high schools, the

acquisitionof future school sites

and additions, renovations,

modifications and improvements

at existing schools and facilities

within the Carroll County School

District and (B) Interest on the

School District debt.

$

Original Estimated Cost (1)
80,135,000

Current Estimated Costs (2)
$ 64,042,477

Amount Expended In Current Year (3)

Amount Expended In Prior Years (3)

Project Status

$ 64,042,477

Completed

Providing funds to pay or to be applied toward the cost of capital outlay projects within the Carroll County School District, consistingof acquiring, constructing, adding to, renovating, modifying, repairing, improving and equipping existing schools and other buildings and facilities and acquiring any property necessary or desirable therefore, both real and personal; acquiring real estate for the construction of new schools and facilities; constructingand equipping new schools and facilities and acquiring any property necessary or desirable therefore, both real and personal.

105,420,000

105,420,000 $ 21,490,24 1

56,055,427 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 projects. Includes all cost from project inception to completion.
(3) The voters of Carroll County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes andlor other funds over the life of the projects.

See notes to the basic financial statements.

- CARROLL COUNTY BOARD OF EDUCATION
GENERAL FUND QUALITY BASIC EDUCATION PROGRAM (QBE)
- ALLOTMENTS AND EXPENDITURES BY PROGRAM
F O R T H E FISCAL YEAR ENDED J U N E 30,2010

SCHEDULE "5"

Descriotion

Allotments From Georgia Department of Education (1)(2)

Eligible QBE Program Costs

Salaries

Operations

Total

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program - Early Intervention Program

Primary Grades (1-3) Program
Primary Grades - Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5) Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category I1

Category I11

Category IV

Category V
Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

4,983,894 703,564
12,499,044 1,363,074 5,720,153
956,126 9,282
9,507,723 8,538,518 2,511,373 12,568,220
3,419,689 693,523 762,022 422,023

TOTAL DIRECT INSTRUCTIONAL PROGRAMS $

64,658,228 $ 60,438,217 $ 1,035,103 $ 61,473,320

Media Center Program Staff and Professional Development

TOTAL QBE FORMULA FUNDS

$

66,780,656 $ 62,845,656 $ 1,147,539 $ 63,993,195

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

See notes to the basic financial statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 18,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Carroll County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Carroll County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Carroll County Board of Education's basic financial statements and have issued our report thereon dated July 18, 2011. 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 Standam's, issued by the Comptroller General of the United States.
Internal Control Over Financial Re~orting
In planning and performing our audit, we considered Carroll County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Carroll County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Carroll County Board of Education's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Comeliance and Other Matters
As part of obtaining reasonable assurance about whether Carroll 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Carroll County Board of Education in a separate letter dated July 18, 2011.
This report is intended solely for the information and use of management, members of the Carroll County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~us)ell W. Hinton, CPA, CGFM State Auditor

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 18,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Carroll County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Carroll County Board of Education's compliance with the types of compliance requirements described in the OMB Ci~cularA-133 Complince Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Carroll 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 Carroll County Board of Education's management. Our responsibility is to express an opinion on Carroll County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, L m l 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 t o 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 Carroll 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 Carroll County Board of Education's compliance with those requirements.
As described in item FA-6221-10-01 in the accompanying Schedule of Findings and Questioned Costs, Carroll County Board of Education did not comply with requirements regarding Allowable Costs/Cost Principles that are applicable to its Title I, Part A Cluster. Compliance with such requirements is necessary, in our opinion, for Carroll County Board of Education to comply with requirements applicable to that program.

In our opinion, except for the noncompliance described in the preceding paragraph, Carroll County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010.
Internal Control Over Comoliance
Management of Carroll County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Carroll County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the 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, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Carroll County Board of Education's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified a certain deficiency in internal control over compliance that we consider to be a material weakness.
A deficiency in internal control over complianceexists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency described in internal control over compliance described in the Schedule of Findingsand Questioned Costs as item FA-6221-10-01to be a material weakness.
Carroll County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Carroll County Board of Education's response and, accordingly, we express no opinion on the response.
This report is intended solely for the information and use of management, members of the Carroll County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
v* Respectfullysubmitted, Rus ell W. Hinton, CPA, CGFM
state Auditor

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

CARROLL COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

Unqualified

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

No None Reported

Noncompliance material to financial statements noted:

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

Yes None Reported

Type of auditor's report issued on compliance for major programs: Unqualified for all major programs except for Title I, Part A Cluster, which was qualified.

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

Yes

Identification of major programs:

CFDA Numberts)

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS

No matters were reported.

CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records not Utilized Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-6221-10-01
Condition: Periodic certifications and personnel activity reports were not completed in support of Title I Program (CFDA 84.010 and 84.389) salaries and wages as required by OMB Circular A-87.
Criteria: Provisions of the OMB Circular A-87, Cost Principals for State, Local and Indian Tribal Governments, require that salaries be documented as follows:
Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official havingfirst-hand knowledge of the work performed by the employee.
Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports (PARs) or equivalent documentation. Such documentary support will be required where employees work on more than one Federal award, or a Federal and a non-Federal award. PARs must reflect an after-the-fact distribution of the actual activity of each employee, account for the total activity for which the employee is compensated, be prepared at least monthly and must coincide with one or more pay periods, and be signed by the employee.
Questioned Cost: $129,045.47
Information: Based on review of employees' payroll records, the following exceptions were noted:
One instance was noted where an employee's salary charged solely to the Title I Program was not supported with the required semi-annual certifications.
Thirteen instances were noted where employees' salaries charged to multiple activities or cost objectives were not supported by personnel activity reports or equivalent documentation.
Cause: Management failed to implement appropriate procedures to ensure compliance with Federal guidelines regarding charges for salaries and wages being supported by periodic certifications or personnel activity reports.

CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERALAWARD FINDINGSAND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRlNClPLES Time and Attendance Records not Utilized Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-6221-10-01
Effect: Noncompliance with applicable provisions of OMB Circular A-87.
Recommendation: The School District should implement proceduresto ensure all salaries and wages paid from Federal award programs are allowable and properly documented in accordance with OMB Circular A-87. The Georgia Department of Educationshould review this matter to determine if a refund is appropriate.

SECTION V MANAGEMENT'S RESPONSES

CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30,2010

Finding Control Number: FA-6221-10-01

We concur with this finding. The Director of Title I will implement procedures to insure that all employees charged full time to Title I are completing the required periodic certification forms and those that work on multiple activities charged to Title I complete the required personnel activity reports.

Contact Person: Telephone: Fax: Email:

Greg Denney, CFO (770) 832-3568 (770) 836-2739 Greg.Den ney@carrollcountyschools.com