CHATTAHOOCHEE COUNTY BOARD OF EDUCATION
CUSSETA, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CHATTAHOOCHEECOUNTYBOARDOFEDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS-OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

8

ADDITIONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

FIDUCIARY FUND TYPE

G

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

22

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

23

2 SCHEDULE OF STATE REVENUE

25

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

4 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
May 17, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Chattahoochee County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements of the Chattahoochee County Board of Education, as of and for the year ended June 30, 2003, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Chattahoochee County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using a certain accounting practice and policy which, in our opinion, varies in some respects from generally accepted accounting principles. This variance is described as follows:

2003ARL-14

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
The aggregate effect on the general-purpose financial statements ofthis variance or omission has not been determined, but is believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matter referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Chattahoochee County Board of Education as ofJune 30, 2003, and the results ofits operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the general-purpose financial statements, during fiscal year 2003, the Board of Education changed its method of accounting for the salaries of certain ten-month employees from a cash basis to modified accrual basis. This change is in accordance with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated May 17, 2004, on our consideration ofthe Chattahoochee County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Chattahoochee County Board ofEducation taken as a whole. The accompanying combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules 1 through 4), which includes the Schedule ofExpenditures ofFederal Awards as required by U. S Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part ofthe general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and in our opinion such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
2003ARL-14

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
Respectfully submitted,

RWH:as 2003ARL-14

State Auditor

CHATTAHOOCHEECOUNTYBOARDOFEDUCATION

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30. 2003

Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements

GENERAL FUND

$

748,124.89

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

153,185.23

342,556.22 $

193,368.20

73,119.86

1,427.68 2,744.78

Total Assets

$ 1,090,681.11 $

197,540.66 $ ====2;;;;26;;,f,3=0=5.=09=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue Funds Held for Others Capital Lease Agreements General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Inventories Food Donated Commodities Purchased Food For SPLOST Projects Unreserved Undesignated
Total Fund Equity

$

64,893.63

$

82,594.24

15,925.58

367,570.82

77,137.40

14,496.93

$

450,165.06 $

172,453.54

$

54,747.00

$

1,427.68

2,744.78

$

226,305.09

585,769.05

20,914.66

0.00

$

640,516.05 $

25,087.12 $

226,305.09

Total Liabilities and Fund Equity

$ 1,090,681.11 $

197,540.66 $ ===22=6=,3=0=5.=09=

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

EXHIBIT"A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 2003

JUNE 30, 2002

$

0.00 $

534.70

$

901,844.82 $

510,989.26

674,893.89

609,044.28

452,264.89

1,427.68 2,744.78

3,000.05 526.21

- - - - - $ _ ___;9;;.;;9=,2=00=,;..;70'-

99,200.70

220,000.00

$

0.00 $

534.70 $

99,200.70 $ 1,614,262.26 $ 1,861,674.30

$

64,893.63

98,519.82 $

103,933.82

444,708.22

437,745.46

258.21

14,496.93

8,892.85

$

534.70

534.70

779.27

$

99,200.70

99,200.70

220,000.00

$

534.70 $

99,200.70 $

722,354.00 $

771,609.61

$

0.00 $

0.00

$

0.00 $

0.00

$

54,747.00 $

31,023.00

1,427.68 2,744.78 226,305.09

3,000.05 526.21
237,168.49

606,683.71

818,346.94

$

891,908.26 $ 1,090,064.69

$

0.00 $

534.70 $

99,200.70 $ 1,614,262.26 $ 1,861,674.30

-3-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 2003

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Services Operations
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1 (Restated - See Note 1}
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 2,749,730.15 $ 145,908.85 595,882.11 339,757.84
$ 3,831,278.95 $

199,035.85 776,740.66
12,498.23
988,274.74

$ 2,377,516.19 $
212,250.09 12,968.81 80,439.42
183,485.85 239,487.81 124,401.94 209,358.37 143,231.11
21,605.27 271.39
92,782.80 159,436.00
6,838.70 1,806.30

499,072.44 16,731.21 40,872.65
108,481.30
6,809.25 11,722.42 102,432.32 264,272.44
4,972.60 1,313.40

$ 3,865,880.05 $ 1,056,680.03

$

-34,601.10 $

-68,405.29

$

111,012.00

$

-227,887.33

$ -116,875.33 $

31,942.49 31,942.49

$ -151,476.43 $ 791,992.48

-36,462.80 60,903.72

-1,572.37 2,218.57

FUND BALANCE JUNE 30

$

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

640,516.05 $ ===2=5,=0=87=.1=2=

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only) YEAR ENDED

JUNE 30, 2003

JUNE 30, 2002

$ 2,948,766.00 $ 3,218,994.83

922,649.51

835,131.48

$

58,025.18 $

224,950.00

878,857.29

664,353.63

2,184.41

354,440.48

278,739.49

$

60,209.59 $

224,950.00 $ 5,104,713.28 $ 4,997,219.43

$

267,017.83

$

$

267,017.83 $

$ -206,808.24 $

$
220,000.00 4,950.00
224,950.00 $ 0.00 $

2,876,588.63 $
228,981.30 53,841.46 80,439.42
291,967.15 239,487.81 124,401.94 216,167.62 154,953.53 124,037.59 264,543.83
92,782.80 426,453.83
231,811.30 8,069.70
5,414,527.91 $
-309,814.63 $

3,182,592.66
164,315.66 34,007.97 92,999.00
341,194.99 311,548.75 117,845.09 254,591.51 185,110.19 103,694.28 236,899.67
36,782.54 84,327.43
210,000.00 14,625.00 530.00
5,371,064.74
-373,845.31

$

195,944.84

$

195,944.84

$

-10,863.40 $

237,168.49

$

111,012.00

227,887.33 $ -124,897.99

-227,887.33

124,897.99

$

111,012.00 $

0.00

0.00 $ 0.00

-198,802.63 $ 1,090,064.69

-373,845.31 1,462,738.87

-1,572.37 2,218.57

1,781.49 -610.36

$

226,305.09 $

0.00 $

891,908.26 $ 1,090,064.69

-5-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 2003

EXHIBIT"C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 2.776,820.00 $ 2,749,730.15

145,908.85

485,060.00

595,882.11

339 757.84

Total Revenues

$ 3,261,880.00 $ 3,831,278.95

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Services Operations
Capital Outlay Debt Service

$ 2,220,574.53 $ 2,377,516.19

109,336.00 9,378.00
81,154.39 205,990.87 218,047.17 123,588.06 208,662.37 185,638.61
18,000.00
65,078.00

212,250.09 12,968.81 80,439.42
183,485.85 239,487.81 124,401.94 209,358.37 143,231.11
21,605.27 271.39
92,782.80 159,436.00
8,645.00

Total Expenditures

$ 3,445,448.00 $ 3,865,880.05

Excess of Revenues over (under) Expenditures

$ -183,568.00 $ -34 601.10

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses

$ 111,012.00 -227,887.33

Total Other Financing Sources (Uses)

$ -116,875.33

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses

$ -183,568.00 $ -151,476.43

FUND BALANCE JULY 1. 2002 (Restated- See Note 1\

851,609.19

791,992.48

Adjustments Food Inventory - Net Change in Period
Donated Commodities Purchased Food

-30,029.93

FUND BALANCE JUNE 30. 2003

$ 6381011.26 $ 640,516.05

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 24,000.00 $ 199,035.85

804,969.40

776,740.66

12,498.23

$ 828,969.40 $ 988,274.74

$ 464,179.00 $ 499,072.44

22,686.00 53,268.00

16,731.21 40,872.65

94,632.00

108,481.30

664.40 10,626.00 96,195.00 210,910.00

6,809.25 11,722.42 102,432.32 264,272.44

6,286.00 $ 953,160.40 $ 1,056,680.03 $ -124,191.00 $ -68,405.29

$

31,942.49

$

31,942.49

$ -124, 191.00 $ 42,341.40 34,122.24

-36,462.80 60,903.72
-1,572.37 2,218.57

$ -47 727.36 $

251087.12

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

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Chattahoochee County Board ofEducation (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 School District 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.
FUND ACCOUNTING
The School District uses funds and an account group to report on its financial position and the results ofits 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
-8-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
-9-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures are generally recognized when the related fund liability is incurred.

For fiscal year 2003, the School District changed its method of accounting for the final two payments on one hundred and ninety day contracts and for the related revenue due from the State to fund these contracts. Adjustments have been made in the fiscal year 2003 financial statements to record expenditures for salaries and fringe benefits earned by employees through June 30, 2003, (even though paid in July and August 2003) and the related revenue due from the State to fund these contracts. Adjustments were also made for the similar salaries, benefits and related State revenues earned in fiscal year 2002 and recorded in fiscal year 2003.

The net effect ofthe above accounting treatment results in the accompanying financial statements reflecting expenditures for those salaries and benefits earned by employees during fiscal year 2003 and the related State revenue to fund these contracts. In addition, the fund balance at July 1, 2002, has been restated for salaries and benefits earned by employees in fiscal year 2002 but not paid until July and August 2002 and for the related State revenue for these contracts. This change is in accordance with generally accepted accounting principles. See Restatement of Prior Year Fund Balance.

Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities.

RESTATEMENT OF PRIOR YEAR FUND BALANCE

In prior years, the governmental fund activity for the School District's Principal's Accounts was reported as an agency fund. This fund had a balance of$10,767.39 at June 30, 2002. For fiscal year 2003, this fund has been reported as a part ofthe General Fund. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 953,142.65

Add: State Revenue Related to July and August 2002 Salary Payments Earned by Employees in Fiscal Year 2002 School Activity Account - Governmental Activity

261,752.00 10,767.39

Deduct: July and August 2002 Salary Payments Earned by Employees in Fiscal Year 2002

433,669.56

General Fund Balance July 1, 2002 (Restated)

$ 791,992.48

- 10 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUDGET
The Chattahoochee County Board ofEducation's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Chattahoochee County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on October 31, 2002 (levy date). Taxes were due on February 10, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in fiscal year 2003. The Chattahoochee County Tax

- 11 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2003 for maintenance and operations amounted to $589,799.37.

The tax millage rate levied for the 2002 tax year (calendar year) for the Chattahoochee County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

12.2 mills

SALES TAXES

Special Purpose Local Option Sales Tax revenue during the year amounted to $282,975.18 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 Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

INTERFUND TRANSACTIONS

The School District has the following types of interfund transactions:

Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

Operating transfers are recorded for all interfund transactions other than reimbursements.

- 12 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
Note 2: DEPOSITS
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 ofmoney which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance.
Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe
securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe 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

- 13 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 2: DEPOSITS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank.balances were $1,317,403.69. Theamountsofthetotal bank balances are classified into three categories of credit risk:

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

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 200,000.00

2

0.00

3

1,117,403.69

Total

$ 1,317,403.69

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: 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.

- 14 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 4: RISK MANAGEMENT

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

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

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2002 2003

$

0.00 $

294.70 $

294.70 $

0.00

$

0.00 $

0.00 $

0.00 $

0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $400,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent School Food Service Manager Maintenance Supervisor Each Principal Each Bookkeeper Each School Secretary Each School Clerk

$ 100,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00

- 15 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Chattahoochee County Board of Education has entered into a lease agreement as lessee for modular buildings. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of their inception.

GENERAL OBLIGATION DEBT OUTSTANDING Voters have authorized $1,255,000.00 in general obligation debt for acquisition, construction and equipping of capital outlay projects which was not issued as of June 30, 2003.

The changes in General Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 2002

$

0.00 $ 220,000.00 $ 220,000.00

Additions Capital Leases
Deductions Debt Retired
Balance June 30, 2003

111,012.00

111,012.00

11,811.30

220,000.00

231,811.30

$ 99,200.70 $

0.00 $ 99,200.70

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
2004 2005 2006 2007 2008
Total Principal and Interest
Deduct: Imputed Interest

Capital Leases
$ 25,596.00 25,596.00 25,596.00 25,596.00 10,665.00
$ 113,049.00
13,848.30

Net Present Value of Future Minimum Lease Payments

$ 99,200.70

- 16 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 6: CONTINGENT LIABILITIES

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

Note 7: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

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

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 251,979.61 $ 237,291.59 $ 270,725.96

- 17 -

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 2003

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

31,783.45 $

34,276.11

1,962.64

1,427.68 2,744.78

Total Assets

$

37,918.55 $ ===3=4=,2=76=.1=1=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

1,474.93 $

3,577.66

11,356.50

16,201.52

14,496.93

$

12,831.43 $

34,276.11

$

1,427.68

2,744.78

20,914.66 $

0.00

$

25,087.12 $

0.00

Total Liabilities and Fund Equity

$

37,918.55 $ ===34=,2=7=6=11=

See notes to the general-purpose financial statements.

-18 -

EXHIBIT"E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2003

JUNE 30, 2002

$

66,059.56 $

107,306.82

$

191,405.56

193,368.20

110,141.92

1,427.68 2,744.78

3,000.05 526.21

$

191,405.56 $

263,600.22 $ =====2=2=0=,9=75=.o=o=

$

130,953.19 $

130,953.19 $

10,872.99

15,925.58

49,579.38

77,137.40

14,496.93

45,940.87 21,187.25 83,792.10
258.21 8,892.85

$

191,405.56 $

238,513.10 $

160,071.28

$

$ _ _ ____;;_0."'-'00'--

$

0.00 $

1,427.68 $ 2,744.78

3,000.05 526.21

20,914.66

57,377.46

25,087.12 $ ---'-60'--'-,9'--'0-'-3._72_

$

191,405.56 $

263,600.22 $ ===2=2=0,=97=5.=00=

-19-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2003

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

17,100.00 $

181,935.85

195,487.55

12,498.23

$

225,085.78 $

181,935.85

$

135,318.89

160.08

63,665.63 6,809.25

$

261,548.58

1,638.49

4,972.60 1,313.40

$

261,548.58 $

213,878.34

$

-36,462.80 $

-31,942.49

$

-36,462.80 $

60,903.72

-1,572.37 2,218.57

31,942.49
0.00 0.00

FUND BALANCE JUNE 30 See notes to the general-purpose financial statements.
- 20-

$

25,087.12 $ = = = = =0.0=0

EXHIBIT "F"

FEDERAL
PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2003

JUNE 30, 2002

$

199,035.85 $

217,262.95

$

581,253.11

776,740.66

743,704.14

12,498.23

14,874.39

$

581,253.11 $

988,274.74 $ _ _9_7_5.._,8_4_1._48_

$

363,753.55 $

499,072.44 $

546,813.37

16,571.13 40,872.65 44,815.67
11,722.42 100,793.83
2,723.86

16,731.21 40,872.65 108,481.30
6,809.25 11,722.42 102,432.32 264,272.44

28,491.78 22,290.88 80,734.24 10,762.09
9,466.87 79,670.42 236,899.67

4,972.60 1,313.40

$

581,253.11 $ 1,056,680.03 $ 1,015,129.32

$

0.00 $

-68,405.29 $

-39,287.84

31,942.49

29,845.76

$

0.00 $

-36,462.80 $

-9,442.08

0.00

60,903.72

69,174.67

-1,572.37 2,218.57

1,781.49 -610.36

$

0.00 $

25,087.12 $ ====6=0=,9=03=.=72=

- 21 -

PRINCIPAL ACCOUNTS ASSETS
Cash and Cash Equivalents
LIABILITIES Funds Held for Others

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30. 2003

EXHIBIT"G"

BALANCE JULY 1, 2002

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 2003

$

779.27 $

949.96 $

1,194.53 $======5=34==70=

$

779.27 $

949.96 $

1,194.53 $===5=34==70=

See notes to the general-purpose financial statements.

- 22-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement
Total Special Education Cluster
Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies Title II Eisenhower Professional Development Enhancing Education Through Technology Improving Teacher Quality TitleV Innovative Education Program Strategies Pass-Through From Georgia Department of Human Resources Safe and Drug-Free Schools and Communities Pass-Through From Chattahoochee-Flint Regional Educational Service Agency Safe and Drug-Free Schools and Communities
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A N/A $
$

(2) 234,994.14
234,994.14

10.550 10.558

N/A N/A
$

8,718.49
10,995.36 254,707.99

84.027 84.173 84.027

N/A $ N/A N/A
$

63,082.61 5,918.00 2,080.00
71,080.61

84.041
. 84.010
84.281 84.318 84.367 84.298
84.186
84.186

(3)

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

408,614.54 5,831.83 7,631.00
71,937.13 8,158.00
43,011.66
8,000.00 624,264.77

- 23-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Pass-Through From Children and Youth Coordinating Council Abstinence Education Block Grant Pass-Through From Georgia Department of Human Resources Child Care and Development Block Grant
Total U. S. Department of Health and Human Services
Labor, U. S. Department of Pass-Through From Columbus Consolidated Government Workforce Investment Act

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

93.235 93.575

NIA $ N/A
$

38,486.90
42,047.61 80,534.51

17.259

N/A $

2,480.32

Total Federal Awards Expenditures N/A = Not Available

$ ===96=1=,9=8=7=59=

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($64,855.00) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Funds earned on the Impact Aid program, in the amount of $8,887.00, do not require reporting of expenditures.

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

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Chattahoochee 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 general-purpose financial statements.

See notes to the general-purpose financial statements.

-24-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

GRANTS Community Affairs. Georgia Department of Local Assistance Grant

$

25,000.00

$ 25,000.00

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 (4-5) Program - Early Intervention Program Middle School (6-8) Program Students with Disabilities Category I Category II Category Ill Gifted Student - Category VI Alternative Education Program Media Center Program 20 Days Additional Instruction Mid-term Adjustment Hold-Harmless Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Austerity Reduction Other State Programs , Preschool Handicapped Program Statewide K-3 Reading Program Statewide 4-8 After School Program Lottery Programs Assistive Technology Computers in the Classroom Student Information System

105,183.00 45,078.00 338,750.00 150,596.00 150,246.00 99,193.00 338,879.00
5,595.00 45,170.00 157,705.00 58,662.00 11,984.00 43,586.00 12,877.00 53,560.00
8,196.00 517,020.00

105,183.00 45,078.00
338,750.00 150,596.00 150,246.00
99,193.00 338,879.00
5,595.00 45,170.00 157,705.00 58,662.00 11,984.00 43,586.00 12,877.00 53,560.00
8,196.00 517,020.00

102,856.00 23,724.00
138,466.00 27,752.00 1,693.00
222,283.00 $
-59,389.00
33,707.00 11,400.00 11,400.00

17,100.00
1,072.58 8,892.85 2,839.49

102,856.00 23,724.00
138,466.00 27,752.00 1,693.00
222,283.00 17,100.00 -59,389.00
33,707.00 11,400.00 11,400.00
1,072.58 8,892.85 2,839.49

Human Resources, Georgia Department of Before and After School Grant Family Connection

10,000.00 58,558.15

10,000.00 58,558.15

Office of School Readiness Pre-Kindergarten Program

169,130.93

169,130.93

$ 2,749,730.15 $ 199,035.85 $ 2,948,766.00

See notes to the general-purpose financial statements.

-25-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST(1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

Chattahoochee County Education

Center - Classroom building additions.

renovation to media center. cafeteria.

re-roofing main building, covered

walkway to existing playground and

bus stop, additional parking facilities,

heating and air conditioning, sanitation

and communications improvements,

furniture needs, relocation and

correction of three mobile units,

furniture needs for Chattahoochee

County Education Center and other

necessary costs associated with

School District Expansion Program

$

1,500,000.00 $

2,340,756.34 $

31,006.07 $

2,309,750.27 Ongoing

Providing funds to pay or to be applied toward the cost of the acquisition, construction and equipping of a new high school; renovating, adding to, repairing, improving and equipping existing school buildings and other buildings and facilities; and acquiring any property necessary or desirable therefor, both real and personal, the maximum cost of such projects not to exceed $2,275,000.00

2,275,000.00

2,275,000.00

240,961.76

Ongoing

$

3,775,000.00 $

4,615,756.34 $

271,967.83 $

2,309,750.27

(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 Chattahoochee 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 and/or other funds over the life of the project.

See notes to the general-purpose financial statements.

-26-

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE}
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2003

SCHEDULE "4"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

Students with Disabilities

Category I

Gifted Student - Category VI

Alternative Education Program

118,935.00 $ 53,191.00 371,252.00 167,633.00 169,506.00

110,496.71 $ 85,972.96 528,520.07 133,733.01 153,590.12

107,840.00 369,765.00 229,539.00
56,719.00 12,979.00

81,497.78 554,801.63
271,283.47 18,698.73 49,857.69

6,092.31 $ 12,295.59 9,916.64
22,465.44
622.02

116,589.02 85,972.96
540,815.66 133,733.01 163,506.76
81,497.78 577,267.07
271,283.47 19,320.75 49,857.69

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

1,657,359.00 $ 1,988,452.17 $ 51,392.00 $ 2,039,844.17

Media Center Program Staff and Professional Development

48,035.00 9,019.00

76,686.93 5,981.24

3,463.55 3,607.00

80,150.48 9,588.24

TOTAL QBE FORMULA FUNDS

$

1,714,413.00 $ 2,071,120.34 $ 58,462.55 $ 2,129,582.89

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

See notes to the general-purpose financial statements.

- 27-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
May 17, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Chattahoochee County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofChattahoochee County Board ofEducation as ofand for the year ended June 30, 2003, and have issued our report thereon dated May 17, 2004. This report was qualified for a departure from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Chattahoochee County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Chattahoochee County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003YB-40

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Chattahoochee County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6261-03-01 and FS-6261-03-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider item FS-6261-0302 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Chattahoochee County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2003YB-40

~lb.~~
State Auditor

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
May 17, 2004

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Chattahoochee County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Chattahoochee County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to its major Federal program for the year ended June 30, 2003. Chattahoochee County Board of Education's major Federal program is 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 its major Federal program is the responsibility of Chattahoochee County Board of Education's management. Our responsibility is to express an opinion on Chattahoochee County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Chattahoochee County Board of Education's compliance with

2003SA-30

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 Chattahoochee County Board ofEducation's compliance with those requirements.
In our opinion, the Chattahoochee County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to its major Federal program for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Chattahoochee County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Chattahoochee County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in ourjudgment, could adversely affect the Chattahoochee County Board ofEducation's ability to administer a major Federal program in accordance with applicable requirements of laws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6261-03-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
2003SA-30

This report is intended solely for the information and use of the management, members of the Chattahoochee County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2003SA-30

lo~
Russell W. Hinton State Auditor

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

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6261-01-01 FS-6261-02-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6261-02-01

According to GASB Statement 34, we are required to implement the accounting for general fixed assets and depreciation for these assets on our general ledger system by fiscal year 2004. We have begun this process through attendance at seminars and FasGov training sessions and by the preparation of a General Fixed Assets Policy. We intend to comply with the requirements of GASB Statement 34.

SECTION IV FINDINGS AND QUESTIONED COSTS

CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

I SUMMARY OF AUDITOR'S RESULTS

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

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

Revenues/Receivables/Receipts

General Fixed Assets

Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness.

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

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Chattahoochee County Board of Education disclosed a reportable condition in internal control over its major program for the following compliance requirement.

Eligibility

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

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

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Chattahoochee County Board ofEducation's audit disclosed an audit finding required to be reported by section .510(a) ofOMB Circular A-133. This audit finding is included in section IV of this report.

7. Major Programs The Federal award audited as a major program is as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies

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

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CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Chattahoochee County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-6261-03-01
Our examination ofindividual school principal accounts disclosed weaknesses in internal control as discussed below:
Revenues/Receivable/Receipts (1) Deposit preparation was not separated from cash custody functions.
(2) Adequate receipt documentation was not maintained to support cash collections.
These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible for accounting functions applicable to the various Principal's accounts and failure to implement proper controls to adequately document cash collections. Management should develop procedures to ensure that the accounting functions of deposit preparation and cash collection be segregated. Additionally, controls should be established to ensure proper documentation of cash collections is maintained.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6261-03-02
The Chattahoochee County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings, and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location, and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Asset Account Group.
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CHATTAHOOCHEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ELIGIBILITY Poverty Children from an Unallowable Data Source Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6261-03-01 The 2003 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies (CFDA 84.010) Program grant application requires that the number ofpoverty children recorded by the School District on Section 3, Part IV of its fiscal year 2003 No Child Left Behind Consolidated Application be based on a poverty measure obtained from an allowable data source. Further investigation disclosed that the number of poverty children reported by the School District on the grant application was based on the total number ofchildren in the Title I program in the year that the application is prepared; this is not an acceptable poverty measure from an allowable source ofdata as described in 0MB Circular A-133 Compliance Supplement Part 4(4-84.010), Ill, E.2a. This condition was a result ofthe School District's failure to implement adequate internal controls for monitoring compliance with Federal guidelines. The School District should review the Federal compliance procedures in place, design procedures which would enhance monitoring compliance and implement those procedures to strengthen the internal control over Federal programs. Also, the Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
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