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

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

CLINCH COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS -

SECTION I

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

EXHIBITS

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

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE

CLINCH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I FI NANClAL SCHEDULES SUPPLEMENTARY INFORMATION 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 M A l l E R S BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH O M B CIRCULAR A - 1 3 3
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

CLINCH 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 - 1 56 Atlanta, Georgia 30334-8400
August 3 1 , 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 Clinch County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTSAND SUPPLEMENTARY INFORMATION- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanyingfinancial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Clinch 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 Clinch 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 Standards, issued by the Comptroller General of the United States. Those standards require that we plan and petform 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 Clinch 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.
The Clinch County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.

In accordance with Government Auditing Standards, we have also issued our report dated August 31, 2011, on our consideration of the Clinch 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 Government Auditing Standards and should be considered in assessing the results of our audit.

Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, 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 reporting for 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 Clinch 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, focal Governments, and Non-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,

n

\*

~ u $ e l lW. Hinton, CPA, CGFM State Auditor

CLINCH COUNTY BOARD OF EDUCATION

CLINCH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30.2010
ASSETS
Cash and Cash Equ~valents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Cap~talizedBond Issuance Cost Cap~taAl ssets, Non-Deprec~able Cap~taAl ssets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salariesand Benef~tsPayable Interest Payable Long-Term Liabilities
Due Within One Year Due in More than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuat~onof Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

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

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

GOVERNMENTAL ACTIVITIES
lnstructlon Support S e ~ l c e s
Pup11Servlces Improvement of Instruct~onaSl eNlCeS Educational Med~aSeNlces General Admlnlstratlon School Admlnlstratlon BuslneSS AdmlnlStratlOn Malntenance and Operat~onof Plant Student Transportation S e ~ l c e s Centrai Support SeNlCeS Other Support Servlces O ~ e r a t ~ o onfsNon-lnstruct~onaSl ervlces Food Servlces Interest on Short Term and Long-Term Debt
Total Governmental Act~vit~es
General Revenues Taxes Property Taxes For Malntenance and Operat~OnS Railroad Cars Sales Taxes Spec~aPl urpose Local Opt~onSalesTax For Debt Services For Capital Projects Other Sales Tax Grants and Contr~but~onnsot Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change In Net Assets
Net Assets - Beginn~ngof Year
Net Assets - End of Year

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

The notes to the baslc financial statements are an integral p a n of t h ~ statement. - 2

CLINCH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 3 0 . 2 0 1 0

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

LIABILITIES AND FUND BALANCES

Accounts Payable Salar~esand Benefits Payable D e ~ o s i t sand Deferred Revenue
Total L~ab~litles
Reserved for: Bus Replacement Continuat~onof Federal Programs Debt Service Capital Projects
Unrese~ed Designated for Student Activ~ties Undeslgnated Reported in General Fund Cap~taPl rojects
Total Fund Balances
Total Liabllltles and Fund Balances

DEBT SERVICE
FUND

TOTAL

The notes to the basic financial statements are an ~ntegrapl art of this statement. -3-

CLINCH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reDorted in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Other Long-Term Assets are not available to pay for current period expenditures and therefore, are deferred on the Statement of Net Assets.
Deferred Charges - Capltallzed Bond Issuance Costs
Lonp-Term Liabilities, including Bonds Payable, are not due and payable i n the current period and therefore are not reported as llabllities In the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Accrued Interest Unamortized Bond Prem~ums
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

EXHIBIT "D"

The notes to the basic financlai statements are an lntegral part of thls statement.
- 4 -

CLINCH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

PropeQ Taxes Sales Taxes State Funds Federal Funds Charges for Serv~ces Investment Earnings M~scellaneous
Total Revenues

Current lnstruct~on Suppon Serv~ces Pup11Serv~ces Improvement of Instructional Services Educational Med~aServices General Admlnlstrat~on School Admlnlstratlon Buslness Admlnlstratlon Ma~ntenanceand Operat~onof Plant Student Transportat~onServ~ces Central Support Servlces Other Support Servlces Food S e ~ l c e sOperat~on
Cap~taOl utlay Debt Services
Prlnc~pal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expend~tures
OTHER FINANCING SOURCES (USES)
Proceeds of Bonds Premlums on Bonds Sold Transfers In Transfers Out
Total Other Financing Sources (Uses)
SPECIAL ITEM
Proceeds from Sale of Land
Net Change in Fund Balances
Fund Balances - Beg~nnlng

Fund Balances - End~ng

$ 3,139,988.95 $ 4,195,090.86 $

The notes to the baslc financial statements are an Integral part of thls statement.

322.711.19 $

7,657,791.00

CLINCH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30.2010
Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capltal Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) 1s to decrease net assets.
Bond proceeds provide current financial resources to Governmental Funds; however. issuing debt increases Long-Term Liablllt~esin the Statement of Net Assets. In the current period, proceeds were received from General Obligation Bonds issued, includinga premium of $190.522.65.
Bond issuance costs, deferred galns on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, using the straight-line method. The details of this difference in the current period is the Amortization of Bond Issuance costs.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of Bond Principal Retirements.
Some items reported i n the Statement of Activities do not requlre the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of a Net Increase in Accrued Interest.
Change in Net Assets of Governmental Activities (Exhibit "B")

EXHIBIT "F"

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

CLINCH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2010
ASSETS Cash and Cash Equivalents
LlABl LlTlES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

The notes t o the basic financial statements are an integral part of this statement.

(This page left intentionally blank)

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

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Clinch County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
The Fargo Elementary K-4 (Charter School) is responsible for the public education of all students attending its school. The Charter School was created through a contract between the School District and the Charter School whereby all State funding associated with the students attending the Charter School and certain specific local funds are turned over to the Charter School to cover the cost of its operations. The financial statements of the Charter School have been included within the School District's general fund.
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 Clinch County Board of Education.
DiHrict-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 nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support 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. Revenuesthat are not classified as program revenues, including all taxes, are presented as general revenues.
fund Financial Statemen&: 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.

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

EXHIBIT "H"

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.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general long-term principal, interest and payingagent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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 are recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, 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 are reported as other financing sources.
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.

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

EXHIBIT "H"

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. 51,Accounting and Reporting for Intangible Asseets. 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 EQUIVALENTS
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:
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,

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

EXHIBIT "H"

5. Prime banker's acceptances,
6. The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Se wices,
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 investment policies that address 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.

PROPERTY TAXES

The Clinch County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on August 17, 2009 (levy date). Taxes were due on December 20, 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 Clinch County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $3,594,688.50.

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

School Operations

15.682 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $746,508.55 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.

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

EXHIBIT "H"

CAPITAL ASSETS

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

Any Amount $ 10,000.00 $ 10,000.00 $ l0,OOO.OO

N/A 1 0 to 8 0 years 1 0 to 8 0 years
5 to 20 years

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

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:

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.

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

EXHIBIT "H"

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.
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 AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 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,
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 or securities guaranteed 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 MortgageAssociation, and the Federal National Mortgage Association.

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

EXHIBIT "H"

CATEGORIZATION OF DEPOSITS
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. The School District does not have a formal policy for managing custodial credit risk. At June 30, 2010, the bank balances were $8,113,040.73. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution in the School District's name.
CATEGORIZATION OF INVESTMENTS
At June 30, 2010, the carrying value of the School District's total investments was $18,953.86, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.aa.aov/SGD/cafr. html.
The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 46 days.
NOTE 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA)for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

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

EXHIBIT "H"

NOTE 5: CAPITAL ASSETS

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

Balances
July 1.2009

Increases

Decreases

Balances June 30, 2010

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

$

449,739.00

$ 10,250.00 $

439,489.00

396,406.33 $ 196,196.36

579,511.27

13,091.42

Total Capital Assets Not Being Depreciated

$

846,145.33 $ 196,196.36 $ 589.761.27 $

452,580.42

Capital Assets Being Depreciated Buildings and lmprovements Equipment Land lmprovements

Less Accumulated Depreciat~onfor: Bulldings and Improvements Equipment Land Improvements

Total Capital Assets. Being Depreciated, Net $

Governmental Activity Capital Assets, Net

$

7,574,653.00 $ 264,893.23 $

0.00 $

8,420,798.33 $ 461,089.59 $ 589,761.27 $

7,839,546.23 8,292,126.65

Current year depreciation expense by function is as follows:
Instruction Support Services
Pupil Services Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

NOTE 6: INTERFUND TRANSFERS

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

Transfers

From

District-wide

Capital

Transfer to

Projects

Debt Service Fund

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

EXHIBIT "H"

Transfers are used to move sales tax revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund for debt repayment.

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 has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, and acts of God. 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 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:

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

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 $500,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $500,000.00 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 Board Chairperson Principals High School Assistant Principal Secretaries

$ 10,000.00 -

$ 25,000.00 $ 2,500.00 $ 25,000.00 $ 25,000.00 $ 25,000.00

CLINCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30.2010

EXHIBIT "H"

NOTE 8: LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2010

3.00%- 4.00% $

3,000,000.00

The changes in Long-TermDebt during the fiscal year ended June 30,2010, were as follows:

Balance July 1.2009

Governmental Funds

Balance

Additions

Deductions June 30, 2010

Due Within One Year

G. 0. Bonds

$ 750,000.00 $ 3,000,000.00 $ 750,000.00 $ 3.000,000.00 $ 575,000.00

Bond Premiums Amortized

0.00

190,522.65

190,522.65 38.104.53

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

General Obligation Debt

Unamortized

Fiscal Year Ended June 30:

Principal

Interest

Bond Premium

Total Principal and lnterest
NOTE 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $26,708.35 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 $22,160.86
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 $4,547.49

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

EXHIBIT "H"

NOTE 10: SPECIAL ITEM
Duringfiscal year 2010, the Clinch County Board of Education sold .328 acres of land to the Georgia Department of Transportation for an easement. The proceeds of $10,250.00 are shown as a Special Item at the fund level and the land was removed from the capital assets listing at the sale price.
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertainingto 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-EMPLOYMENT BENEFITS
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 Fun 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 of the cost of 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.

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

EXHIBIT "H"

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 non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

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 to 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.

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

EXHIBIT "H"

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 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 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.
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 precedingtwo fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(This page left intentionally blank)

CLINCH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30.2010

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Sewices Improvementof Instructional Sewlces EducationalMedia Sew~ces General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operations
Cap~taOl utlay
Total Expenditures
Excess of Revenuesover (under) Expenditures
SPECIAL ITEM
Proceeds from Sale of Land
Net Change in Fund Balance
Fund Balances- Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

Fund Balances- Ending
Notes to the Schedule of Revenues. EKDendituresand Changes in Fund Balances Budget and Actual (1) Orianal and Final Budgetamounts do not Include budgeted revenueor expenditures of the various principal accounts. The accompanyingschedule of revenues, expenditures and 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 of the fund financial statements.

See notes to the basic financial Statements.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDEDJUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutr~tionCluster Pass-Through From Georg~aDepartment of Education Food Sewlces School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-ThroughFrom Georgia Department of Education Food Services ARRA - Child Nutrition Discretionary Grants Limited Availability
Total U. S. Department of Agriculture
Education. U. S. Department of Education Technology State Grants Cluster Pass-ThroughFrom Georgla Department of Education Education Technology State Grants
Special Education Cluster Pass-ThroughFrom Georgla 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-ThroughFrom Georgia Department of Education ARRA - Education State Grants
Title I, Part A Cluster Pass-ThroughFrom Georgia Department of Education
ARRA - Title IGrants to Local Educational Agencies
Title IGrants to Local Educational Agencies
Total Title I, PanA Cluster
Other Programs Pass-ThroughFrom Georgia Department of Education Career and Technical Education - Basic Grants to States Engl~shLanguage Acquisition Grants Improving Teacher Quality State Grants
Migrant Education - State Grant Program
Rural Education Pass-ThroughFrom Okefenokee Regional Educational
Service Agency Safe and Drug-Free Schools and Communities- State Grants
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTlN ID
NUMBER

EXPENDITURES IN PERIOD

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
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
Head Start Cluster Pass-Through From Concerted Services. Inc.
ARRA - Head Start
Head Start
Total Head Start Cluster
Total U. S. Department of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance
N/A = Not Available
Notes to the Schedule of Exoend~turesof FederalAwards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $31.738.54.
(2) Expendituresfor the funds earned on the School Breakfast Program ($139,561.14w)ere not maintained separately and are ~ncludedin 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 FederalAssistance to any Subrecipient.
The accompanyingschedule of expenditures of Federal awards includes the Federal grant activity of the Clinch County Board of Education and is presented on the modified accrual basis of accounting which is the basls of accounting used in the presentation of the fund financial statements.

See notes to the basic financial Statements.

(This page left intentionally blank)

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.2010
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 lntervention Program
Primary Grades (1-3) Program Primary Grades - Early lntervention (1-3)Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early lntervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory(9-12) Program Students with Disabilit~es Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pup11Transportation Regular Sparsity Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization FundingGrant Food Services Vocational Education Amended Formula Adjustment Other State Programs Charter Schools Health Insurance Preschool Handicapped Program
Office of Treasury and Fiscal Services Public School Employees Retirement

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND

See notes to the basic financial statements.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE "4"

PROJECTS

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

2005 SPLOST REFERENDUM

(1) Constructingaddlt~onacl lassrooms

$

(2) Remodeling renovaung, Improving, and equlpplng sclence labs, physlcal educat~onand athletlc facillties. ~nstruct~onaolf,flce and support space and grounds at varlous schools and admlnistratlve f a c ~ l ~ t ~lnethse School D~strlct,~ncludingfurn~shtngesq, uipment, and f~xturesfor such schools and other facllltles (3) Lightlng of the Glrl's softball f~eldand the tennls courts at Cllnch County Hlgh School (4) Renovation of the gymnasium at Cllnch County Pr~marySchool and Cllnch County Elementary School (5) Pavlngand resurfaclngof vartous park~ngareas (6) Purchase school buses (7) Renovat~onor replacement of electrical, heatlngand alr condit~onlngsystems. telling t~lesand carpeting (8) Acqu~r~nganyecessary real or personal properry ~n connectlon wlth any of the forgolng

1,000,000.00 $

1,041,258.75

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

$ 1.041.258.75 Completed

Ongolng
Comoleted
Ongolng Ongolng Ongoing

2010 SPLOST REFERENDUM (1) Constructing, remodeling, renovating, ~mprovinga, nd equ~ppingadd~tronacllassrooms, physical education and athletlc facillties, tnstructlonal, office and suppon space and grounds at various schools and administrative facilities In the School District. tncludingfurnish~ngs, equlpment, and fixtures for such schools and other faclllbes (2) HVAC Systems (3) Renovations to the gymnasium (4) Faculty parklng ( 5 )Extension of the bus loadlng and unload~ngarea for Cllnch County Prlmary/Elementary School
(6) Sc~encelabs and Improvements for the gyrnnaslum and baseball fleld for Cllnch County High School (7) System wide safety and securlty systems and equipment (8) Transportation vehtcles and equipment (9) School buses (10) Technology equlpment (11) Real or personal property In connectlon wtth any of the forgolng.

Ongoing Ongoing Ongoing Ongolng
Ongoing
Ongoing
Ongo~ng Ongoing Ongoing Ongolng
Ongoing

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

(1)The School Dlstrlct's or~glnacl ost estimate as spec~fledIn the resolution calllngfor the lmposltlon of the Local Opt~on Sales Tax.

(2) The School Dlstrlct's current estlmate of total cost for the projects. Includes all cost from project lnceptlon to completion.

(3) The voters of Cl~nchCounty 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 projects.

(4) In addition to the expenditures shown above, the School D~strichtas incurred Interestand other expenditures to provide advance funding for the above projects as follows:

Prlor Years

$

41,993.98

Current Year

126.369.22

Total

$

168.363.20

SCHEDULE "4"

See notes to the baslc financial statements.

(This page left intentionally blank)

CLINCH COUNTY BOARD OF EDUCATION
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES- BY PROGRAM YEAR ENDED JUNE 30.2010

SCHEDULE "5"

DESCRIPTION
D~recltnstruct~onaPl rograms Kindergarten Program Primary Grades (1-3) Program Prlmary Grades-Early l n t e ~ e n t l o n(1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Mlddle Grades ( 6-8) Program High School General Educatlon (9-12) Program Vocational Laboratory (9-12) Program Students with Dlsabllltles Categoty I Category II Categoty Ill Category IV Category V Gifted Student - Category VI Remed~aEl ducatlon Program Alternative Educatlon Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Medla Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EUJCAT 0'. (1)(2)

ELIGIBLE OBE PROGRAM COSTS

SALAR ES

CPFRATIOUS

TOTAL

TOTALQBE FORMULA FUNDS

$

6,054,606.00 $ 5.466.195.70 $

81,236.25 $

P

(1) Compr~sedof State Funds plus Local Five Mill Share. (2) Allotments do not Include the impact of the State amended formula adjustment.

5,580,110.95

See notes t o the baslc 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
August 31,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Clinch 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 Clinch County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Clinch County Board of Education's basic financial statements and have issued our report thereon dated August 31, 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 Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Re~orting
In planning and performing our audit, we considered Clinch County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressingour opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clinch County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Clinch County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.
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. We consider item FS-6321-10-02 in the accompanying Schedule of Findings and Questioned Costs to be a material weakness.
A s@nificantdeficienncy is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider items FS-6321-10-01and FS-6321-10-03 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
Com~lianceand Other Matters
As part of obtaining reasonable assurance about whether Clinch County Board of Education's financial statements are free of material misstatement, we petformed 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 Clinch County Board of Education in a separate letter dated August 31,2011.
Clinch County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Clinch County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the management, members of the Clinch 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, .
~ l $ s e lWl . 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
August 3 1 , 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 Clinch County Board of Education
INDEPENDENTAUDITOR'S REPORT ON COMPLIANCEWlTH REQUIREMENTSTHAT 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 Clinch County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Clinch 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 Clinch County Board of Education's management. Our responsibility is to express an opinion on Clinch 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 o f States, 1ocal Governments, and Non-Profit Organtzations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Clinch 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 Clinch County Board of Education's compliance with those requirements.
In our opinion, the Clinch 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. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6321-10-01.

Internal Control Over Comeliance
Management of Clinch 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 Clinch 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 Clinch 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 certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.
A deficiency in internal control over compliance exists 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 materlbl weakness in internal control over compliance is a deficiency, or a 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. The significant deficiency noted below is also considered to be a material weakness.
A sigmfiwnt deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-6321-10-01 to be a significant deficiency.
Clinch 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 Clinch 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 Clinch 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, ,
tRus ell W. Hinton, CPA, CGFM
Sta e Auditor

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

CLINCH 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

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6321-08-02

Further Action Not Warranted

FS-6321-08-03

Further Action Not Warranted

FS-6321-08-04

Further Action Not Warranted

(1)

FS-6321-09-01

Further Action Not Warranted

(1)

FS-6321-09-02

Partially Resolved - See Corrective Action/Responses

FS-6321-09-03

Further Action Not Warranted

(1)

CORRECTIVE ACTION/RESPONSES

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-6321-09-02

The Clinch County Board of Education tried to follow its capital assets policy and monitor the Capital Assets more closely. However, current year auditors found it necessary to make several adjustments that were material t o the financial statements.

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 1 1 2 or Governmental
AuditingStandards(Yellow Book), will be communicated in a management letter.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSVSTATUS

FA-632 1-09-01

Unresolved - See Corrective Action/Responses

CLINCH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Through Okefenokee Regional Educational Service Agency Safe and Drug-FreeSchools and Communities - State Grants (CFDA 84.186) Finding Control Number: FA-6321-09-01
All Federal program managers were instructed to maintain required documentation of employee's time worked on Federal programs. Current year auditors found that proper documentation was not maintained for Federallyfunded personnel.

SECTION IV FINDINGS AND QUESTIONED COSTS

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
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?

Yes

Significant deficiencies identified?

Yes

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: All major programs

Unqualified

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 Number(s1

Name of Federal Program or Cluster

Child Nutrition Cluster Title I, Part ACluster 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

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-6321-10-01

Condition: The School District did not have adequate controls in place to ensure that all required activity was properly reflected in the financial statement information presented for audit.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGSAND QUESTIONEDCOSTS
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-6321-10-01
Criteria: Chapter 22A Annual Financbl Reporting of the Financial Management for Georgia Local Units of Administration indicates that the School Districts must prepare their financial statements in accordance with generally accepted accounting principles.
Questioned Cost: N/A
Information: Notable audit entries were proposed by the auditor and accepted by the client to properly present the entity's financial statements in accordance with Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration.
Cause: The School District did not implement an adequate system of internal control over the financial statement reporting process.
Effect: The School District did not comply with the requirements of the Georgia Department of Education regarding financial reporting. Adjustments were necessary in order for the School District's financial statements to be properly stated.
Recommendation: The School District should develop and implement internal controls over the financial statement reporting process to ensure that all required activity (including note disclosures) is properly recorded in the financial statement information presented for audit.
CAPITAL ASSETS Failureto Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6321-10-02
Condition: This is a repeat finding (FS-6321-09-02, FS-6321-08-03 and FS-6321-07-03) from the years ending June 30, 2009, June 30, 2008, and June 30, 2007, respectively. The School District failed to adequately maintain capital assets records.
Criteria: Chapter 37 Imp'ementing a Capital Assets Management System of the Financial Management for Georpia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6321-10-02
Questioned Cost: N/A
Information: A review of the School District's Capital Assets policies and procedures and the related Capital Assets records disclosed the following deficiencies:
rn The School District failed to capitalize $579,511.27 of Building Improvements cost for Clinch County Elementary School Renovation and Repair of HVAC Project. An audit entry was proposed by the auditors and accepted by the School District to correct this error.
The School District failed to capitalize $13,091.42 of construction in progress cost for miscellaneous capital projects. An audit entry was proposed by the auditors and accepted by the School District to correct this error.
The School District wrote off the cost of all fully depreciated capital assets that are still in use in the amount of $1,473,916.00. An audit entry was proposed by the auditors and accepted by the School District to correct this error.
The School District failed to correct the capitalized cost of the Elementary School 4th Grade Wing in the amount of $9,467.00. This entry was proposed in fiscal year 2007 as a correcting entry but the School District has failed to correct this error. We again proposed a correcting entry and this was accepted by the School District.
rn Accumulated Depreciation was understated by $11,642.00 for various reasons caused by incorrect calculations. This entry was proposed in fiscal year 2009 as a correcting entry but the School District has failed to correct this error. We again proposed a correcting entry and this was accepted by the School District.
Cause: The School District failed to properly record its capital assets and maintain the capital assets records in accordance with the School District's approved capital assets policy.
Effect: The failure of the School District to maintain a complete and accurate capital assets listings could lead to inaccurate internal and external reporting.
Recommendation: The School District should review its capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital assets policy.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGSAND QUESTIONEDCOSTS
BUDGET PREPARATION/EXECUTION Inadequate Internal Controls over Budget Preparation/Execution Significant Deficiency Finding Control Number: FS-6321-10-03
Condition: The School District failed to adopt a balanced budget for the General Fund.
Criteria: Budgeting is an essential element of the financial planning, control, and evaluation processes of governments. The budget determines the nature and scope of most governmental fund financial operations by establishing the amounts and sources of estimated revenues and transfers in, on the one hand, and the amounts and purposes of authorized expenditures and transfers out, on the other. Therefore, strong budgetary control is essential to a strong fiscal policy.
Chapter 32, Preparing Operating Budgets of the Financial Management for Georgia Local Units of Administration states in part: "The budget must be balanced for all budgeted funds. Total anticipated revenues should equal total estimated expenditures. In the event anticipated revenues are insufficient to fund anticipated essential expenditures, a portion of unreserved fund balance from previous years must be used to fund the shortfall. In the event there is insufficient unreserved fund balance from previous years to fund anticipated expenditures, then such expenditures must be reduced to equal anticipated revenues plus available unreserved fund balance."
Questioned Cost: N/A
Information: The School District's original and final budgets for the General Fund budgeted deficit fund balances in the amounts of $2,335,980.39 and $2,790,982.67, respectively.
Cause: The School District failed to budget for the Property Tax revenue in the original and final budgets resulting in budgets with deficit endingfund balances.
Effect: In addition to budgetary overexpenditures, waste and abuse can occur if strong budgetary controls are not in place.
Recommendation: Management should implement controls to ensure that established budgetary procedures are consistently being performed and documented.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Material Weakness U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027,84.173,84.391 and 84.392) Title 1,Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-6321-10-01
Condition: This is a repeat finding (FA-6321-09-01) from the fiscal year ending June 30, 2009. A review of documentation supporting salaries charged to various Federal grants revealed that time and attendance records were not being prepared as required by OMB Circular A-87.
Criteria: Provisions of OMB Circular A-87, Cost Principles 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 having first 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 award 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.
Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards.
Questioned Cost: N/A
Information: Selected employees whose salaries were paid from one Federal award or multiple Federal awards and/or non-Federal awards did not have the required PARs or periodic certifications supporting time and effort.
Cause: The School District failed to complete the required semi-annual certifications and PARs that are used as basis for documenting salary charges to each of the Federal programs.

CLINCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGSAND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Material Weakness U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027,84.173,84.391 and 84.392) Title 1,Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-6321-10-01
Effect: The failure to maintain the required semi-annual certifications and PARS supporting time and attendance caused the School District to be in noncompliance with the applicable provisions of OMB Circular A-87.
Recommendation: In accordance with Federal regulations, the School District should implement procedures to ensure that appropriate time and attendance records are prepared and maintained for all personnel working on Federal programs. Management should ensure that all salaries charged to the Federal programs are commensurate with actual time devoted to those Federal programs.

SECTION V MANAGEMENT'S RESPONSES

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

Finding Control Number: FS-6321-10-01

We concur with this finding. The Head Bookkeeper will correct the capital asset records in accordance with the School District's approved capital asset policy. This correction will be made before the close of FY 2011.

Finding Control Number: FS-6321-10-02

We concur with this finding. The Head Bookkeeper will implement procedures to review the revenue budget areas more closely so that this oversight does not happen in FY 2011. This procedure will be implemented before the close of FY 2011.

Finding Control Number: FS-6321-10-03

We concur with this finding. The Head Bookkeeper will implement procedures to review more closely all aspects of financial statement preparation so that oversights or errors do not affect the financial statement for FY 2011. Head Bookkeeper plans to attend future training sessions held by the Georgia Department of Audits and Accounts as time permits.

Finding Control Number: FA-6321-10-01

We concur with this finding. The Head Bookkeeper will represent PAR and Semi-Annual Certification information back to federal program managers and t o the principals to ensure that these were done for FY 2 0 1 1 and that they continue to be completed and tracked by the appropriate personnel to stay in compliance with OMB Circular A-87.

Contact Person: Telephone: Fax: E-mail:

Patsy S. Villiers, Head Bookkeeper (912) 487-5321 (912) 487-5068 pvilliers@clinchcounty.com