Audit report, Cook County Board of Education, Adel, Georgia, year ended June 30, 1998

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AUDIT REPORT

COOK COUNTY BOARD OF EDUCATION

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ADEL, GEORGIA

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YE_AR_E_ND_E_D__ JUN_ E 3_0'_1_99_8

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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

COOK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXlllBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

21

DEBT SERVICE-FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

23

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

25

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

29

COOK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

31

7

BY PROGRAM

32

SECTIONll
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-B3

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

SECTIONN 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
July 1, 1999

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

98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incU17'ed, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements ofthese variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Cook County Board ofEducation as ofJune 30, 1998, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated July 1, 1999, on our consideration ofthe Cook County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Cook County Board ofEducation is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Cook ~ounty Board ofEducation does business are or will become year 2000 compliant.
Our audit was performed for the purpose offorming an opinion on the general purpose financial statements ofthe Cook County Board ofEducation taken as a whole. The accompanyingcombining statements (Exhibits E through H) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits o/States, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-13B

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 ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~ro~~ State Auditor
RWH:gp 98ARL-13B

COOK COUNTY BOARD OF EDUCATION

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

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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

82,443,47 $

405,054,57 $

4,902.53

1,659,165,56

7,657,289,58

155,009.38

192,988.20

167,000.00

15,992.25 6,095,91

$ 2,063,618,41 $

620,130,93 $ 7,662,192.11

LIABiLITIES AND FUND EqUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Due to Other Funds Capital Lease Agreements General Obligation Bonds Payable
Total Uabilities
FUND EqUI!y
Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue Unreserved Designated for Self-Insurance Undesignated
Total Fund Equity

$

107,462.51 $

116,394.01

197,378,42

42,942.18

$

167,000.00

$

107.462.51 $

356,714.61 $

167,000.00

$

4,797.79

15,992.25 6,095.91
$

7,495,192.11

$ 1,956,155.90 $ 1,956,155.90 $

236,530.37 263,416.32 $

0.00 7.495,192.11

Total Uabilities and Fund EqUity

$ 2,063,618.41 $

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

-2-

620,130,93 $ 7,662,192,11

DEBT SERVICE
FUND

$

5,479.62

746,354.40

254,851.10

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum Only) JUNE 30,1998 JUNE 30,1997

$

497,880.19 $

613,510.54

10,062,809.54

8,227,238.28

602,848.68

207,014.59

167,000.00

$ 1,006,685.12

15,992.25 6,095.91
1,006,685.12

9,723.31 9,754.71
1,853.67

6,013,314.88 437,494.74

6,013,314.88 437,494.74

7,313,146.33 567,184.26

$ 1,006,685.12 $ 7,457,494.74 $ 18,810,121.31 $ 16,949,425.69

$

223,856.52 $

106,973.30

197,378.42

170,867.83

42,942.18

12,012.80

167,000.00

$

437,494.74

437,494.74

567,184.26

7,020,000.00

7,020,000.00

7,315,000.00

$ 7,457,494.74 $ 8,088,671.86 $ 8,172.038.19

$ 1,006,685.12
0.00 $ 1,006,685.12

$

4,797.79

1,006,685.12 $

1,853.67

15,992.25 .6,095.91 7,495,192.11
2,192,686.27 $ 10,721,449.45 $

9,723.31 9,754.71 1,242,562.67
1,076.67 1,512,416.47
8,7n.387.50

$ 1,006,685.12 $ 7,457,494.74 $ 18,810,121.31 $ 16,949,425.69

-3-

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

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$ 11,632,780.37 $ 10,719,191.91

1,941,715.84

1,696,385.38

$ 1,530,275.62

4,744,429.14

3,029,767.79

$

431,197.10

14,851.61

931,751.08

501,355.48

$

431,197.10 $ 1,545,127.23 $ 19,250,676.43 $ 15,946,700.56

$ 10,147,n8.56 $ 9,391,258.06

$

178,567.66

881,446.94 428,508.18 265,728.63 431,071.64 1,001,970.57 99,996.87 . . 1,257,481.98 687,m.33 27,3n.57 123,467.18 974,452.03 276,181.66

760,646.01 372,802.79 248,199.38 474,038.23 822,486.37 227,626.55 1,136,861.20 645,628.74
9,202.98 102,209.00 1,135,985.21 584,081.63

$

295,000.00

250,245.00

424,689.52 281,295.96

122,279.23 38,461.25

$

178,567.66 $

545,245.00 $ 17,309,224.62 $ 16,071.766.63

$

252,629.44 $

999,882.23 $ 1,941,451.81 $

-125,066.07

$

252,629.44$

7,242,562.67

$

1,853.67

12,183.45

$

31,319.02

-31,319.02

7,315,000.00 32,766.35 -32.766.35

$

0.00 $ 7,329,037.12

999,882.23 $ 6,802,89

1,941,451.81 $ 8,m,387.5O

7,203,971.05 1,581,723.67

6,268.94 -3,658.80

-6,531.24 -1,n5.98

$ 7,495,192.11 $

8,m,387.50 -5-

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

EXHIBIT"C"

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

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Cook County Board of Education (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board 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 Board. 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.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes- and Other funds under control ofthe Board, 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 fQIlows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board 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 ofspecific 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 ofEducation and from the Federal government to accomplish specific educational objectives.
-8-

COOK COUNTy BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.

DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.

ACCOUNT GROUP

"

GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.

BASIS OF ACCOUNTING

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.

Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.

Governmental funds are accounted for using the modified accrual basis ofaccounting under which:

Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.

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

A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education

-9-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30,1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The Cook County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure 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 Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper 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, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions.. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSmON OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one ye~ 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
- 10-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofretum shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State ofGeorgia 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 ofthe United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
. (8) Obligations of other political subdivisions ofthe State of Georgia.
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 r.ecorded 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 Cook County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on October 6, 1997 Qevy date). Taxes were due on December 22, 1997: The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported
as revenue in fiscal year 1998. The Cook County Tax Commissioner bills and collects the property taxes for
the Board ofEducation, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the Board.
The tax millage rate levied for the 1997 tax year (calendar year) for the Cook County Board ofEducation was as follows (a mill equals $1 per thousand dollars of assessed value):
- 11 -

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

School Operations

15.50 mills

SALES TAXES

Special Pmpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $1,529,718.41
and was recorded in the Debt Service Fund. The State will tenninate collection ofthis tax once an additional
$7,470,281.59 has been collected or on June 30, 2002, whichever occurs first.

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 of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

GENERAL OBLIGATION BONDS

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

The Board has the following types of interfu.nd 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 interfu.nd transactions other than reimbursements.

-12 -

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

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 of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone ofor any combination ofthe 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 ofindebtedness or other direct obligations ofthe United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities of the State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, 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 ofindebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home

- 13 -

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS

Loan Bank, the Federallntennediate 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, 1998, the bank balances were $1,711,340.93. The amounts of the total bank balances are classified into three categories of credit risk:

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

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

Risk Category

Bank Balance

1

$ 374,119.51

2

830,856.75

3

506.364.67

Total

$)2.11.340.93

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:
,)
Category 1 - Insured or registered, or securities held by the Board or the Board's agent in the Board's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Board's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Board's name.

At June 30, 1998, the carrying value ofthe Board's total investments was $10,062,809.54.. The investments are classified as to risk categories as follows:

- 14-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Note 2: DEPOSITS AND INVESTMENTS

Type ofInvestment
Repurchase Agreements
Local Government Investment Pools
Total Investments

Risk Categories

2

3

Carrying Amount

Fair Value

$ 7,657,289.58 $

0.00 $===O~.O=O $ 7,657,289.58 $ 7,657,289.58

2.405.519.96 2.405.519.96 $ 10,062,809.54 $ 10,062,809.54

The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the Board owns no identifiable securities. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety ofcapital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds ofthe State of Georgia's General Fund.

Investments in Georgia Fund land Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration of approximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years.

Note 3: NON-MONETARY TRANSACTIONS

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

- 15-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 4: RISK MANAGEMENT

The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.

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

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

The Board is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user fund on the basis of the percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The Board accounts for claims with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

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

1997 1998

Beginning ofYear Liability

Claims and Changes in Estimates

$

0.00 $

5.276,00 $

$

0.00 $

0,00 $

Claims Paid

End ofYear liability

5.276.00 $

0.00

0.00 $

OrOO

The Board 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 ofworkers' compensation self-~ce for its member organizations. The Board 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 United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent Scheduled Employees

$ 10,000.00 $ 40,000.00

- 16-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 5: GENERAL LONG-TERM DEBT

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

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

Purpose General Government - Series 1997

Interest Rates 4.0%-5.2%

Amount $ 7.020.000.00

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

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 1997

$ 567,184.26 $ 7,315,000.00 $ 7,882,184.26

Deductions Payments

129.689.52

295.000.00

424.689.52

Balance June 30, 1998

$ 437.42.4.74 $ 7.020.000.00 $ 7.457.494.14

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

Fiscal Year Ended June 30
1999 2000 2001 2002 2003 2004
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value ofFuture Minimum Lease Payments

Capital Leases
$ 160,740.48 160,740.48 76,306.58 34,090.08 34,090.08 25.567.56
$ 491,535.26
54.040.52

General Obligation
Bonds
$ 1,544,867.50 1,660,090.00 1,721,317.50 1,898,780.00 1,097,820.00
$ 7.922.875.00

Total Debt
$ 1,705,607.98 1,820,830.48 1,797,624.08 1,932,870.08 1,131,910.08 25.567.56
$ 8.414.410.26

$ 437.4~4.74

-17 -

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note6: ON-BEHALFPAYMENTS
The Board has recognized revenues and expenditures in the amount of$272,547.56 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.
Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$211,746.08
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $17,667.48
Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For P~blic School Employees Retirement (PSERS) Employer's Cost In the amount of$43,134.00
Note 7: 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 Board believes that such disallowances, if any, will be immaterial to its overall financial position.
Nme8: RETffiEMENTPLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (fRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-shing multiple employer defined benefit pension plari. 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 Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required

- 18-

COOK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 8: RETIREMENT PLANS

employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 1,101,765.84, $ 1,027,862.36 $ 963,057.09

, - 19-

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

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

EXHIBIT"E"

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30, 1998 JUNE 30,1997

$ 279,541.02 $ 115,828.67 $

9,684.88 $ 405,054.57 $ 213,985.68

18,340.75

6,373.00

168,274.45

192,988.20

159,083.56

15,992.25 6,095.91

15,992.25 6,095.91

9,723.31 9,754.71

$ 319,969.93 $ 122,201.67 $ 177,959.33 $ 620,130.93 $ 392,547.26

Total Uabilities and Fund Equity

$ 319,969.93 $ 122,201.67 $ 177,959.33 $ 620,130.93 $

See notes to the general purpose financial statements.

-20-

COOK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30,1998

EXHIBIT "F"

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30,1998 JUNE 30, 1997

REVENUES

State Funds Federal Funds other Funds

$ 75,304.00 $ 580,825.07

$ 656,129.07 $ 524,679.47

750,502.80

$ 1,191,213.04 1,941,715.84 1,696,385.38

247,896.65

247,896.65

242,664.01

Total Revenues

$ 1,073,703.45 $ 580,825.07 $ 1,191,213.04 $ 2,845,741.56 $ 2,463,728.86

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

$ 511,732.38 $ 876,229.34 $ 1,387,961.72 $ 1,112,524.43

$ 971,472.98

24,136.36 6,238,40
12,824,80
5,183.67 8,976.77 12,180.00
466.55 2,979.05

121,009,49 50,690,69
4,057.55 89,032.80
2,000.00
1,024.84 69,796.65

145,145,85 56,929.09
4,057.55 101,857.60
2,000.00 5,183.67 8,976.77 13,204.84 70,263.20 974,452.03

111,810.80 49,752.65
114,354.81 1,005.00 4,909.90
13,934.00 7,740.25
53,590.78 1,135,98521

TotalExpend~unes

$ 971 ,472.98 $ 584,717.98 $ 1,213,841.36 $ 2,770,032.32 $ 2,605,607.83

Excess of Revenues over (under) Expend~nes

$ 102,230.47 $ -3,892.91 $ -22,628.32 $ 75,709.24 $ -141,878.97

OTHER FINANCING SOURCES

Operating Transfers In

3,892.91

27,426.11

31,319.02

32,766.35

Excess of Revenues and Other Financing Sources

over (under) Expend~nes

$ 102,230.47 $

0.00 $ 4,797.79 $ 107,028.26 $ -109,112.62

FUND BALANCE JULY 1

153,m.92

0.00

0.00

153,m.92

273,845.95

Food Inventory - Net Change in Period Donated Commodities Purchased Food
Residual Equity Transfer

6,268.94 -3,658.80

6,268.94 -3,658.80

-6,531.24 -1,775.98 -2,648.19

FUND BALANCE JUNE 30

$ 258,618.53 $

0.00 $ 4,797.79 $ 263,416.32 $ 153,m.92

See notes to the general purpose financial statements.

-21-

COOK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30,1998

EXHIBIT"G"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS JUNE 30,1998 JUNE 30, 1997

$

5,479.62

$

5,479.62 $

4,916,40

$

746,354,40

746,354.40

26.81

254,824.29

254,851,10

1,886.49

$

5,506.43 $ 1,001,178.69 $ 1,006,685.12 $

6;&,8.0.2=._89. .

FUND EqUITY
Fund Balances Reserved For Debt Service Unreserved Undesignated

$

5,506.43 $

_ _ _ _---.,;o~.o:::.:o:...

1,001,178.69 $ 1,006,685.12 $

0.00

0.00

1,853.67 4,949,22

Total Fund Equity

$

...5,5O.6..4..3... $ 1,001!178.69 $ 1,006,685.12 $ iiio1ii i i

6.,8=02=',;;,;89=

See notes to the general purpose financial statements.

-22-

COOK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30,1998

EXHIBIT "H"

FUND BALANCE JUNE 30

$

.-.5,_50_6_.4~3 $ 1,OOU78,69 $ 11006,685.12 $

68.,.0.2..8.9.

See notes to the general purpose financial statements.

-23-

COOK COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REQ!JIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

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

See notes to the general purpose financial statements. - 24-

COOK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

Agriculture, U. S. Department of Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)

10,553
10.555 10.550

Total U. S. Department of Agriculture

Education, U. S, Department of

Pass-Through From Berrien County Board of Education

d/b/a Southern Pine Mountain Migrant Education Agency

Elementary and Secondary Education Act

Title I

Migrant Education

1998 Grant

84.011

1998 Summer

84.011

Pass-Through From Georgia Department of Education

Elementary and Secondary Education Act

Title I
Grants to Local Educational Agencies

1998 Grant

* 84.010

Title II

Eisenhower Professional Development

1998 Grant

84.281

Title VI

Innovative Education Program Strategies

1998 Grant

84,298

Technology Literacy Challenge Fund Grants

1998 Grant

84.318

Individuals with Disabilities Education Act

Part B - Special Education

Flow Through

1998 Grant

* 84.027

Preschool

1998 Grant

* 84.173

Safe and Drug-Free Schools

1998 Grant
Vocational Education - Basic Grants to States

84,186

High School Program

Basic Grant

1998 Grant

84.048

Tech-Prep Education

1998 Grant

84.243

Total U. S, Department of Education

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

N/A

$ 168,407.03

N/A

527,534.94 $

N/A

54,560.83

$ 750,502.80 $

(2)
916,912:15 (3) 54,560.83
971,472.98

N/A

$ 11,992.04 $

N/A

900.45

11,992.04 900.45

N/A

620,748,98

620,748.98

N/A

21,672.64

17,349.91

N/A

17,410.00

17,410.00

NlA

128,812.23

128,337.17

N/A

247,579,00

248,307.11

NlA

89,205.70

.89,205.70

N/A

14,194.00

14,194.00

N/A

33,698.00

60,396.00 (3)

N/A

5,000.00

5,000.00

$ 1,191,213.04 $

1,213,841.36

Total Federal Financial Assistance N/A - Not Available

-25-

$ 1,941,715.84 $

2,185,314.34

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

SCHEDULE "2"

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 system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The Board did not provide Federal Assistance to any SUbrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Cook County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements.

-26-

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

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEARS

Acquisition, construction and equipping of a new middle school, and a new auditorium at the new middle school, including the acquisition of all necessary property

$ 9,000,000.00 $ 9,000,000.00 $

178,567.66 $ ====0=,0=0

(1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board's current estimate of total cost for each project. Includes all cost from project inception to completion.
(3) The voters of Cook 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.
(4) In addition to the expenditures shown above, the Board incurred current year interest expenditures
in the amount of $250,245.00 to provide advance funding for the above projects.

See notes to the general purpose financial statements.

-28-

COOK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

6,373.00 $

80.355.91 $

425.003.47 $
24.136.36 6,238.40 12,824.80 5,183.67 8.976.77 12,180.00 466.55 2,979.05

511,732.38
24,136.36 6,238.40 12,824.80 5,183.67 8,976.77 12.180.00
466.55 2,979.05

Total Expenditures

$

6,373.00 $

80,355.91 $

497.989.07 $ 5.8.4....7.1.7...9...8.

RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program

$ 401.667.58
6.373.00 80,355.91 96,321.49

$ 584,717.98

See notes to the general purpose financial statements.

-29-

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

SCHEDULE "6"

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

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

7,684,002.00 $ _ _...;2;;;.;5;,.;;0....,;,4;;.;;.O.;;.;8.~00;;..

$

7,507,392.23

644,289.09 $

$

8,151,681.32

5,;;,;9;,.;;5.l,,;,0;,.;.3;;;;2';,;.03~.

-3,909.65 $ _ _...;;,81~.,..;.47;...:,,7;.,.;.7.1.;.,;,.6.-.7

$

0.00 $ ====-===0.=00....

See notes to the general purpose financial statements. - 31 -

COQK COUNTY BQARD OF EDUCATION ANALYSIS OF MINIMUM EXpENDITURE REqUIREMENTS - BY pROGRAM
GENERAL FUND - QUALITY BASIC EDUCATION pROGRAMS YEAR ENDED JUNE 30,1998

SCHEDULE "7"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

. OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$ 568.323.00 . $

588.234.49 $

53.940.14 $ 642.174.63

1.548.181.40

1,516.728.28

115.291.01

1.632.019.29

$ 2,116,504.40 $ 2.104.962.n $

169,231.15 $ 2,274.193.92 $

0.00

593,220.80

615.852.06

86.077.80

701.929.86

0.00

1,175.541.30

1.311.636.61

130.824.13

1.442.460.74

0.00

614.782.80

753.607.46

94.404.08

848.011.54

0.00

507.759.10

692.613.80

34.379.35

726,993.15

0.00

441.212.40

535.731.49

55.718.53

591,450.02

0.00

$ 5,449,020.80 $ 6.014.404.19 $ 570,635.04 $ 6,585.039.23

$

707.946.30

$

9.172.61 $ 150,269.37 564,757.30
3,231.72 9.635.70

979.88 $ 1.317.20 13,345.72
148.49 569.40

10.152.49 151,586.57 578.103.02
3.380.21 10,205.10

$

707,946.30 $

737.066.70 $

16,360.69 $ 753,427.39

0.00

182.038.50

183.100.50

4,468.95

187,569.45

0.00

$

889,984.80 $

920.167.20 $

20.829.64 $ 940.996.84

$

373.917.60 $

370.350.25 $

3.567.35 $ 373.917.60

0.00

$ 6,712,923.20 $ 7.304,921.64 $ 595,032.03 $ 7,899,953.67

$

182,274.30 $

202,470.59

$ 202.470.59

0.00

40,761.90

$

49,257.06

49,257.06

0.00

$ 223.036.20 $

202.470.59 $

49.257.06 $ 251,727.65

$ 6,935.959.40 $ 7.507.392.23 $ 644.289.09 $ 8.151,681.32 $

0.00

$

21.n2.00

53,281.00

$ _....,;7.5.05.30..0.

$

37.513.08 $

37.513.08

45.444.97

45,444.97

$

82.958.05 $

82.958.05 $

00.0.

33 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
July 1, 1999

Honorable RoyE. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Cook County Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Cook County Board ofEducation as of and for the year ended June 30, 1998, and have issued our report thereon dated July 1, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditinf' Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Cook County Board of Education's financial statements are free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and- grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditinf' Standards.
Internal Control Over Financial Reportin~
In planning and performing our audit, we considered Cook County Board ofEducation's internal control over .financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation
98YB-40

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 financial reporting that, in our judgement, could adversely affect Cook County Board ofEducation's ability to record, process, summarize and report fmancial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-6371-98-01.
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 the risk that misstatements in amounts that would be material in relation to the fmancial statements being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. Our consideration ofthe 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 conditioris that are also considered to be material weaknesses. However, the reportable condition noted above is considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restrictionis not intended to limit the distribution ofthis report which is a matter ofpublic record.
Respectfully submitted,
~._ (/l w.~'
Russell W. Hinton State Auditor
RWH:gp 98YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
July 1, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Cook County Board ofEducation
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INJERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Cook County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OME) Circular A-I33 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Cook County Board ofEducation's major Federal programs are identified in the accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility'ofCook County Board ofEducation's management. Our responsibility is to express an opinion on Cook County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government AuditinC Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,Audits ofStates, Local Governments, andNon-Profit Organizations. Those standards and OMB Circular A-B3 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 Cook County Board ofEducation'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 Cook County Board ofEducation's compliance with those requirements.

98SA-I0

In our opinion, the Cook County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management of Cook 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 Cook County Board ofEducation'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 OMB Circular A-l33.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements of laws, 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. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~ ... Jl2, w~ Russell W. Hinton State Auditor
RWH:gp 98SA-10

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

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6371-93-03 FS-63 71-97-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6371-97-01

Due to current staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staffthe Board has decided not to pursue the recording of General Fixed Assets on the financial statements.

SECTIONN .FlNDINGS AND QUESTIONED COSTS

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

I SUMMARY OF AUDITOR'S RESULTS

1. ]J:' '1fReport Issued on the Financial Statements e auditor's opinion on the Cook County Board ofEducation's financial statements was qualified
;.or various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit ofthe Financial Statements

The audit report for the Cook County Board ofEducation disclosed a financial statement reportable

condition related to the following control category.

co

General Fixed Assets .

The reportable condition described above is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit ofthe Cook County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Melior Pro(WUl1S The audit report for the Cook County Board ofEducation did not disclose any reportable conditions in internal control over major programs.

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

6. Audit Findin2s Required to be Re.ported by Section .510(a) ofOMB Circular A-l33 The Cook County Board ofEducation's audit did not disclose audit findings required to be reported by section .51O(a) ofOMB Circular A-l33.

7. Major Pro(WUIls Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.027 Individuals with Disabilities Education Act, Part B - Special Education - Flow Through 84.173 Individuals with Disabilities Education Act, Part B - Special Education - Preschool

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

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

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COOK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6371-98-01 The Cook 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 Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. Management's Response: We concur with this recommendation. Due to current staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the financial statement at this time. We are, however, reviewing fixed asset programs presently available to determine which one will best suit the requirements ofthe audit department and also the cost ofour Board.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
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